Dream Industrial REIT (DIR.UN-T) has updated its investment strategy and announced its first property purchase in the U.S., a 717,000-square-foot, modern distribution facility in Nashville, Tenn.
The REIT also said in a release Tuesday it plans to “actively leverage” its existing land bank and new industrial development group to explore development opportunities and further acquisitions in both Canada and the U.S.
Dream Industrial will buy the Nashville property from Dream Office REIT (D.UN-T), which had owned and managed the facility since 2012 but designated it a “non-core” asset. The purchase price is approximately CDN$60 million.
“Dream Industrial believes that this presents a unique opportunity to acquire a high-quality asset with a strong covenant and long-term lease in a non-competitive process at an attractive price,” the release states.
Nissan NA is building tenant
Located along the Interstate 840 corridor, the distribution centre is 100 per cent leased to Nissan North America Inc., with nine years remaining on the lease term. This makes Nissan the REIT’s largest tenant with 4.2 per cent of its gross leasable area.
Nissan North American is headquartered in Nashville, where Dream Industrial said it is seeking future opportunities in both the local market and with Nissan as a tenant.
The building has a clear ceiling height of 32 feet and parking capacity of 258 spaces, plus 422 trailer parking spaces. The site includes 14 acres of land for storage or site expansion of up to 485,000 square feet.
Dream is one of Canada’s largest, most diverse and active real estate companies with approximately $14 billion of assets under management in North America and Europe. There are four TSX-listed funds plus it has investments in and manages Canadian renewable energy infrastructure and commercial property.
Some of Dream’s larger developments in Canada include Toronto’s Distillery District, the King Edward private residences, the Pan-American Games Athletes’ Village, planned transformation of Ottawa/Gatineau’s Chaudiere Islands into a vibrant and sustainable Zibi community and a 20-year partnership with the Canadian Pacific Railway Limited to develop surplus real estate in Canada and the U.S.
New industrial development division
“Dream Industrial REIT and Dream will review Dream’s existing assets and partnerships that may represent unique opportunities for the Trust to acquire proprietary and off-market investment opportunities that would not be available to our competitors,” said Brent Chapman, CEO of Dream Industrial.
“The Trust will benefit from preferential access to a pipeline of brand new medium and large bay industrial properties at market value, bypassing competitive bidding processes and meaningfully save on transaction costs.”
The new industrial development division includes engineers, architects and project managers overseeing construction and development of flex and light industrial projects. They’re tasked with exploring industrial development opportunities within Dream’s existing land inventory and real estate.
Dream’s land development business has operations in Saskatoon, Regina, Calgary and Edmonton and its land bank consists of approximately 10,000 acres.
The company estimates there are 180 acres, or approximately three million square feet of industrial development identified on its lands, of which over 200,000 square feet are in various stages of development.
“We believe Dream Industrial is well positioned to leverage our existing industrial land bank in Dream and our network of relationships to explore a series of strategies that will make the Trust more valuable for its unitholders,” said Michael Cooper, president and chief responsible officer of Dream Unlimited.
Dream will update its strategy on its Q2 2017 conference call on Wednesday, August 9, 2017 at 2:00 p.m. (ET).