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Kingsett to acquire Dream Industrial’s E. Canada portfolio

KingSett Capital will purchase the entire portfolio of Dream Industrial REIT’s (DIR.UN-T) Eastern...

IMAGE: Dream Industrial REIT logo.KingSett Capital will purchase the entire portfolio of Dream Industrial REIT’s (DIR.UN-T) Eastern Canadian properties, comprising 38 assets and about 2.8 million square feet of gross leasable area.

The purchase price for the portfolio is $271 million, the companies said. Kingsett is making the purchase on behalf of its KingSett Real Estate Growth LP No. 7 fund.

“Pleased with this $270M acquisition in our Growth LP7 where we have significant capacity to complete transactions of scale,” said Kingsett CEO Jon Love in a brief statement on LinkedIn. “We remain active in seeking new opportunities in all asset classes across Canada for our growth, core and mortgage businesses.”

The purchase “fits squarely in our value creation strategy for LP 7” the company said in a separate LinkedIn posting.

The transaction is expected to close during Q3 2019, pending the successful fulfillment of customary closing conditions.

“This sale of the Eastern Canada Portfolio represents a significant milestone for the trust,” said Brian Pauls, chief executive officer of Dream Industrial REIT, in a release Monday morning.

“We plan to utilize the net proceeds from the sale to increase scale in our target markets as we continue to transform, as well as enhance the overall quality and performance of the Dream Industrial portfolio.”

Dream buys in Oakville, Ottawa

Dream Industrial also announced the purchase of two other properties, one in Oakville just outside Toronto, and the other in Ottawa. The price for these two sites (the property in Oakville had previously been announced) is about $40 million.

Upon completion of the sale and the two acquisitions, Dream Industrial will own 210 properties across Canada and the United States with a total GLA of approximately 21.8 million square feet.

“We remain focused on driving solid organic growth and improving the quality of our portfolio,” said Lenis Quan, Dream’s chief financial officer, in the release.

“The sale of the Eastern Canada portfolio provides us with ample financial flexibility to acquire high-quality industrial assets in our target markets that contribute strong cash flow and NAV per unit growth over the long term.”

On the acquisitions side, Dream completed the acquisition of a 43,000-square-foot property at 333 Wyecroft Rd. in Oakville. The purchase price before transaction costs was $7 million, representing a going-in cap rate of approximately 5.6 per cent.

Dream has also waived all conditions on a property located in the Belfast and Sheffield area of Ottawa. The purchase price is expected to be approximately $32.8 million, representing an anticipated going-in cap rate of 5.6 per cent.

Humber Place is comprised of two buildings, totalling 233,000 square feet and is fully occupied with a weighted average lease term of 4.8 years. The multi-tenant property has a diverse tenant roster focused on warehousing and distribution.

The property is in close proximity to major highways and shipping routes including Highway 174 and Highway 417.

The Belfast/Sheffield node of the Ottawa East submarket is the city’s largest industrial submarket, with a low availability rate of 2.8 per cent and no new supply under construction.

Closing of this acquisition is expected to take place in July.

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