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Montreal-based PROREIT (PRV.UN-T) has been closing in on its goal of growing its industrial holdings to 90 per cent of the trust’s overall portfolio with a series of acquisitions and sales through 2024. Its latest purchase is a $32.6-million industrial building in Dorval, in Greater Montreal.
The building comprises 134,340 square feet and is fully leased to a single tenant. Located at 2945 André Ave., it is adjacent to Montreal’s Trudeau International Airport.
"As we continue to successfully execute on our capital recycling program, we are pleased with this accretive acquisition which aligns with our growth strategy and medium-term goals of expanding our industrial footprint to 90 per cent of base rent and $2 billion in total asset value," Gordon Lawlor, the president and CEO of PROREIT, said in the announcement.
This acquisition will increase the portfolio's exposure to the industrial sector in line with PROREIT’s strategy over the past couple of years, bringing it to approximately 86 per cent of GLA and 80 per cent of base rent on a pro forma basis.
PROREIT says its binding agreement represents a going-in cap rate of 6.7 per cent. It will finance the acquisition through a new $21.2-million first mortgage at a rate of 5.1 per cent, as well as proceeds from its recently announced non-core asset sales and a draw on its available operating facilities.
PROREIT is acquiring a 100 per cent interest in the property.
Active 2024 for PROREIT
The building features a warehouse clear height of 24-27 feet, along with what PROREIT calls an “efficient loading configuration”.
The tenant, KD Services, is a national logistics company offering packaging, assembly and fulfillment services, which has been in place since 2013. It is under a long-term lease that includes annual rent escalations and a renewal option.
The transaction remains subject to customary closing conditions, and is expected to close during Q3.
Upon completion of the acquisition, PROREIT's portfolio will consist of 115 income-producing commercial properties - including a 50 per cent ownership interest in 42 investment properties - totalling approximately 6.1 million square feet of GLA.
The trust has been very active on the transaction market during 2024, with this latest move representing its seventh deal - but its first acquisition of the year.
In the second quarter, PROREIT completed the sale of three small non-core properties for gross proceeds of $13.5 million, two retail properties and an industrial asset.
Since the end of Q2, it has entered agreements to sell two office buildings in Ottawa for a total of $26.4 million and a retail property in Lacombe, Alta., for $5 million.
The two Ottawa office properties combine for 153,000 square feet. The Lacombe retail property is approximately 11,000 square feet.
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