While confidentiality agreements preclude the release of full details, PRO Real Estate Investment Trust (PROREIT) has entered into separate binding agreements to acquire a 100-per-cent interest in two industrial portfolios in Quebec City and Winnipeg for an aggregate purchase price of approximately $136.8 million, excluding closing costs.

PROREIT president and chief executive officer Gordon Lawlor told RENX the acquisitions involved a mix of on- and off-market deals and that the three separate vendors can’t yet be named.

“They're small and mid-bay industrial real estate similar to what we have,” Lawlor said of the new acquisitions. “There's no land with them but some of the properties would have room for expansion.

“It’s really driven off the current cash flow, and we see upside in the rents compared to market in both of these portfolios.” 

PROREIT’S growing industrial portfolio

Montreal-based PROREIT was founded in 2013. It owns and operates a portfolio of properties in primary and secondary Canadian markets.

Upon completion of the new acquisitions, which is expected to take place in the third quarter of this year, PROREIT's portfolio will be comprised of 122 income-producing commercial properties representing approximately 7.2 million square feet of gross leasable area (GLA) and $1.2 billion of total assets with a weighted average lease term of 4.3 years. 

The addition of these properties will increase PROREIT’s portfolio exposure to the industrial segment to 93 per cent by GLA and 92 per cent by base rent.

“We turned the corner in 2025 to be a pure-play industrial REIT with small and mid-bay real estate across Canada, mostly in secondary markets, so these assets fit that mantra for us,” said Lawlor.

Quebec City portfolio

The Quebec City portfolio comprises 13 properties representing approximately 613,000 square feet of GLA. The purchase price was $112.8 million.

The portfolio is highly clustered and in close proximity to major transportation infrastructure. Approximately 77 per cent of the properties are within Carrefour du Commerce Industrial Park and Cardinal Industrial Park, which will enable operational scale and efficiency.

The properties are approximately 91 per cent occupied with a weighted average lease term of 2.8 years. Certain in-place rents are estimated to be below market levels, providing an opportunity for lease-up and rental rate growth over time.

“We've been looking in Quebec City for almost 14 years to find a platform with size,” said Lawlor. “We have some other properties in Quebec City, and we bought and sold a couple, but this would be the first deal of magnitude.”

Halifax-headquartered Compass Commercial Realty & Property Management, which has been wholly owned by PROREIT since 2018, is the property manager for the trust’s entire portfolio. It will open an office in Quebec City to oversee these new acquisitions and hopefully, according to Lawlor, more in the future.

Winnipeg portfolio

The Winnipeg portfolio comprises four properties totalling approximately 160,000 square feet of GLA. The purchase price was $24 million.

The acquisition includes a single-tenant building totalling approximately 69,000 square feet that’s fully leased on a long-term basis, providing stable in-place cash flow with contractual rent growth over time. 

It also includes a three-building portfolio totalling approximately 90,500 square feet, which is occupied by a diversified roster of tenants and located near other PROREIT assets.

The portfolio is approximately 97 per cent occupied with a weighted average lease term of about 5.2 years, offering both durable income and embedded rental upside through lease roll and mark-to-market opportunities.

“We bought seven properties last year in Winnipeg, which got us to 1.3 million square feet, so this is complementary to that,” said Lawlor.

Part of the Winnipeg portfolio was marketed and attracted a lot of interest from investors, Lawlor added.

Conditional Winnipeg acquisitions

PROREIT has also entered into a conditional agreement to acquire four other Winnipeg industrial properties totalling approximately 165,000 square feet of GLA for $21.7 million, excluding closing costs.

Lawlor couldn’t provide any more details about those acquisitions, which aren’t as close to closing as the other two portfolios.

“There are still some due diligence conditions to be completed,” he explained.

Public offering and concurrent private placement

PROREIT simultaneously announced that it has entered into an agreement to issue 11.15 million trust units of the REIT from treasury on a bought deal basis at a price of $6.50 per unit to a syndicate of underwriters, with TD Securities and Scotiabank acting as book runners, for gross proceeds of approximately $72.5 million.

The REIT has granted the underwriters an over-allotment option to purchase up to an additional 1,672,500 units on the same terms and conditions — exercisable at any time, in whole or in part — up to 30 days after the closing of the offering.

PROREIT also entered into concurrent binding subscription agreements to issue units on a non-brokered private placement basis at the offering price per unit with:

• Collingwood Investments Incorporated, for gross proceeds of approximately $16.7 million;
• and Parkit Enterprise Inc., for gross proceeds of approximately $5 million.

Collingwood is part of the Nova Scotia-based Bragg Group of Companies and has been an investor in PROREIT since 2021 when it took a $50-million equity position.  

PROREIT acquired six industrial properties totalling 678,177 square feet of GLA in Winnipeg from Parkit last June for $96.5 million, excluding closing costs. Parkit took an approximate 9.6-per-cent ownership interest in PROREIT after the transaction.

Financing the acquisitions

The new portfolio acquisitions will be made with approximately $47.5 million in cash from the public offering and concurrent private placement and approximately $89.4 million from new mortgage financings. 

Closing costs for the acquisitions and financing costs, estimated at approximately $4.3 million, will also be funded with cash from the public offering and concurrent private placement.

Net proceeds from the public offering and concurrent private placement will also be used to repay certain indebtedness, some of which may be subsequently redrawn. The balance will fund future acquisitions that are in various stages of negotiations and be used for general business and working capital purposes.

The public offering and concurrent private placement are expected to close on or about June 10.