Skyline Industrial REIT ended 2023 as it began the year: actively buying, selling and developing industrial properties across Canada.
The Guelph-based real estate investment trust announced it transacted on 1.6 million square feet of properties worth $388.68 million in 2023. Eight transactions were completed, which resulted in adding three properties and selling off 15 non-core assets.
Its final, and largest, acquisition of 2023 closed in December; a 414,459-square-foot multi-tenant logistics warehouse at 1 High Plains Trail in Rocky View County, north of Calgary.
A release issued by Skyline also refers to 2023 as a “banner year” for its investment into the Rosefellow Development Funds, a venture with the Montreal-based firm.
Three properties in Greater Montreal were completed under the Rosefellow development partnership and ground was broken on two more in Candiac, Que.
Skyline managed the hurdles of rising interest rates and an inflationary environment through 2023 because of its “robust and diverse tenant portfolio comprised of both near-term, under-market leases and long-term tenants with built-in rental rate increases,” and “its selective and opportunistic acquisition strategy, strong development partner relationships, and an influx of capital from the completion of its strategic dispositions” the REIT reported in its year-end statement.
Skyline’s acquisitions in 2023
On Dec. 21, 2023, Skyline acquired a logistics and warehousing facility in Rocky View County that had been completed earlier in the year. It did not release financial details of the acquisition.
Skyline said the 414,459-square-foot building is 100 per cent leased to two “high-value tenants, on long-term leases.”
“We are very pleased with this acquisition as it perfectly supports and aligns with our acquisition strategy and adds a major asset to the portfolio,” Mike Bonneveld, president of Skyline, said in the statement.
Skyline had made its first investment in Rocky View County in October 2021 when it acquired a 150,000-square-foot, single-tenant industrial warehouse.
Prior to the December distribution centre acquisition in Rocky View County, Skyline had also bought:
- the unowned interest from Rosefellow for a 321,008-square-foot multi-tenant freezer storage and industrial warehouse facility at 3601 Avenue de la Gare, Mascouche, Que., in October; and
- a single-tenant industrial asset at 353 Griffin Way in Woodstock, Ont., totaling 148,050 square feet, in November.
Skyline completed $195.25 million of acquisitions in 2023, adding 883,517 square feet of class-A space to its portfolio.
Disposition activity in 2023
The REIT’s disposition activity nearly matched its acquisitions by dollar value — $193.43 million totalling 716,354 square feet. In February and April, Skyline sold:
- a single-tenant industrial building at 500 Saint-Louis St. in Saint-Jean-sur-Richelieu, Que., for $10.75 million;
- an office building at 380 Hunt Club Rd. in Ottawa for $4.08 million; and
- its interest in a 26.17-acre industrial redevelopment site at 2800 Rue Andre in Dorval, Que., for $88 million.
Later in September, it divested:
- 11 properties in Alberta and Saskatchewan totaling 364,951 square feet for $68 million; and
- a single-tenant industrial freezer storage building at 7801 Boulevard Henri-Bourassa E. in Montreal, for $22.6 million.
Most of the capital from its dispositions was redeployed into Skyline’s development pipeline and other acquisitions, contributing to its “strong” balance sheet for 2023, the company said.
"Banner year" with Rosefellow
Skyline’s partnership with Rosefellow continued to evolve with more development activity.
Construction on two projects in Candiac was started in conjunction with Montreal-based Fit Ventures. Located at 131 Montcalm Blvd. N. and 450 Rue Paul-Gaugion, the properties total approximately 619,750 square feet.
Ground was broken on a 296,350-square-foot development in Laval, and a three-building, 585,401-square-foot development in Kirkland, Que.
Three projects were completed:
- a 98,954-square-foot development in Montreal at 6100 Rue Notre-Dame E. that is fully leased and expected to be acquired by Skyline in Q1 2024;
- 555 & 565 Avenue Victor Davis in Pointe-Claire, Que., a 274,716-square-foot building also anticipated for acquisition by the REIT in Q1 2024; and
- 3601 Avenue de la Gare in Mascouche, Que. The 321,008-square-foot facility is 90 per cent leased.
Seven development projects with Rosefellow and Fit Ventures are in the pipeline.
Skyline’s other projects
More real estate activity came in the form of groundbreaking and construction on Skyline's Bayers Lake Halifax Development joint venture. The two-building, 400,688-square-foot project is in Halifax.
Skyline completed a 52,000-square-foot expansion for its tenant TRW at 6365 Hawthorne Dr. in Windsor.
The addition of a 96,726-square-foot industrial building on vacant land within the Skyline’s Rampart Business Park in Edmonton was announced. Construction is expected to be finished in Q3 2024.
The new development pipeline is expected to add approximately 3.1 million square feet of industrial space by the end of 2025.
As of Dec. 31, 2023, Skyline's portfolio consists of 50 properties in five provinces totalling 9.6 million square feet.
Expectations for 2024
Skyline expressed optimism for 2024, listing strong occupancy rates and an anticipated continued growth trajectory in key markets as key factors.
Its focus will remain on acquisitions, operations and developing light industrial, logistical and warehousing assets in “primary Canadian cities along major transportation routes and global shipping outlets.”
Environmental sustainability will be a critical focus of Skyline in 2024, the REIT said, as it facilitates LEED and Zero Net Carbon developments and an electric vehicle charging program across its portfolio.
The company plans to bring rental rates up to market, be proactive in tenant renewals and responsive to market trends and demands.