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Summit Industrial Income REIT (SMU-UN-T) will spend $233.5 million to purchase 11 light industrial properties in Montreal, the Greater Toronto Area and Ottawa, the trust announced Thursday afternoon.
The portfolio comprises just under 2.1 million square feet of gross leasable area and is 98 per cent occupied.
Summit also announced a $110-million bought-deal share offering, which will be underwritten by a syndicate led by BMO Capital Markets.
“We continue to accretively build our presence in our key target markets,” said Summit CEO Paul Dykeman in a release. “Additionally, our pipeline of future acquisition opportunities remains strong, and we look for further growth in the quarters ahead.”
Dykeman told RENX Friday morning the REIT isn’t releasing any more details until the prospectus filing for the share offering is complete.
Other recent Summit acquisitions
This is the latest of a series of acquisitions and investments for Summit in the past few months.
In September, Summit provided $16 million in financing to its data centre partner, Urbacon, to develop a 95,000-square-foot facility in Montreal. Summit can convert that investment into 50 per cent ownership on completion of construction and leasing.
The two companies became partners in the sector at the end of 2017.
Related Stories:
* Summit adds five industrial properties in GTA, Calgary
* Summit Industrial buys into data centres
Summit made three acquisitions during the summer, adding seven buildings to its portfolio.
In July, the REIT spent $37 million to acquire a 369,500-square-foot logistics facility in Oshawa in the GTA; in June in bought five GTA and Calgary properties, comprising almost 800,000 square feet, for $127 million; and in May it purchased a 187,245-square-foot cold storage facility in Mississauga for $37 million.
The acquisitions came on the heels of the REIT’s nearly doubling its portfolio during an aggressive series of purchases during 2017.
More purchase details
In the purchases announced Thursday, Summit said the price is “well below” replacement cost. The average remaining lease term is 4.5 years and current rents are below market, creating the opportunity for future income growth. The purchase price represents a going-in 5.5 per cent cap rate.
The transactions remain conditional upon completion of due diligence and standard conditions, and are expected to close before the end of December 2018.
Financing for the purchase will come through the assumption of $38.9 million in existing mortgages with an average interest rate of 3.16 per cent, cash from the REIT’s operating facility and net proceeds of the share offering.
The offering will see 11,830,000 shares distributed at a price of $9.30 per unit. The underwriters also have an over-allotment option for up to 1,774,500 additional units on the same terms, which could raise an additional $15 million. It is expected to close by Dec. 10, 2018.
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