Summit Industrial Income REIT (SMU-UN-T) has waived all conditions and will acquire a quarter-million-square-foot single-tenant warehouse in the Greater Toronto Area city of Vaughan. The trust says it will pay $47.3 million for the facility and the sale is expected to close by Oct. 13.
The REIT also announced it has sold a “non-core” 41,487-square-foot property at 16295 132nd Ave. in Edmonton, for net proceeds of $2 million. The transaction closed on Sept. 25.
The GTA logistics facility is located at 123 Great Gulf Dr. in Vaughan, a suburban community just north of Toronto. The class-A property, which contains 244,633 square feet of GLA, was constructed in 2003 and expanded in 2013.
It’s located in a growing industrial and distribution node which is close to both major railway links and the region’s 400-series highways which link it to cities across Ontario.
Summit said the building is “modern and well-maintained.” Ceiling heights range from 24 feet to 32 feet.
Expanding the GTA portfolio
“We continue to successfully grow our presence in the GTA, Canada’s strongest light industrial property market, with the announcement of the acquisition of this modern, highly leasable property in a prime location,” chief executive officer Paul Dykeman said in the announcement.
The transaction is a sale-leaseback with the existing owner, CTG Brands, a North American wholesaler and strategic merchandiser which also operates distribution centres in Vancouver and Montreal. The 15-year lease will include two per cent annual rent escalations.
The Vaughan property is being acquired at a cap rate of approximately 4.5 per cent. Summit said the purchase price is well below replacement cost and will be financed with cash from its unsecured revolving credit facility.
The industrial market in Toronto remains very tight, with vacancy at just two per cent according to new Q3 data just released from CBRE.
As the pandemic has shifted more buying to online and e-commerce, the sector has continued to expand even as some other commercial real estate has suffered.
The rate is virtually unchanged from Q2 2020, despite the delivery of an additional 2.7 million square feet of space. In the past two quarters, the GTA industrial sector has seen 6.8 million square feet of new capacity come onto the market, CBRE reports.
About Summit Industrial Income REIT
Summit has been fairly quiet on the transaction front through 2020. Its most recent acquisition was a 282,133-square-foot, LEED Gold-certified cold-storage facility in Guelph, west of Toronto, in March. The REIT paid $77.7 million for the facility, which was built in 2013 and is fully occupied.
Summit also recently sold its interest in a GTA data centre just as construction was wrapping up. The DC2 data centre project was a joint venture with Urbacon.
Summit Industrial Income REIT owns 158 properties in five Canadian provinces: Ontario, Quebec, Alberta, British Columbia and New Brunswick.
The bulk of its assets are in Ontario, with 78 across the province and a heavy concentration throughout the GTA and Greater Golden Horseshoe areas.
The trust has its asset management head office in Brampton and its investors services office in Dartmouth, N.S.