The Cochrane Business Park in Markham, just northeast of Toronto. Summit Industrial Income REIT has purchased the campus. (Google Street View)

Summit Industrial Income REIT (SMU-UN-T) announced Wednesday it has waived conditions and will acquire the Cochrane Business Park, a six-building light industrial campus in Markham, just northeast of Toronto.

Summit is paying $45.15 million for the campus, which the REIT says is well below replacement cost. The six buildings total 228,719 square feet of gross leasable area.

In its announcement of the purchase, Summit noted in-place rents are approximately 50 per cent below market, providing the opportunity to increase returns as leases are renewed over time. The weighted average lease term for the campus is only 2.6 years.

“We are very pleased to be acquiring this modern industrial park with a prime location in an established GTA industrial node. The buildings contain very functional, highly-leasable space and have been well maintained to an institutional standard,” said Summit CEO Paul Dykeman in the release.

“This acquisition is an excellent example of how we are accretively building scale in the GTA, Canada’s largest and strongest industrial market.”

The campus consists of four single-tenant buildings and two multi-tenant buildings. Each of the structures features 24-foot-clear ceiling heights.

The property is located along the Highway 7 corridor, with convenient access to Highway 404, Highway 407, and the extensive GTA transportation network. The park is serviced by transit and includes “ample” tenant parking.

Occupancy for the portfolio is 94.4 per cent with a diverse group of warehouse and industrial tenants, food production, studios and service companies. No single tenant represents more than 21 per cent of the park’s GLA.

Summit Industrial’s strategy

It will fund the purchase via its acquisition credit facility. Summit says the going-in capitalization rate is approximately 4.3 per cent.

Closing is expected on or before Feb. 14, 2020.

The campus was previously part of the portfolio of Montreal-based Kevric.

The purchase is the second for Summit during 2020. It also bought a 51,490-square-foot class-A light industrial property in Oakville (west of Toronto), which includes significant room for expansion on the four-acre property. That acquisition cost $13.3 million.

In announcing that transaction, Dykeman noted Summit had focused on diversifying its portfolio in 2019, but was shifting its focus for the foreseeable future. Dykeman said expanding its presence in Toronto and the GTA would be a goal during 2020. 

The REIT had closed 2019 with a major purchase in Alberta, acquiring 37 light industrial properties for $588 million. The portfolio encompasses 3.3 million square feet.

About Summit

Summit Industrial Income REIT is an unincorporated open-end trust focused on growing and managing a portfolio of light industrial properties across Canada.

According to its website, Summit owns interests in 111 properties across Canada, with the majority (68) in Ontario.