True North plans two more GTA industrial acquisitions

IMAGE: The 315,400-square-foot ATB Westwinds office campus in Calgary was recently acquired by True North Commercial REIT. (Google Street View)

The 315,400-square-foot ATB Westwinds office campus in Calgary was recently acquired by True North Commercial REIT. (Google Street View)

True North Commercial REIT (TNT-UN-T) has conditional agreements to purchase two class-A industrial properties in the Greater Toronto Area for a total of $205.3 million, the trust announced Thursday. 

The properties comprise a total of just over 621,000 square feet of leasable space and are 98.6 per cent occupied, the REIT says in a release.

As part of its funding for the purchases, True North is also issuing a share offering designed to raise up to $80.5 million in equity, including overallotments.

True North has not identified the properties it intends to purchase, but the first comprises 368,800 square feet, is 98 per cent occupied and has a remaining weighted average lease term of 4.8 years. The second property is 252,500 square feet and is fully occupied with a weighted average lease term of 7.2 years.

If both deals close, True North’s portfolio will have 4.8 million leasable square feet, be 97 per cent occupied, have a weighted average lease term of 4.7 years and 76.7 per cent of its revenue generated by government and/or credit-rated tenants.

Offering to raise up to $80.5M

CIBC Capital Markets and Raymond James Ltd. are leading the offering to sell, on a bought-deal basis, 10,120,000 units at $6.92 per unit. This would raise about $70 million for the REIT.  

An entity controlled by Daniel Drimmer, True North’s president and chief executive officer, will purchase approximately $3.5 million worth of the units.

The overallotment is for an additional 1,518,000 units at the offering price, for additional gross proceeds of approximately $10.5 million.

The offering is expected to close by Nov. 18 and remains subject to conditions, including TSX and other regulatory approvals. It is not contingent on the closing of the two most recent property acquisitions.

True North’s recent activity

The pending acquisitions come on the heels of True North’s announcement in September it would purchase industrial buildings in Calgary, and in Markham, north of Toronto. The REIT subsequently closed on 3699 63rd Ave. NE in Calgary on Nov. 4; and expects to close on 101 McNabb Street in Markham on or about Nov. 15.

The properties total 524,800 square feet and are being purchased for a combined price of $190.5 million plus closing costs.

As part of its funding for those purchases, True North in September issued an offering of 12.2 million units, raising about $80.5 million.

True North decided not to acquire a third building (a 100,000-square-foot office property in the GTA) which was also announced in September.

In its Q3 2019 financial report issued this week, True North reported increases of 14 per cent in revenue (to $25.7 million) and 13 per cent in NOI (to $15 million) compared to Q3 2018. The increases were generated mainly due to property acquisitions in late 2018 and  in 2019.

As of Sept. 30, True North reported its indebtedness to gross book value ratio was at 52 per cent.

True North currently owns and operates a portfolio of 46 properties consisting of approximately 3.9 million square feet in urban and select secondary markets across Canada.

The REIT is focused on growing its portfolio principally through acquisitions across Canada and such other jurisdictions where opportunities exist.