Summit Industrial Income REIT
TSX : SMU.UN

Summit Industrial Income REIT

December 15, 2014 16:31 ET

Summit Industrial Income REIT Announces Acquisition of Light Industrial Properties and $30.0 Million Equity Offering

TORONTO, ONTARIO--(Marketwired - Dec. 15, 2014) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Summit Industrial Income REIT ("Summit" or the "REIT") (TSX:SMU.UN) announced recently that it has waived certain conditions and will be acquiring interests in six light industrial properties in Montreal through a new joint venture aggregating approximately 326,409 square feet of gross leaseable area ("GLA") for total acquisition costs of approximately $39.4 million (the "Montreal Acquisition"). In conjunction with the acquisition announced recently of a single-tenant property located in Mississauga, Summit will be acquiring seven light industrial properties comprising approximately 546,400 square feet of GLA for a total purchase price of approximately $61.6 million.

Highlights

  • Summit continues to execute its strategic growth initiatives by acquiring accretive, high quality properties in strong industrial markets.
  • The acquisitions described in this press release enhance Summit's overall portfolio quality through improved average age and lease term.
  • New joint venture provides an active pipeline to further grow and strengthen the REIT's portfolio in the Greater Montreal Area.
  • The acquisitions described in this press release are expected to be immediately accretive to the REIT's Adjusted Funds from Operations per Unit.
  • With the completion of the Offering (defined below) the REIT will have increased flexibility and buying capacity to act on additional acquisitions currently being evaluated.

Acquisitions

The REIT has entered into a joint venture with Montreal's Groupe Montoni and will be purchasing six light industrial properties in Montreal aggregating 326,409 square feet of GLA. The REIT will acquire a 50% interest in the portfolio for approximately $39.4 million satisfied by the assumption of approximately $22.9 million in existing mortgages with a weighted average remaining term of 4.8-years bearing an average interest rate of 3.47% with the balance from the proceeds of the Offering, generating a going-in capitalization rate of approximately 6.63%. The properties are 100% occupied with a weighted average remaining lease term of 13.1 years and contractual growth in rents that produce an average annual increase in rents of 2.1%. Founded in 1995, Groupe Montoni is a well-respected developer and owner of primarily LEED-certified commercial and industrial properties currently owning approximately 1.1 million square feet of industrial GLA and 650,000 square feet of office space with another 1.4 million square feet of industrial GLA under development. In addition to the Montreal Acquisition, the REIT announced recently that it has waived conditions and will be acquiring a 220,000 single-tenant property in Mississauga for approximately $22.2 million, which is expected to close prior to the closing of the Offering and will be satisfied with cash from the REIT's existing credit facility (the "Mississauga Acquisition"). Furthermore, the REIT is currently undergoing customary due diligence with respect to approximately $25 million of light industrial properties that it has under contract, which properties are located in the Greater Toronto Area. "We are very pleased to be establishing this new relationship with Groupe Montoni and the opportunity to further grow our Greater Montreal Area property portfolio with them," commented Paul Dykeman, Summit's Chief Executive Officer. "With the completion of these acquisitions in Montreal, and the previously announced purchase of a property in Mississauga, we will significantly expand and strengthen Summit's portfolio in our key industrial markets, while the successful completion of the equity offering will provide us with enhanced flexibility and increased buying capacity to continue our track record of accretive growth."

Equity Offering

Summit also announced today that it has entered into an agreement with a syndicate of underwriters led by BMO Capital Markets (collectively, the "Underwriters"), to sell on a bought deal basis, 5,130,000 Units at a price of $5.85 per Unit for gross proceeds to Summit of $30,010,500 (the "Offering"). In addition, Summit has granted the Underwriters an over-allotment option to purchase up to an additional 769,500 Units on the same terms and conditions, exercisable at any time, in whole or in part, up to 30 days after the closing of the Offering. The Offering is expected to close on or about January 7, 2015 and is subject to customary conditions, including regulatory approval and the approval of the Toronto Stock Exchange. The Offering is not conditional upon closing of the Montreal Acquisition. The REIT intends to use the net proceeds from the Offering primarily for the funding of a portion of the purchase price in respect of the Montreal Acquisition, for the repayment of debt (including in connection with the Mississauga Acquisition), for the funding of future acquisitions and for general trust purposes. In the event the REIT is unable to consummate the Montreal Acquisition, and the Offering is completed, the REIT would use the net proceeds of the Offering for the repayment of debt and/or to fund future acquisitions and for general trust purposes.

The Units will be offered by way of a short form prospectus to be filed with the securities commissions and other similar regulatory authorities in each of the provinces and territories of Canada.

The Units have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, (the "1933 Act") and may not be offered, sold or delivered, directly or indirectly, in the United States, or to, or for the account or benefit of, "U.S. persons" (as defined in Regulation S under the 1933 Act), except pursuant to an exemption from the registration requirements of the 1933 Act. This press release does not constitute an offer to sell or a solicitation of an offer to buy any Units in the United States or to, or for the account or benefit of, U.S. persons.

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. Summit's units are listed on the TSX and trade under the symbol SMU.UN. For more information, please visit our web site at www.summitIIreit.com.

Caution Regarding Forward Looking Information

This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends", "goal" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this news release contains forward looking statements and information concerning the goal to build Summit's property portfolio. The forward-looking statements and information are based on certain key expectations and assumptions made by Summit, including general economic conditions. Although Summit believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Summit can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed. These risks and uncertainties include, but are not limited to, tenant risks, current economic environment, environmental matters, general insured and uninsured risks and Summit being unable to obtain any required financing and approvals. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof, and to not use such forward looking information for anything other than its intended purpose. Summit undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

Contact Information