Summit Industrial Income REIT
TSX : SMU.UN

Summit Industrial Income REIT

May 30, 2016 16:23 ET

Summit Industrial Income REIT Announces Property Acquisition and $30 Million Equity Offering

TORONTO, ONTARIO--(Marketwired - May 30, 2016) -

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 today it will be acquiring 100% of a 309,077 square foot light industrial property in Edmonton, Alberta (the "Edmonton Property") for a purchase price of approximately $33.0 million, representing a capitalization rate of approximately 6.8%. Summit plans to finance the purchase with the assumption of a $23.5 million mortgage maturing in November 2025 bearing an interest rate of 3.85%, with the balance in cash. The Edmonton Property is 100% occupied by a single-tenant with 11 years remaining on its lease term, including contracted rent escalations resulting in 1.4% annual increases. The vendor has recently completed significant improvements to the property including a roof replacement and sprinkler system upgrade. Summit is currently undergoing customary due diligence with respect to the Edmonton Property, and anticipates completion of the acquisition on or before June 30, 2016.

"We are pleased to be adding to our presence in Edmonton," commented Paul Dykeman, Chief Executive Officer. "We believe Edmonton, Canada's fifth largest industrial market, presents a real opportunity as the Canadian energy industry begins to recover, and that now is the right time to invest in the region. Rising vacancies have resulted in reductions in rental rates while leasing and property sale activities have remained low as both tenants and investors have remained cautious. As a result, cap rates have been trending upwards, and we believe acquiring high quality properties now will generate significant returns for our Unitholders over the long term. Importantly the acquisition will generate a strong and accretive spread between the in-place cap rate and the related interest cost, further strengthening the long-term stability of our cash flow."

The REIT also announced today that it had entered into an agreement with a syndicate of underwriters led by BMO Capital Markets (collectively, the "Underwriters") to sell, on a bought deal basis, 5,000,000 units of the REIT (the "Units") at a price of $6.05 per Unit for gross proceeds to Summit of $30,250,000 (the "Offering"). In addition, Summit has granted the Underwriters an over-allotment option to purchase up to an additional 750,000 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 June 17, 2016 and is subject to customary conditions, including regulatory approval and the approval of the Toronto Stock Exchange.

The REIT intends to use the net proceeds from the Offering primarily to fund the purchase of the Edmonton Property, the repayment of existing indebtedness, the funding of future acquisitions and for general trust purposes. The Offering is not conditional upon the closing of the Edmonton Property.

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 following: the completion of the acquisition of the Edmonton Property on the terms and conditions described herein; the timing of closing of the acquisition of the Edmonton Property; the expected benefits to the REIT of the acquisition of the Edmonton Property; the completion of the Offering on the terms and conditions described herein and the use of proceeds of the Offering.

Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management as of the date hereof, are inherently subject to significant business, economic and competitive uncertainties and contingencies. When relying on forward-looking statements to make decisions, Summit cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties and should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be achieved. A number of factors could cause actual results to differ, possibly materially, from the results discussed in the forward-looking statements.

Additional information about risks and uncertainties is contained in Summit's annual information form for the year ended December 31, 2015 available on SEDAR at www.sedar.com.

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