Pure Industrial Real Estate Trust (TSX: AAR.UN) (the “Trust”) announced today the following strategic initiatives:
- $32.6 million unconditional agreement to acquire a core asset in Richmond, British Columbia;
- $55.7 million (US$42.0 million) acquisition of a core asset in Dallas, Texas;
- $39.1 million (US$29.5 million) acquisition of the Trust’s existing joint venture partner’s interest in three assets in North Carolina; and
- $33.9 million in dispositions of three assets in British Columbia and Alberta.
The Trust announced today that it has entered into an unconditional agreement to acquire a 268,000 square foot (“sf”) distribution centre located in Richmond, British Columbia (the “Richmond Acquisition”) for a purchase price of $32.6 million, representing a going-in capitalization rate of 5.9% (inclusive of rental payments related to a 49-year ground lease with the Vancouver Port Authority) and a price per sf of $122. The Richmond Acquisition is expected to close late Q2 or early Q3 2017 and will be financed with existing cash on hand.
Key highlights of the Richmond Acquisition include:
- Investment in a recently constructed Class A distribution centre in one of the Trust’s target markets featuring direct rail access and a large storage yard;
- 100% leased to a leading overseas freight forwarding company on a 20-year lease;
- Increased presence in the Richmond market. This core asset complements the Trust’s existing assets in Richmond, one of the top distribution nodes in Vancouver; and
- Applying proceeds from the bought deal equity financing that closed on April 5, 2017, the acquisition will be immediately accretive to the Trust’s adjusted funds from operations per unit or “AFFOPU”.
The Trust announced today that it has completed the acquisition of Dalport Trade Center, a 758,922 sf distribution centre located in the Dallas suburb of Wilmer, Texas (the “Dallas Acquisition”) for a purchase price of $55.7 million (US$42.0 million), representing a going-in capitalization rate of 5.9% and a price per sf of $73 (US$55). The Dallas Acquisition was financed with existing cash on hand.
Key highlights of the Dallas Acquisition include:
- Investment in a modern Class A distribution centre in one of the Trust’s target markets;
- The asset was built in 2008 to modern specifications including a 32-foot clear height and is 100% leased to three distribution tenants with a weighted average lease term of 4.4 years;
- Dalport Trade Center is one of the only demised buildings in Dallas’ I-45 South market, offering flexibility to tenants looking for space of 300,000 sf or less;
- Increased presence in the Texas market. This acquisition complements the Trust’s existing Texas portfolio, which includes assets in Houston, San Antonio and Austin; and
- Applying proceeds from the bought deal equity financing that closed on April 5, 2017, the acquisition was immediately accretive to the Trust’s AFFOPU.
ACQUISITION OF REMAINING JOINT VENTURE INTEREST IN NORTH CAROLINA
The Trust announced today that on June 13, 2017, it acquired the remaining 49% interest in three buildings located in North Carolina (the “North Carolina Acquisition”) from the Trust’s existing joint venture partner for a gross purchase price of approximately $39.1 million (US$29.5 million). The Trust financed the acquisition with cash on hand and through the assumption of the joint venture partner’s interest in the related mortgage of approximately $18.9 million (US$14.3 million). As a result of this transaction, the Trust owns a 100% interest in each of the assets and expects funds from operations, or “FFO”, to increase by approximately $1.3 million (US$1.0 million) per annum.
The Trust today announced that it has sold two assets in Calgary, Alberta and one asset in Surrey, British Columbia. The properties total 271,800 sf of gross leasable area (“GLA”), have a weighted average age of 28 years, and were sold for an aggregate sale price of $33.9 million, representing a weighted average implied capitalization rate of 4.6%. The properties were originally acquired for an aggregate purchase price of $22.7 million.
|Property Address||Market||Age (years)||GLA(sf)||Disposition Price ($000s)||Original Purchase Price
|Implied Cap Rate|
|1390 17thAvenue SE||Calgary, AB||54||44,429||3,393||2,264||6.2%|
|1401 17thAvenue SE||Calgary, AB||54||39,382||3,007||2,006||6.2%|
|9255 194thStreet||Surrey, BC||22||187,989||27,525||18,380||4.3%|
The sale of the two Calgary properties closed on June 2, 2017 and the sale of the Surrey property closed on May 18, 2017. All three properties were classified as assets held for sale since December 31, 2016.
As of today’s date, the Trust’s assets held for sale consists of six assets with a book value of $34.9 million and related mortgages outstanding of $8.3 million.
IMPACT OF THE TRANSACTIONS
Following the acquisitions and dispositions described herein, the Trust expects the following changes to the portfolio’s market segments based on adjusted net operating income:
|Income Producing Properties
|Income Producing Properties Post Transactions|
* Pre Transactions pro-forma includes subsequent events as disclosed in the Trust’s unaudited Q1 2017 financial statements and management’s discussion and analysis dated May 9, 2017 (available on SEDAR at www.sedar.com). Pro-forma information excludes properties classified as assets held for sale as at March 31, 2017.
Following these transactions, the Trust will have completed year-to-date acquisitions of $247.1 million and year-to-date asset dispositions of $97.9 million. The Trust has also completed $47.3 million of partial interest asset sales with regard to five properties to an existing joint venture partner as previously announced. Pro-forma these announced transactions, the Trust will have estimated liquidity of approximately $250 million comprised of cash and available lines.
Kevan Gorrie, President and Chief Executive Officer, commented, “Today’s announcements reflect significant further progress on our acquisition and capital recycling strategies. We have now completed over $240 million in new core investments in our target markets. At the same time, we have sold almost $100 million of older, non-core assets on a substantially accretive basis.
“We remain focused on building an industry-leading portfolio of modern distribution properties in key distribution markets in Canada and the U.S. To that end, our liquidity and acquisition pipeline remain strong and we expect to announce further strategic transactions in the second half of 2017.”
ABOUT PURE INDUSTRIAL REAL ESTATE TRUST
The Trust is an unincorporated, open-ended investment trust that owns and operates a diversified portfolio of income-producing industrial properties in leading markets across Canada and key distribution and logistics markets in the United States. The Trust is an internally managed REIT and is one of the largest publicly-traded REITs in Canada that offers investors exposure to industrial real estate assets in Canada and the United States.
Additional information about the Trust is available at www.piret.ca or www.sedar.com.
Toronto Stock Exchange – AAR.UN
The Trust prepares and releases unaudited quarterly and audited consolidated annual financial statements prepared in accordance with IFRS (GAAP). The Trust may disclose and discuss certain non-GAAP financial measures, including AFFO, adjusted net operating income, AFFOPU and capitalization rate. The non-GAAP measures are further defined and discussed in the MD&A dated May 9, 2017, available on SEDAR at www.sedar.com, which should be read in conjunction with this release. Since AFFO, adjusted net operating income and capitalization rate are not determined by IFRS, such measures may not be comparable to similar measures reported by other issuers. The Trust has presented such non-GAAP measures as management believes these measures are a relevant measure of the ability of the Trust to earn and distribute cash returns to Unitholders and to evaluate the Trust’s performance. These non-GAAP measures should not be construed as alternatives to net income (loss) or cash flow from operating activities determined in accordance with GAAP as an indicator of the Trust’s performance. Please refer to “Additional IFRS Measures and Non-IFRS Measures” in the Trust’s MD&A.
Certain statements contained in this news release may constitute forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “anticipate”, “plan”, “expect”, “may”, “will”, “intend”, “should”, and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Forward looking statements in this news release include the following: (i) the Richmond Acquisition is expected to close late Q2 or early Q3 2017 and will be financed with existing cash on hand;; (ii) as a result of the North Carolina Acquisition, the Trust expects funds from operations, or “FFO”, to increase by approximately $1.3 million (US$1.0 million) per annum; (iii) the expected changes in the Trust’s portfolio market segments based on adjusted net operating income; and (iv) pro-forma the announced transactions the Trust estimates it will have estimated liquidity of approximately $250 million comprised of cash and available lines.
Although the Trust believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Trust can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, competitive factors in the industries in which the Trust operates, prevailing economic conditions, and other factors, many of which are beyond the control of the Trust.
The forward-looking statements contained in this news release represent the Trust’s expectations as of the date hereof, and are subject to change after such date. The Trust disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.
THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR THE ACCURACY OF THIS RELEASE.
Source: Pure Industrial REIT