Pure Industrial Real Estate Trust announces $358.5 million Portfolio Acquisition and Public Offering of $160.1 million of Subscription Receipts

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TORONTO, April 11, 2013 /CNW/ - Pure Industrial Real Estate Trust (TSX: AAR.UN) ("PIRET" or the "REIT") announced today that it has entered into an agreement to purchase 59 industrial properties (the "Portfolio") from Slate Acquisitions Inc. (the "Acquisition") for a total purchase price of $358.5 million (the "Purchase Price"), representing a going-in capitalization rate of approximately 6.33%. The Portfolio consists of 59 light-industrial properties totaling approximately 3.7 million square feet, which are located throughout the Greater Toronto Area ("GTA") and Southwestern Ontario. Approximately 93% of the properties by gross leasable area ("GLA") are located within the GTA: Vaughan (33%), Brampton (23%), Mississauga (21%) and other GTA locations (16%).

Highlights of the Acquisition include:

• Significant portfolio transaction that enhances PIRET's scale in the GTA, Canada's largest industrial market.
• Well located and strategically clustered portfolio, providing operating efficiencies in key GTA submarkets.
• Following the Acquisition, approximately 55% of PIRET's portfolio by GLA will be located in Ontario, primarily in the GTA (45%).
• High quality institutionally owned and managed real estate portfolio.
• Well diversified tenant base, characterized by warehousing, distribution and light manufacturing, with a weighted average remaining lease term of approximately 3.5 years.
• Purchase Price of $358.5 million represents a going-in capitalization rate of approximately 6.33% and $98 per square foot, representing a significant discount to replacement cost.
• The Acquisition is expected to be immediately accretive to PIRET's Adjusted Funds From Operations ("AFFO") per unit and within the first full year of operations is estimated to be over 3.75% accretive to PIRET's AFFO per unit.

In conjunction with the Acquisition, PIRET also announced today that it has entered into an agreement with a syndicate of underwriters co-led by Canaccord Genuity Corp., RBC Capital Markets and BMO Capital Markets (collectively, the "Underwriters"), to sell, on a bought deal basis, approximately $160.1 million of subscription receipts ("Subscription Receipts") of PIRET at a price of $5.05 per Subscription Receipt (the "Offering").

Kevan Gorrie, PIRET's President, commented, "We are extremely pleased to be adding these properties to our core portfolio, increasing our exposure to the strategic GTA market. These properties represent a significant increase in our portfolio GLA in one of our targeted markets. As a portfolio, they have historically had very high occupancy levels." Mr. Gorrie added, "The Acquisition is consistent with and further demonstrates PIRET's strategy of acquiring high quality industrial properties in Canada's strongest and most liquid industrial markets. Following the completion of the Acquisition, 91% of PIRET's portfolio will be located in the GTA, Vancouver, Edmonton and Calgary. We expect this acquisition to be immediately accretive to our AFFO per unit."

The Portfolio

The Portfolio consists of 59 light-industrial properties located throughout the GTA and Southwestern Ontario, comprising approximately 3.7 million square feet of GLA. The Portfolio is concentrated in mature, fully developed industrial parks encompassing over 207 acres of land and benefitting from proximity to the 400 series highways, Pearson International Airport, local labour forces and key infrastructure facilities. The Portfolio has a weighted average remaining lease term of 3.5 years and an average building age of only 20.7 years. Furthermore, over 64% of the properties are occupied by single tenants with the balance of the assets being multi-tenanted. The properties are predominantly used for warehousing and distribution.

The Purchase Price of $358.5 million represents a going-in capitalization rate of approximately 6.33%. Management believes that the implied price of approximately $98 per square foot represents a significant discount to replacement cost.

	No. of Properties	Area (Acres)	GLA (sq. ft.)	% of Total	Occupancy (%)*	Weighted Avg. Lease Term (yrs.)*
Vaughan Cluster	34	64.3	1,212,753	33.1%	88.0%	2.51
Brampton Cluster	8	46.4	825,705	22.5%	97.7%	3.10
Mississauga Cluster	8	46.3	784,212	21.4%	92.4%	5.09
Other GTA Properties	5	25.1	591,928	16.2%	100.0%	3.34
Southwestern Ontario Cluster	4	25.0	248,623	6.8%	100.0%	5.04
Total	59	207.1	3,663,221	100.0%	93.9%	3.50

*

Stated occupancy and weighted average lease term do not include premises leased under a head lease with the vendor (the "Vendor Head Lease") which comprises approximately 4.3% of the GLA of the Portfolio for a 12 month term. Inclusion of the Vendor Head Lease will result in an effective occupancy rate of 98.3%. In addition, the going-in cap rate of 6.33% and the estimated AFFO accretion shown above do not include any contribution to net operating income from the Vendor Head Lease.

Vaughan Cluster

The Vaughan Cluster includes a collection of 33 light-industrial properties, centrally located on the northwest quadrant of the Highway 400 and 407 intersection in an area known as the Pine Valley Business Park, with one further property located nearby in the Vaughan submarket. The Pine Valley location provides convenient access to all major transportation routes in the GTA, including Highway 407 and 400 located to the south and east, respectively. All of the properties have benefited from institutional ownership, are well-maintained and have received significant capital upgrades in the past several years including full roof replacement on 19 buildings within the past five years. Consistent with PIRET's strategy, the properties are leased to a variety of high quality national, regional and local tenants, with an average occupancy of 88.0% and a weighted average remaining lease term of 2.51 years.

Brampton Cluster

The Brampton Cluster consists of 8 light-industrial properties located in north and south Brampton, in highly sought-after industrial nodes, with proximity to major 400 series highways including the 401, 410 and the 427. The properties have excellent access to labour pools, transportation infrastructure and amenities. The properties are leased to a variety of high quality national, regional and local tenants and are 97.7% occupied, with a weighted average remaining lease term of 3.10 years.

Mississauga Cluster

The Mississauga Cluster includes 8 light-industrial properties, located in Meadowvale and the Courtney Park Business Area. The properties are generally very well located near major highways and are well maintained. The properties are leased to a variety of high quality national, regional and local tenants, with an average occupancy of 92.4% and a weighted average remaining lease term of 5.09 years.

Other GTA Properties

The Other GTA properties consist of five properties located in Burlington (2), Markham (2) and Etobicoke (1). All five assets are single-tenant properties that are 100% leased to covenant tenants. The buildings are situated in proximity to Highways 404 and 407 as well as the QEW. The properties are leased to a variety of high quality national, regional and local tenants, with a weighted average remaining lease term of 3.34 years.

Southwestern Ontario Cluster

The Southwestern Ontario cluster consists of four single-tenant buildings in the cities of London (3) and Guelph (1). All four properties feature excellent locations on major transportation routes, are 100% leased to strong covenant tenants, and have a weighted average remaining lease term of 5.04 years.

Completion of the Acquisition is conditional upon the receipt of all necessary consents and waivers from third parties relating to the Acquisition, regulatory approvals, and the satisfaction of certain other customary conditions. The Acquisition is expected to be completed on May 15, 2013.

Description of Public Offering of Subscription Receipts

In conjunction with the Acquisition, PIRET has agreed to sell 31,700,000 Subscription Receipts, on a bought deal basis, at a price of $5.05 per Subscription Receipt to a syndicate of underwriters co-led by Canaccord Genuity Corp., RBC Capital Markets and BMO Capital Markets for gross proceeds of approximately $160.1 million. In addition, PIRET has granted to the Underwriters an over-allotment option exercisable at any time up to 30 days after closing of the Offering to acquire up to an additional 4,755,000 Subscription Receipts of PIRET.

Each Subscription Receipt represents the right to receive, without payment of additional consideration, one unit of PIRET which will be issuable upon the closing of the Acquisition. The proceeds from the Offering will be used to partially fund the Acquisition and will be deposited in escrow pending satisfaction of the escrow release conditions, which include satisfying the closing conditions for the Acquisition (other than payment of the Purchase Price). If the Acquisition closes on or before July 15, 2013, the gross proceeds from the Offering will be released to the Company and used by it to pay a portion of the Purchase Price and to provide a reserve for short-term capital repairs. If the Acquisition fails to close by July 15, 2013, or the Acquisition is earlier terminated, the escrow agent will return to holders of the Subscription Receipts the gross proceeds and a pro rata share of the interest earned thereon during the escrow period.

On the completion of the Acquisition, (i) one unit of PIRET will be automatically issued in exchange for each Subscription Receipt (subject to customary anti-dilution protections), without payment of additional consideration, (ii) holders of Subscription Receipts shall be entitled to receive, without duplication, an amount per Subscription Receipt equal to the amount that would have been declared as distributions on the units issuable on the exchange of such Subscription Receipts, as if such units had been issued on the closing of the Offering in lieu of the Subscription Receipts, which amount will be payable on or about the third business day following the completion of the Acquisition, except that if a distribution has been declared but not paid, then payment of that distribution will, at PIRET's option, be made on the date that distribution is paid to Unitholders, and (iii) the net proceeds from the sale of the Subscription Receipts will be released from escrow to the REIT and will be used in partial payment of the Purchase Price under the Acquisition.

The Subscription Receipts will be offered by way of a short form prospectus to be filed on or before April 17, 2013 with the securities commissions and other similar regulatory authorities in each of the provinces of Canada, except Quebec, pursuant to National Instrument 44-101 - Short Form Prospectus Distributions.

Closing of the Offering is expected to take place on May 1, 2013 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals, including the approval of the Toronto Stock Exchange and the securities regulatory authorities.

This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities being offered have not been and will not be registered under the U.S. Securities Act of 1933 as amended and may not be offered or sold in the United States absent registration or pursuant to applicable exemption from registration.

Bridge Facility

In addition to the proceeds from the Offering, PIRET has received a commitment letter from BMO Capital Markets and RBC Capital Markets to provide first mortgage financing for the Acquisition in the amount of up to $190 million, bearing interest at the banker's acceptance rate plus 2.0% per annum (approximately 3.3% based on current market rates), for an open 12 month term. In addition, a portion of the Purchase Price will be paid by way of the assumption of existing mortgages in the amount of approximately $25 million having a weighted average interest rate of 5.54% per annum and a remaining term of 3.53 years.

PIRET expects to obtain permanent first mortgage financing for up to 50% of the properties comprising the Portfolio prior to the completion of the Acquisition, on standard mortgage terms and with third party lenders. PIRET expects that such financing will be in an amount equal to approximately 53% of the purchase prices of such properties, with terms of five to seven years and twenty-five year amortization periods and an expected weighted average interest rate of 3.5%. PIRET expects to obtain permanent first mortgage financing for the remaining properties within the Portfolio, on similar terms, within six months after the completion of the Acquisition.

Impact of the Acquisition on PIRET's Portfolio

The Acquisition will increase the scale of PIRET's property portfolio, while further diversifying its tenant base:

	Current Portfolio*	Post-Acquisition*
Number of Properties	97	156
GLA (square feet)	8,174,512	11,837,733
Gross Book Value	$885.3 million	$1,258.7 million
Occupancy (%)	97.3%	96.3%**
Weighted Average Lease Term (Yrs.)	8.9	7.2**
% of NOI from Top 10 Tenants	43.7%	31.9%**
Average Building Age	21.8 years	21.5 years
Debt / Gross Book Value	50.9%	53.3%

*	Includes all transactions completed as of March 31, 2013.
**	Does not include premises leased under the Vendor Head Lease.

Geographic Diversification (by GLA)

The Acquisition will increase PIRET's exposure to the Ontario market, resulting in the REIT's portfolio becoming more representative of the overall Canadian industrial marketplace:

	Current Portfolio*	Post-Acquisition*
Ontario:	34%	55%
British Columbia:	29%	20%
Alberta:	23%	16%
Manitoba:	8%	5%
Quebec:	3%	2%
New Brunswick:	1%	1%
Saskatchewan:	2%	1%

*	Includes all transactions completed as of March 31, 2013.

About Pure Industrial Real Estate Trust

PIRET is an unincorporated, open-ended investment trust established for the purposes of acquiring, owning and operating a diversified portfolio of income-producing industrial properties in primary markets across Canada. PIRET focuses exclusively on investing in industrial properties and is the largest internally managed publicly traded REIT in Canada that offers investors exclusive exposure to Canada's industrial asset class.

Additional information about PIRET is available at www.piret.ca or www.sedar.com.

Forward-Looking Information

This press release contains forward looking statements that reflect the current expectations of the REIT about its future results, performance, prospects and opportunities. Readers are cautioned not to place undue reliance on forward looking information. The REIT has tried to identify these forward looking statements by using words such as "may", "will", "should" "expect", "anticipate", "believe", "intend", "plan", "estimate", "potentially" and similar expressions. By its nature, such forward looking information necessarily involves known and unknown risks and uncertainties that may cause the REIT's actual results, performance, prospects and opportunities in future periods to differ materially from those expressed or implied by such forward looking statements. These risks and uncertainties include, among other things, risks related to: the anticipated closing of the Acquisition; real property ownership; tenant risks; fixed costs; liquidity; financing risks; limit on activities; availability of cash flow; availability of growth opportunities; access to capital; interest rate fluctuations; reliance on anchor tenants; competition; land leases; general uninsured losses; environmental matters; possibility of unitholder liability; tax-related risk factors; potential conflicts of interest; dilution; specific lease considerations; and nature of investment. There can be no assurance that the expectations of the REIT will prove to be correct. The REIT assumes no obligation to update or revise any such forward looking statements to reflect new events or circumstances.

Although the forward-looking statements contained in this press release are based upon what management believes are reasonable assumptions, there can be no assurance that actual results will be consistent with these forward-looking statements. Certain assumptions made in preparing forward-looking information and the REIT's objectives include the assumption that the Acquisition will be completed on the terms and basis set out herein, that the REIT will obtain permanent first mortgage financing in respect of up to 50% of the Portfolio prior to the completion of the Acquisition, that the Canadian economy will remain stable in 2013 and that inflation will remain relatively low. Management has also assumed that interest rates will remain stable in 2013, that conditions within the real estate market, including competition for acquisitions, will be consistent with the current climate and that capital markets will continue to provide the REIT with ready access to equity and/or debt.

You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While the REIT may elect to, the REIT is under no obligation and does not undertake to update this information at any particular time, except as required by law.

THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR THE ACCURACY OF THIS RELEASE.

SOURCE: Pure Industrial Real Estate Trust (PIRET)

Andrew Greig,
Director of Investor Relations

Pure Industrial Real Estate Trust 
Suite 910, 925 West Georgia Street
Vancouver, BC  V6C 3L2
Phone: [phone] or [phone]
E-mail: [email protected]
www.piret.ca