Pure Industrial Real Estate Trust Announces Core Acquisitions and Non-Core Dispositions
VANCOUVER, Dec. 18, 2017 /CNW/ - Pure Industrial Real Estate Trust (TSX: AAR.UN) (the "Trust") announced today the following transactions:
- $32.0 million (US$25.0 million) acquisition of a core asset in Fort Worth, Texas;
- $61.4 million (US$48.0 million) agreement to acquire a core asset in Fort Worth, Texas;
- $46.7 million (US$36.5 million) acquisition of a core asset in McDonough, Georgia;
- $32.5 million agreement to acquire a core asset in Montreal, Quebec;
- $14.9 million disposition of a non-core asset in Etobicoke, Ontario;
- $5.9 million disposition of a non-core asset in Vaughan, Ontario; and
- $1.9 million disposition of a non-core asset in Winnipeg, Manitoba.
FORT WORTH I ACQUISITION
The Trust announced today that it has completed the acquisition of a newly-constructed, 301,500 square foot ("SF"), 32' clear height distribution centre in Fort Worth, TX (the "Fort Worth I Acquisition"), for a purchase price of approximately $32.0 million (US$25.0 million), representing a stabilized capitalization rate of approximately 5.2%.
The asset is located in the well-established East Fort Worth industrial node that is within close proximity to DFW airport and major highways. The asset is currently 86% leased two investment-grade tenants with a weighted average lease term of 8.1 years. The remaining 41,324 SF is currently being marketed for lease. An earn-out structure exists with the Seller to lease the vacant space to a prospective tenant over a set time period, which could result in a stabilized capitalization rate of 5.1%.
The Fort Worth I Acquisition was funded with existing cash on hand and proceeds from the Trust's unsecured line of credit.
FORT WORTH II ACQUISITION
The Trust announced today that it has reached an agreement to acquire a brand new, state-of-the-art, 657,043 SF, 36' clear height distribution centre in Fort Worth, TX (the "Fort Worth II Acquisition"), for a purchase price of approximately $61.4 million (US$48.0 million), representing a stabilized capitalization rate of approximately 5.2%.
The asset is located in the prominent North Fort Worth industrial submarket with exceptional access to regional transportation networks. The asset is currently 75% leased to a large national apparel company on a 10.5-year lease term. The remaining vacant space is being actively marketed, and should a lease deal be completed by closing (subject to the Trust's approval), a promote structure exists whereby the stabilized capitalization rate will be 4.8%.
The Fort Worth II Acquisition is expected to be funded with existing cash on hand and proceeds from the Trust's unsecured line of credit and will close on August 30, 2018.
KING MILL II ACQUISITION
The Trust announced today that it has completed the acquisition of 150 Distribution Drive, a brand new, state-of-the-art, 760,256 SF, 36' clear height distribution centre in McDonough, Georgia (the "King Mill II Acquisition") for a purchase price of $46.7 million (US$36.5 million), or US$48 per SF. This newly-constructed asset is being acquired vacant, and is currently being marketed for lease. The Trust forecasts a stabilized yield on cost of approximately 6.0% once leased.
The asset is located in Henry County, Atlanta's strongest submarket and located only 200 miles from the Port of Savannah. The asset is in close proximity to the Trust's 201 Greenwood Court property which was acquired in February 2017.
The King Mill II Acquisition was funded with existing cash on hand and proceeds from the Trust's unsecured line of credit.
MONTREAL ACQUISITION
The Trust announced today that it has reached an agreement to acquire 2200 Rue de l'Aviation in Montreal, Quebec (the "Montreal Acquisition") a 287,338 SF, 32' clear height distribution centre for a purchase price of $32.5 million, representing a stabilized capitalization rate of approximately 6.8% (inclusive of rental payments related to a long-term ground lease with the Aéroports de Montréal).
Constructed in 2015 by Broccolini as a design-build, the asset is located adjacent to the P.E. Trudeau International Airport, and is 100% leased to Cardinal Health Canada Inc. with a 10-year remaining lease term. Cardinal Health Canada Inc. is part of a global healthcare services and products company specializing in the distribution of pharmaceuticals and medical products around the world. This location services multiple health care facilities across the province of Quebec with medical supplies.
The Montreal Acquisition will be funded with the assumption of a $22.8 million mortgage bearing an interest rate of 3.48% and remaining term of approximately 7 years and existing cash on hand and is expected to close in January 2018, subject to customary closing conditions.
SUMMARY OF ACQUISITIONS
| Property |
Location |
GLA |
Site |
Site |
Year |
Clear |
Price |
Price |
PSF |
Stabilized |
| Fort Worth I |
Fort Worth, TX |
301,500 |
16.7 |
41% |
2016 |
32' |
$32.00 |
$25.00 |
$106/$83 |
5.20% |
| Fort Worth II |
Fort Worth, TX |
657,043 |
34.5 |
44% |
2017 |
36' |
$61.40 |
$48.00 |
$94/$73 |
5.20% |
| King Mill II |
McDonough, GA |
760,256 |
57 |
31% |
2017 |
36' |
$46.70 |
$36.50 |
$61/$48 |
5.75 - 6.25% |
| Montreal |
Montreal, QC |
287,338 |
17.5 |
38% |
2015 |
32' |
$32.50 |
$25.40 |
$113/$88 |
6.80% |
| TOTAL |
2,006,137 |
125.8 |
37% |
$172.70 |
$134.90 |
$86/$67 |
5.6 - 5.8% |
NON-CORE DISPOSITIONS
The Trust today announced that it has completed the sale of 75-77 Fima Crescent, a 212,110 SF multi-tenanted asset located in Etobicoke, ON. The asset was 53 years old at the time of sale and features covered shipping, a clear height of 21' and a site coverage ratio of approximately 60%.
The property was originally acquired in May 2013 as part of a larger portfolio transaction and a purchase price of $12.9 million was attributed to the asset at that time. The asset was sold for $14.9 million, or approximately $1.9 million per acre. The asset was unencumbered at time of sale and was not classified as an Asset Held For Sale.
The Trust also announced the disposition of 10 Whitmore Road, a 33,479 SF single-tenant asset located in Vaughan, Ontario. The asset was 28 years old at the time of sale and features a clear height of 20'.
The property was originally acquired in May 2013 as part of a larger portfolio transaction and a purchase price of $3.2 million was attributed to the asset at that time. The asset was sold for $5.9 million with a capitalization rate of approximately 3.6%. A $1.7 million mortgage was discharged at time of sale and the asset was not classified as an Asset Held For Sale.
The Trust also announced the disposition of 90 Park Lane, a 20,185 SF single-tenant asset located in Winnipeg, Manitoba. The asset was originally acquired for $1.1 million and sold for $1.9 million. The asset was originally constructed in 1979 and had a clear height of 30'. The Trust was able to relocate the existing tenant from this asset to another Trust-owned asset. The tenant expanded its GLA by over 80% and signed a new long-term lease, thus reducing overall vacancy and increasing the Trust's weighted average lease term in Winnipeg. The timing of the sale of this asset was tied to the relocation, thus removing any downtime to the Trust. The asset was unencumbered at time of sale and was not classified as an Asset Held For Sale.
Kevan Gorrie, President and Chief Executive Officer, commented, "We are excited to add assets with industry-leading physical characteristics in exceptionally strong locations. Once leased, these assets will be accretive to our portfolio and further strengthen our position in our target markets."
IMPACT OF THE TRANSACTIONS
Following the acquisitions and the disposition described herein, the Trust expects the following changes to the Trust's geographic exposure as a percentage of total revenue:
| PRE-TRANSACTIONS |
POST TRANSACTIONS |
||||
| REGION |
# OF ASSETS |
% PORTFOLIO |
#OF ASSETS |
% PORTFOLIO |
|
| BC |
12 |
13% |
12 |
13% |
|
| AB |
41 |
19% |
41 |
18% |
|
| ON |
80 |
38% |
78 |
38% |
|
| USA |
23 |
24% |
26 |
26% |
|
| OTHER |
18 |
6% |
18 |
7% |
|
| 174 |
100% |
175 |
100% |
||
"Pre-Transactions" figures represent the Trust's portfolio as at Q3 2017 including the Richmond Development as outlined in the news release dated July 12, 2017, and excludes assets held for sale.
Following these transactions, the Trust will have completed or announced year-to-date acquisitions of approximately $850 million and year-to-date asset dispositions of approximately $176 million. Pro-forma these transactions, the Trust will have estimated liquidity of approximately $100 million comprised of cash and available lines.
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
Non-GAAP Measures:
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 capitalization rate. The non-GAAP measures are further defined and discussed in the MD&A dated November 8, 2017, available on SEDAR at www.sedar.com, which should be read in conjunction with this release. Since capitalization rate is not determined by IFRS, such measure may not be comparable to similar measures reported by other issuers. The Trust has presented such non-GAAP measure as management believes this measure is a relevant measure to evaluate the Trust's performance. The non-GAAP measure 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.
Forward-Looking Information:
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 Fort Worth II Acquisition is expected to be funded with existing cash on hand and proceeds from the Trust's unsecured line of credit and will close on August 30, 2018; ii) The Montreal Acquisition will be funded with the assumption of a $22.8 million mortgage bearing an interest rate of 3.48% and remaining term of approximately 7 years and existing cash on hand and is expected to close in January 2018, and iii) pro-forma the announced transactions, the Trust will have estimated liquidity of approximately $100 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 Real Estate Trust (PIRET)
Sylvia Slaughter, Director, Investor Relations, (416) 479-8590 Ext 267, E-mail: [email protected]; Pure Industrial Real Estate Trust, Suite 910, 925 West Georgia Street, Vancouver, BC V6C 3L2, Phone: (888) 681-5959, www.piret.ca
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