Vancouver, BC – July 25, 2017: Pure Industrial Real Estate Trust (TSX: AAR.UN) (“PIRET” or the “Trust”) announced today that it has entered into agreements to acquire a total of $365 million of income producing properties located within primary Canadian markets (the “Acquisitions”). The Acquisitions represent three separate transactions, comprising eight distribution and logistics facilities, as follows: four assets located in the Greater Toronto Area (“GTA”), two assets located in Montreal and two assets located in Edmonton, representing an aggregate of approximately 1.9 million square feet of gross leasable area (“GLA”). The properties, upon closing, will be 100% occupied and leased to high quality multinational tenants under long-term lease agreements.
Concurrently with the announcement of the Acquisitions, the Trust also announced that it has entered into an agreement to sell to a syndicate of underwriters led by BMO Capital Markets and RBC Capital Markets on a bought deal basis of 31,250,000 trust units (“Units”) at a price of $6.40 per Unit for gross proceeds to the Trust of approximately $200 million (the “Financing”).
The Trust intends to use the net proceeds from the Financing to fund a portion of the purchase price of the Acquisitions. The balance of the purchase price is intended to be paid using cash on hand and the Trust’s unsecured operating line. The Trust may subsequently place new mortgage financing on certain of the properties following closing.
TRANSACTION HIGHLIGHTS
The Trust has entered into three conditional/unconditional agreements in respect of the Acquisitions, which comprise eight assets and approximately 1.9 million square feet of GLA situated on 181 acres of land. The Trust is completing the Acquisitions for a total purchase price of $365 million and a weighted average going-in cap rate of 5.2%.
- Primary Market Locations: The assets are all well located within Canada’s primary industrial markets and are situated in premier locations within their respective markets. The Acquisitions represent a geographic weighting by net operating income (“NOI”) of Mississauga/Brampton/Vaughan 72%, Montreal 10%, Edmonton 18%, and increase the Trust’s exposure to the Ontario market to approximately 35% of total NOI.
- Long-Term Leases to Multinational Tenants: The assets, upon closing, will be 100% leased to high-quality multinational tenants. Together, the assets have a total remaining weighted average lease term (“WALT”) of 9.8 years and increase the Trust’s overall portfolio WALT to approximately 6.7 years and overall occupancy to approximately 97.0%.
- Expansion Potential: The Acquisitions are situated on a total of 181 acres of land with future expansion potential or development opportunity at two of the assets. The Trust has a successful track record of identifying and executing on expansion projects within its portfolio and the Acquisitions further enhance this highly accretive internal growth pipeline.
- Immediately Accretive Transaction: The Acquisitions are expected to be immediately accretive to the Trust’s Adjusted Funds from Operations per Unit (“AFFOPU”) on a leverage neutral basis.
- Maintains Strong Liquidity and Leverage Profile: Pro forma the Acquisitions and Financing, the Trust will have an estimated liquidity of approximately $170 million and pro forma leverage of approximately 40% debt-to-gross book value.
The Trust has contracted with independent third parties in respect of each of the Acquisitions and such acquisitions are not conditional upon the completion of any other acquisition under contract. The Trust anticipates closing of the Acquisitions to occur between late August and September, with further details to be made available upon each closing thereof.
Kevan Gorrie, President and Chief Executive Officer, commented, “With over 70% of NOI from these acquisitions located in the GTA, I am pleased to be increasing our scale even further in one of North America’s largest and most important industrial markets. All of the acquisitions announced today involve quality assets that will add stability and growth potential to our industry-leading portfolio.”
IMPACT OF THE ACQUISITIONS
Following the Acquisitions, as well as the transactions announced by the Trust on June 15 and July 12, 2017, the Trust has now announced year-to-date $647.8 million in acquisitions as well as $148.6 million of dispositions (collectively, the “Q2 transactions”). Pro forma the Q2 transactions, the Trust’s portfolio will comprise 176 income producing properties with approximately 24.6 million square feet of GLA under management and overall occupancy of approximately 97.0%. Further, on a pro-forma basis, the Trust will have a WALT of approximately 6.7 years, an increase from 6.1 years, as at the end of Q1 2017.
(1) Excludes properties classified as assets held for sale as at March 31, 2017
(2) Pro Forma Transactions include the following: (i) subsequent events as disclosed in the Trust’s Q1 2017 Interim Financial Statements and Management Discussion and Analysis dated May 9, 2017, (ii) the Richmond Acquisition and Dallas Acquisition as described in the Trust’s news release dated June 15, 2017; (iii) the Scarborough (GTA) Acquisition and the new lease agreement at the Richmond Development as described in the Trust’s news release dated July 12, 2017; and the Acquisitions.
In addition, the Trust’s exposure to FedEx is estimated to decrease from 25.6% as at the end of Q1 2017 to approximately 20.7% as a percentage of total revenue.
THE FINANCING
Concurrently with the announcement of these transactions, the Trust has entered into an agreement to sell to a syndicate of underwriters led by BMO Capital Markets and RBC Capital Markets (collectively the “Underwriters”) on a bought deal basis 31,250,000 Units at a price of CDN$6.40 per Unit for gross proceeds to the Trust of approximately $200 million. The Trust has granted the Underwriters an overallotment option to purchase up to an additional 4,687,500 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 Financing. The Financing is expected to close on or about August 3, 2017 and is subject to customary conditions and regulatory approval.
The Financing is being made pursuant to the Trust’s base shelf prospectus dated August 10, 2016. The terms of the Financing will be described in a prospectus supplement to be filed with Canadian securities regulators. 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 PURE INDUSTRIAL REAL ESTATE TRUST
Pure Industrial Real Estate 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.
For more information please contact:
Sylvia Slaughter,
Director, Investor Relations
(416) 479-8590 ext 267
Pure Industrial Real Estate Trust
Suite 910, 925 West Georgia Street
Vancouver, BC V6C 3L2
Phone: (888) 681-5959