13M shares at 9.30 + $233.5M portfolio acquisition NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
TORONTO, Nov. 29, 2018 (GLOBE NEWSWIRE) -- Summit Industrial Income REIT (“Summit” or the “REIT”) (TSX: SMU.UN) announced today that it has entered into agreements to acquire eleven light industrial properties aggregating just under 2.1 million square feet of gross leasable area (the “Acquisition Portfolio”). Summit will pay approximately $233.5 million for the Acquisition Portfolio, well below replacement cost, financed by the assumption of approximately $38.9 million in existing mortgages with an average interest rate of 3.16%, cash from the REIT’s operating facility and the net proceeds of approximately $110 million from a bought-deal equity offering discussed below.
Purchase of Acquisition Portfolio in Montreal, the GTA and Ottawa
The properties comprising the Acquisition Portfolio are well-located in Montreal, the Greater Toronto Area and Ottawa and are approximately 98% occupied with a weighted average lease term of approximately 4.5 years and below market rents, providing the opportunity for future income growth. The purchase price will generate a going-in capitalization rate of approximately 5.5% for the Acquisition Portfolio. Closing of the acquisitions is conditional upon certain customary conditions, including Summit being satisfied with its due diligence in respect of these properties, and is expected to occur on or before the end of December 2018.
“We continue to accretively build our presence in our key target markets,” commented Paul Dykeman, Chief Executive Officer. “Additionally, our pipeline of future acquisition opportunities remains strong, and we look for further growth in the quarters ahead.”
Equity Offering
Summit also announced today that it has entered into an agreement with a syndicate of underwriters led by BMO Capital Markets (collectively, the "Underwriters") to sell, on a bought deal basis, 11,830,000 Units at a price of $9.30 per Unit for gross proceeds to Summit of approximately $110 million (the "Offering"). In addition, Summit has granted the Underwriters an over-allotment option to purchase up to an additional 1,774,500 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 Offering. The Offering is expected to close on or about December 10, 2018 and is subject to customary conditions, including approval of the Toronto Stock Exchange. The Units will be offered by way of a prospectus supplement to the REIT’s short form base shelf prospectus dated April 26, 2017 (as amended by an amendment dated November 22, 2018), which prospectus supplement is expected to be filed with the securities commissions and other similar regulatory authorities in each of the provinces and territories of Canada on or about December 3, 2018. The REIT intends to use the net proceeds from the Offering and cash from the REIT’s credit lines along with the assumed mortgages noted above, primarily for the funding of the acquisition of the Acquisition Portfolio, with the balance, if any, expected to be used for the repayment of debt, which may be subsequently redrawn and applied as needed for funding of future acquisitions, and general trust purposes. The Offering is not conditional upon the closing of the Acquisition Portfolio.
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