VANCOUVER, BRITISH COLUMBIA–(Marketwired – July 25, 2017) –
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
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.
| Q1 2017(1) | Pro Forma Following Q2 transactions(1) |
Change | |
| Income Producing Properties | 162 | 176 | +14 |
| GLA (in 000’s) | 20,226 | 24,622 | +21.7% |
| Occupancy, end of period | 96.3% | 97.0% | +70 bps |
| WALT | 6.1 | 6.7 | +0.6 years |
| (1) | Excludes properties classified as assets held for sale as at March 31, 2017 |
| Adj. NOI | Income Producing Properties Q1 2017 | Income Producing Properties Pro Forma(2) |
| Ontario | 33% | 35% |
| Alberta | 25% | 21% |
| USA | 23% | 25% |
| British Columbia | 13% | 13% |
| Other | 6% | 6% |
| (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.
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 AFFO, adjusted net operating income, AFFOPU, capitalization rate, and weighted average lease term (“WALT”). The non-GAAP measures are further defined and discussed in the Trust’s Management’s Discussion and Analysis (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, AFFOPU, capitalization rate and WALT 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.
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 Trust intends to use the net proceeds from the Financing to fund a portion of the purchase price of the Acquisitions; (ii) the balance of the purchase price is intended to be paid using cash on hand and the Trust’s unsecured operating; (iii) the Trust may subsequently place new mortgage financing on certain of the properties following closing; (iv) the Acquisitions are expected to be immediately accretive to the Trust’s AFFOPU on a leverage neutral basis; (v) 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; (vi) 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; and (vii) the Financing is expected to close on or about August 3, 2017 and is subject to customary conditions and regulatory approval.”
The forward-looking statements contained in this news release are based on certain key expectations and assumptions made by the Trust, including: expectations and assumptions concerning receipt of required regulatory approvals and the satisfaction of other conditions to the completion of and use of proceeds from the Financing.
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, the failure to obtain necessary regulatory approvals or satisfy the conditions to closing the Financing, 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 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.
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
