Summit Industrial Income REIT Announces Significant Increase in GTA Portfolio and Increase to Previously Announced Equity Offering to $90 Million

TORONTO, ONTARIO–(Marketwired – Dec. 5, 2017) –

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Summit Industrial Income REIT (“Summit” or the “REIT”) (TSX:SMU.UN) announced today that due to strong demand, the size of the previously announced equity offering in connection with which it entered into an agreement with a syndicate of underwriters led by BMO Capital Markets (the “Underwriters”) has been increased, on a bought deal basis, to 12,500,000 Units at a price of .20 per Unit for gross proceeds to Summit of approximately million (the “Offering”). In addition, Summit has granted the Underwriters an over-allotment option to purchase up to an additional 1,875,000 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 13, 2017 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, 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 December 6, 2017.

Summit also announced that it has waived conditions and will acquire a 100% interest in a four property portfolio (the “Four Property Portfolio”) for a purchase price of .1 million. The Four Property Portfolio is located in the Greater Toronto Area (“GTA”) close to Pearson International Airport and major transportation routes. The Four Property Portfolio comprises 358,734 square feet of gross leasable area (“GLA”) and is 92.2% occupied by a roster of eight regional, national and global tenants with a substantial lease term to maturity of approximately 6.3 years. The purchase price for the Four Property Portfolio represents a discount to replacement cost and a going-in capitalization rate of approximately 5.9% with potential upside returns from leasing up the vacancy. Closing is expected on or before December 31, 2017.

In addition, the REIT announced that it is in the process of completing due diligence to acquire a 100% interest in a ten-property portfolio (the “Ten Property Portfolio”, and together with the Four Property Portfolio, the “Acquisition Portfolio”) for an expected purchase price of .0 million. The Ten Property Portfolio is primarily located in the GTA, and is comprised of nine single tenant properties and one multi-tenant property. Eight properties comprising 553,556 square feet of GLA are located next to major transportation routes in the GTA. Two properties comprising 184,880 square feet of GLA are located in Ottawa and Montreal. The Ten Property Portfolio comprises 738,436 square feet of GLA and is 100% occupied, with a weighted average lease term of approximately 4.0 years with an average rental rate of .25 per square foot. The expected purchase price for the Ten Property Portfolio represents a going-in capitalization rate of approximately 5.4% and a discount to replacement cost. Due diligence is expected to be completed in the near term with closing expected on or before December 31, 2017.

The Acquisition Portfolio is being acquired free and clear of mortgage financing. In addition to using the net proceeds from the Offering to fund the purchase price and transaction costs associated with the Acquisition Portfolio, Summit has entered into a commitment letter for debt financing arranged by BMO Capital Markets (the “Debt Financing”). This additional financing will give Summit access to up to .0 million, a portion of which will be used to fund the purchase price of the Acquisition Portfolio, and the remainder of which is expected to be used to reduce outstanding indebtedness owing under Summit’s operating line. The Debt Financing will be secured by the Acquisition Portfolio and is subject to customary closing conditions and documentation requirements for loans of this type. The Debt Financing is expected to be re-financed with long-term mortgages on the Acquisition Portfolio in 2018.

With the completion of these transactions, Summit’s total portfolio will grow to 83 properties aggregating 8.8 million square feet of GLA. Consistent with our strategy, the REIT’s portfolio allocation in Ontario is 70% with approximately 60% in our primary target market of the GTA.

“We are pleased to announce the acquisition of these quality properties and the significant increase we will see in our GTA portfolio,” commented Paul Dykeman. “Average rents in these properties are well below market, and we expect to generate solid organic growth over time as we renew tenant leases and lease-up vacant space.”

The REIT intends to use the net proceeds from the Offering and the Debt Financing primarily to fund the purchase price of the Acquisition Portfolio, with the balance expected to be used to reduce outstanding indebtedness, which may be subsequently redrawn and applied as needed for funding of future acquisitions, and general trust purposes. The Offering is not conditional upon 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.

About Summit

Summit Industrial Income REIT is an unincorporated open-end trust focused on growing and managing a portfolio of light industrial properties across Canada. Summit’s units are listed on the TSX and trade under the symbol SMU.UN. For more information, please visit our web site at www.summitIIreit.com.

Caution Regarding Forward Looking Information

This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words “expect”, “anticipate”, “continue”, “estimate”, “objective”, “ongoing”, “may”, “will”, “project”, “should”, “believe”, “plans”, “intends”, “goal” and similar expressions are intended to identify forward-looking information or statements. Forward-looking information may relate to future results, performance, achievements, events, prospects or opportunities for the REIT or the real estate industry, outlook and anticipated events or results. Some of the specific forward-looking statements contained herein include statements with respect to the following: the intention of the REIT to acquire the Acquisition Portfolio on the terms and conditions described herein; the intention of the REIT to secure the Debt Financing on the terms and conditions described herein; the use of the Debt Financing; the refinancing of the Debt Financing; the intention of the REIT to complete the Offering on the terms and conditions described herein; the date on which the closing of the Offering is expected to occur; the timing for the filing of the prospectus supplement; and the use of the proceeds of the Offering.

Forward-looking statements necessarily involve known and unknown risks and uncertainties, which may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, assumptions may not be correct and objectives, strategic goals and priorities may not be achieved. A variety of factors, many of which are beyond the REIT’s control, affect the operations, performance and results of the REIT and its business, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to, the risks discussed in the REIT’s materials filed with Canadian securities regulatory authorities from time to time on www.sedar.com. Readers are cautioned to consider these and other factors, uncertainties and potential events carefully as there can be no assurance actual results will be consistent with such forward-looking statements.

Information contained in forward-looking statements is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including the following: due diligence in connection with the Ten Property Portfolio will be completed to the satisfaction of the REIT and TSX approval in connection with the Offering will be received on a timely basis. While management considers these assumptions to be reasonable based on currently available information, they may prove to be incorrect.

Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof, and to not use such forward looking information for anything other than its intended purpose. Summit undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.