Summit Industrial Income REIT completes USD171.4m in property acquisitions
Summit Industrial Income REIT has completed the acquisition of 15 light industrial properties located in the Greater Toronto Area (GTA'); Moncton, New Brunswick; and Edmonton, Alberta.
Summit II paid approximately USD171.4m for the properties, through a mix of new and existing mortgages with the balance in cash from its recently completed equity offering.
The new properties will add approximately 2.0 m square feet of gross leasable area (GLA) to Summit II's existing portfolio.
New financings totalling USD107.5m have been arranged, including new mortgage financings of USD90.5m consisting of approximately USD23.5m with a five-year term, an assumed mortgage of USD13.0m with four years of term remaining, and USD54.0m with seven-year terms, resulting in an overall weighted average term to maturity of 6.1 years for the new mortgages. The new mortgages bear an attractive weighted average interest rate of 3.69 per cent. Additionally, Summit II did not use the USD68.0m interim backstop debt originally approved to complete the acquisitions, but instead generated significant transaction savings by finalising all necessary mortgage debt prior to closing the property purchases.
In addition, Summit II has increased its revolving line of credit to USD55.0m from USD38.0m, providing management with increased financial resources and flexibility to capitalise on future growth opportunities.
With the completion of these acquisitions, Summit II's property portfolio will consist of 25 light industrial properties aggregating 2.7 m square feet of GLA well-located in key urban markets in British Columbia, Saskatchewan, Alberta, Ontario and New Brunswick with a total asset value of approximately USD260.0m. The portfolio is well balanced in terms of lease maturities with an improved geographic exposure and diversification between single and multi-tenant properties. In addition, the portfolio's tenant base is considerably strengthened with a diverse group of national and regional tenants and no single tenant generating more than 12 per cent of total base rental income. Importantly, there are no mortgage maturities before 2017, and Summit II's leverage ratio stands at a conservative 54.5 per cent.
"With the completion of these key acquisitions, Summit II now has a platform with sufficient size and scale to generate stable and increasing long-term cash flows and on which we can grow significantly in the coming quarters," says Paul Dykeman, chief executive officer. "We were also pleased to have improved on the forecasted mortgage profile for the acquired properties, arranging longer-term funding at lower overall interest rates, improving our cost profile for the next few years."
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