Summit Industrial Income REIT completes $171.4 million in property acquisitions and $107.5 million in new financing
TORONTO, March 13, 2013 /CNW/ - Summit Industrial Income REIT ("Summit II") (TSXV: SMU.UN) announced today that it has completed its previously announced acquisition of fifteen light industrial properties well located in the Greater Toronto Area (the ''GTA''); Moncton, New Brunswick; and Edmonton, Alberta. Summit II paid approximately $171.4 million for the properties, satisfied by the assumption of new and existing mortgages with the balance in cash from its recently completed equity offering. The new properties will add approximately 2.0 million square feet of gross leasable area ("GLA") to Summit II's existing portfolio.
New financings totalling $107.5 million have been arranged, including new mortgage financings of $90.5 million consisting of approximately $23.5 million with a five-year term, an assumed mortgage of $13.0 million with four years of term remaining, and $54.0 million with seven-year terms, resulting in an overall weighted average term to maturity of 6.1 years for the new mortgages. Importantly, the new mortgages bear an attractive weighted average interest rate of 3.69%. Additionally, Summit II did not use the $68.0 million interim backstop debt originally approved to complete the acquisitions, but instead generated significant transaction savings by finalizing all necessary mortgage debt prior to closing the property purchases.
In addition, Summit II announced today that it has increased its revolving line of credit to $55.0 million from $38.0 million, providing management with increased financial resources and flexibility to capitalize 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 million 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 $260.0 million. 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% 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%.
"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," commented 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."
About Summit II
Summit II is an open-ended mutual fund trust focused on growing and managing a portfolio of light industrial properties across Canada. Summit II's units are listed on the TSX Venture Exchange 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. More particularly and without limitation, this news release contains forward looking statements and information concerning the closing of the acquisitions. The forward-looking statements and information are based on certain key expectations and assumptions made by Summit II. Although Summit II believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Summit II can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed. These risks and uncertainties include, but are not limited to, market conditions, tenant risks, current economic environment, environmental matters, general insured and uninsured risks and Summit II being unable to obtain any required financing and approvals. 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 II undertake 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.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Summit Industrial Income REIT
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