PROREIT will act as sole property manager for the portfolio
MONTREAL, June 21, 2022 /CNW Telbec/ – PRO Real Estate Investment Trust (“PROREIT” or the “REIT”) (TSX: PRV.UN) is pleased to announce the completion of a strategically important joint venture agreement with Crestpoint Real Estate Investments Ltd. (“Crestpoint”) to collectively own an industry-focused portfolio of 42 properties, including 41 properties in Halifax, Nova Scotiaand a property in Moncton, New Brunswick. The portfolio includes nearly 3.1 million square feet of Gross Leasable Area (“GLA”).
As part of the joint venture transaction, PROREIT and Crestpoint will each acquire a 50% interest in 21 primarily industrial properties currently owned by a third party for a total purchase price of $228 million (before closing costs).
In connection with such acquisition, PROREIT will earn a 50% interest in 21 of its currently owned properties with an aggregate value of $227 millionfor a total consideration to PROREIT of approx $113.5 million (before closing costs).
“This joint venture is a unique opportunity for PROREIT to expand its presence in Germany Halifax Burnside Industrial Park, one of them canada strongest industrial hub. Joining forces with Crestpoint, a top-tier institutional real estate investor, gives us an opportunity together to achieve meaningful operational and occupancy synergies, in addition to diversifying our solid industrial tenant base,” he said James W. BeckerlegPresident and Chief Executive Officer of PROREIT.
“We are delighted to manage and operate this highly desirable portfolio. given Halifax With a solid economy and a tight industrial property market, we look forward to unlocking the significant market leasing potential of these properties and continuing to benefit from the positive impact that should result from the size of this joint venture,” added Mr. Beckerleg.
“Crestpoint is pleased to have a significant presence in the Halifax Industrial market with an ideal partner, PROREIT. That City of Halifax has been such a strong beneficiary of population and economic growth in recent years, and we believe it will continue to demonstrate these growth patterns as the dominant trade center for China Eastern Canada. The combination of Crestpoint’s national industry expertise with PROREIT’s local industry knowledge will result in a leading East Coast industry platform. With this acquisition, Crestpoint will have a significant coast-to-coast presence, which will contribute to Crestpoint’s leading position as one of the companies canada top investment managers,” said KevinLeonPresident and CEO of Crestpoint.
The combined transaction, which will be immediately profitable, will result in PROREIT and Crestpoint each owning a 50% interest in the 42 property portfolio. PROREIT, through its wholly owned property management company Compass Commercial Realty, will act as the sole property manager for the entire portfolio and will charge industry standard fees.
PROREIT’s acquisition of a 50% interest in the 21 properties totaling 1.6 million square feet at a cost to PROREIT of approximately $114 million (without closing costs), from which the proceeds of a 50% interest in approx $148 million of new fixed-rate mortgages and the remainder of approx 40 million dollars will be satisfied with cash, including cash raised from proceeds from the sale of a 50% interest in existing real estate to Crestpoint.
PROREIT’s sale of a 50% interest in 21 of its currently owned properties totaling 1.5 million square feet will result in consideration of approximately $49 million in cash from Crestpoint (before closure costs), which will also take a 50% interest in approximately $129 million of the fixed-rate mortgages currently held by PROREIT.
The remainder of the proceeds to PROREIT, less the acquisition payment, will be used to reduce the REIT’s credit facility. The transaction is expected to close in the coming weeks and is subject to customary closing conditions.
The 21 acquisition properties are located in the Halifax Burnside Industrial Park and increase PROREIT’s footprint in the area to 42 properties. Halifax The coveted Burnside Industrial Park is one of Canada’s strongest industrial centers and the largest industrial hub east of Montréal and north of Boston. Burnside is currently benefiting from strong underlying fundamentals around its industrial markets, with vacancy rates at all-time lows (2.5%) and steady growth in net rental rates1.
The 42-asset portfolio totals 3,059,635 square feet of GLA with efficient bay sizes and ample cargo doors and consists of warehouse, light industrial and flex office space. Approximately 95% of the properties are let to a diverse mix of tenants with a weighted average lease term of three years. Many of the existing leases benefit from the inclusion of contractually agreed rent increments and/or are below current market rents, representing significant future potential for rent increases on turnover.
PROREIT (TSX: PRV.UN) is an unincorporated open-ended real estate investment trust formed pursuant to a Deed of Trust under the laws of the province ontario. PROREIT was founded in 2013 and owns a portfolio of high quality commercial real estate in Canadawith a strong industrial focus on robust secondary markets.
Crestpoint Real Estate Investments Ltd. is a commercial real estate and mortgage investment manager dedicated to providing investors with direct access to a diversified portfolio of commercial real estate investments. Crestpoint’s current portfolio has a market value of over $8.5 billion and consists of over 31 million square feet of commercial real estate. Crestpoint is part of the Connor, Clark & Lunn Financial Group, a multi-boutique investment management company providing investment management products and services to institutional and high net worth clients. With offices opposite Canada and in Chicago, Londonand gurugram, IndiaConnor, Clark & Lunn Financial Group and their affiliates are collectively responsible for the administration of about $104 billion in wealth. For more information, please visit: www.crestpoint.ca.
This press release contains forward-looking statements and forward-looking information (collectively, “forward-looking statements”) within the meaning of applicable securities laws, including statements regarding certain expectations, forecasts, growth plans and other information regarding the REIT’s business strategy and future plans. Forward-looking statements are based on a number of assumptions and are subject to a number of risks and uncertainties, many of which are beyond PROREIT’s control, which could cause actual results and events to differ materially from those contained in or implied by the forward-looking statements.
Forward-looking statements contained in this press release include, but are not limited to, statements regarding the formation of the joint venture, the acquisition of 21 predominantly commercial properties with Crestpoint and the sale to Crestpoint of a 50% interest in 21 of PROREIT’s current properties, which are anticipated The terms, financing and closing date of such transactions, as well as the expected performance of the portfolio and its future impact on PROREIT’s results. PROREIT’s objectives and forward-looking statements are based on certain assumptions, including that (i) PROREIT will obtain financing on favorable terms; (ii) PROREIT’s future leverage and future growth potential will be consistent with the REIT’s current expectations; (iii) there will be no changes in tax laws adversely affecting PROREIT’s funding capacity or operations; (iv) the impact of the current economic climate and current global financial conditions on PROREIT’s operations, including its funding capacity and asset value, will be consistent with PROREIT’s current expectations; (v) the performance of PROREIT’s investments in Canada will proceed on a basis consistent with PROREIT’s current expectations; and (vi) Capital markets provide PROREIT with readily available access to equity and/or debt.
The forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement. All forward-looking statements in this press release are made as of the date of this press release. PROREIT undertakes no obligation to update any such forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
For more information on these assumptions and risks and uncertainties, see “Risk Factors” in PROREIT’s most recent Annual Information Form and “Risks and Uncertainties” in PROREIT’s Management Report and Analysis for the past year December 31, 2021available under PROREIT’s profile on SEDAR at www.sedar.com.
1 Colliers Q1 2022 Halifax Industrial Report
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