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 that
it has entered into a strategically important joint venture
agreement with Crestpoint Real Estate Investments Ltd.
("Crestpoint") to jointly own an industrial-focused portfolio of 42
properties, including 41 properties in Halifax, Nova Scotia, and one property in
Moncton, New Brunswick. The
portfolio is comprised of 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 conjunction with such acquisition, PROREIT will sell a 50%
interest in 21 of its currently owned properties to Crestpoint,
having a total value of $227 million,
for a total consideration to PROREIT of approximately $113.5 million (before closing costs).
"This joint venture is a unique opportunity for PROREIT to
increase its footprint in Halifax's Burnside Industrial Park, one of
Canada's strongest industrial
nodes. By joining forces with Crestpoint, a high profile
institutional real estate investor, collectively we will have an
opportunity to achieve meaningful operational and leasing synergies
in addition to diversifying our robust industrial tenant base,"
said James W. Beckerleg, President
and Chief Executive Officer of PROREIT.
"We are pleased to manage and operate this highly desirable
portfolio. Given Halifax's solid
economy and tight industrial real estate market, we look forward to
unlocking the significant market leasing upside embedded in these
properties and to further benefit from the accretive effect that
should result from the scale of this joint venture," added Mr.
Beckerleg.
"Crestpoint is excited to take a significant presence in the
Halifax industrial market with an
ideal partner, PROREIT. The City of
Halifax has been such a strong beneficiary of population and
economic growth in the last several years and we believe going
forward it will continue to demonstrate these growth patterns as
the dominant commercial centre for Eastern Canada. Combining Crestpoint's
national industrial expertise alongside PROREIT's local industrial
knowledge will result in a leading East coast industrial platform.
Crestpoint, with this acquisition, will have a significant presence
from coast to coast which will contribute to Crestpoint's leading
position as one of Canada's top
investment managers," said Kevin
Leon, President and CEO of Crestpoint.
Transaction Details
The combined transaction, which will be immediately accretive to
earnings, will result in PROREIT and Crestpoint to each have a 50%
ownership interest in the 42-property portfolio. PROREIT, through
its wholly-owned property management business Compass Commercial
Realty, will act as the sole property manager for the entire
portfolio and will collect industry standard fees.
PROREIT's acquisition of the 50% interest in the 21 properties,
totaling 1.6 million square feet, for a cost to PROREIT of
approximately $114 million (excluding
closing costs), will be financed from the proceeds of a 50%
interest in approximately $148
million of new fixed-rate mortgages and the balance of
approximately $40 million will be
satisfied with cash on hand, including cash from the proceeds of
the sale of a 50% interest in existing properties 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
considerations of approximately $49
million in cash to be received from Crestpoint (before
closing costs), who will also assume a 50% interest in
approximately $129 million of
fixed-rate mortgages currently held by PROREIT.
The balance of the proceeds to PROREIT, net of 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.
Portfolio Details
The 21 acquisition properties are located in Halifax Burnside
Industrial Park, increasing PROREIT's presence in the area to 42
properties. Halifax's highly
sought-after Burnside Industrial Park is one
of Canada's strongest industrial hubs and is the largest
industrial node east of Montréal and north
of Boston. Burnside currently benefits from strong
underlying fundamentals surrounding its industrial markets with
vacancy rates at all-time lows (2.5%) and consistent growth in net
rental rates1.
The 42 asset portfolio totals 3,059,635 square feet of GLA with
efficient bay sizes and ample loading doors, and is comprised of
warehouse, light industrial, and flex office spaces. The properties
are approximately 95% leased to a diverse mix of tenants with a
weighted average lease term of three years. Many of the in-place
leases benefit from the inclusion of contracted rent step
escalations and/or are at below current market rents, presenting
substantial future rental upside upon turnover.
About PROREIT
PROREIT (TSX: PRV.UN) is an unincorporated open-ended real
estate investment trust established pursuant to a declaration of
trust under the laws of the Province of Ontario. Founded in 2013, PROREIT owns a
portfolio of high-quality commercial real estate properties in
Canada, with a strong industrial
focus in robust secondary markets.
About Crestpoint
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 assets. Crestpoint's current portfolio has a
market value in excess of $8.5
billion and is comprised of over 31 million square feet of
commercial properties. Crestpoint is part of the Connor, Clark
& Lunn Financial Group, a multi-boutique asset management
company that provides investment management products and services
to institutional and high net-worth clients. With offices across
Canada and in Chicago, London, and Gurugram, India, Connor, Clark & Lunn Financial
Group and its affiliates are collectively responsible for the
management of approximately $104
billion in assets. For more information, please
visit: www.crestpoint.ca.
Forward-Looking
Statements
This press release contains forward looking statements and
forward-looking information (collectively, "forward-looking
statements") within the meaning of applicable securities
legislation, including statements relating to certain expectations,
projections, growth plans and other information related to 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, that could cause actual results and events to differ
materially from those that are disclosed in or implied by such
forward-looking statements.
Forward-looking statements contained in this press release
include, without limitation, statements pertaining to the creation
of the joint venture, the acquisition with Crestpoint of 21
primarily industrial properties, the sale to Crestpoint of a 50%
interest in 21 of PROREIT's currently owned properties, the
anticipated terms, financing and closing date of such transactions,
and 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 receive financing on favourable terms; (ii) the future
level of indebtedness of PROREIT and its future growth potential
will remain consistent with the REIT's current expectations; (iii)
there will be no changes to tax laws adversely affecting PROREIT's
financing capacity or operations; (iv) the impact of the current
economic climate and the current global financial conditions on
PROREIT's operations, including its financing capacity and asset
value, will remain 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 will
provide PROREIT with readily available access to equity and/or
debt.
The forward-looking statements contained in this news 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 does not
undertake to update any such forward-looking information whether as
a result of new information, future events or otherwise, except as
required by law.
Additional information about these assumptions and risks and
uncertainties is contained under "Risk Factors" in PROREIT's latest
annual information form and "Risk and Uncertainties" in PROREIT's
management's discussion and analysis for the year ended
December 31, 2021, which are
available under PROREIT's profile on SEDAR at www.sedar.com.
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1 Colliers Q1 2022 Halifax Industrial
Report
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SOURCE PROREIT