Summit Industrial Income REIT (“Summit” or the “REIT”) (TSX: SMU.UN) announced today that it has waived conditions and will acquire 100% of a 187,245 square foot single tenant cold storage facility located in Mississauga, Ontario (the “Transaction”). The property is leased to a national logistics company under a long-term lease with fourteen years remaining.

The property includes two potential expansion opportunities. First, the existing building can be easily expanded by approximately 35,000 square feet based on tenant demand. Second, a new, free-standing estimated 90,000 square foot building can be developed on the approximate 5 acres of vacant land included on the property.

Summit will pay $37.0 million (the “Purchase Price”) for the entire property, paid for with units of a wholly-owned subsidiary of the REIT that are exchangeable into trust units of the REIT, and the balance in cash from the REIT’s operating facility. The leased building is being acquired with a going-in capitalization rate of approximately 5.4%. Summit is acquiring the property from Orlando Corporation (the “Vendor”), one of Canada’s largest owners of commercial and industrial properties. Closing of the acquisition is expected on or before June 18, 2018.

In satisfaction of the Purchase Price, on closing of the Transaction, a wholly-owned subsidiary of the REIT expects to issue 3,292,091 exchangeable units (approximately $27.9 million) to the Vendor, together with related special voting units of the REIT. The exchangeable units will be exchangeable into trust units of the REIT on a one-for-one basis at the option of the holder. The special voting units have the same voting rights as the REIT’s trust units and will entitle the holder of the exchangeable units to such number of votes at meetings of the REIT’s unitholders as is equal to the number of trust units of the REIT such exchangeable units are exchangeable for. The exchangeable units will represent an approximate 4.5 % interest in the REIT on an “as exchanged” basis. The number of exchangeable units to be issued to the Vendor was determined using a price of $8.46 per unit for the REIT’s trust units.

“This is our first property acquisition with vacant land on which we can utilize our proven development expertise and our balance sheet to generate value through an expansion to the existing building and the construction of a new property,” commented Paul Dykeman, Chief Executive Officer. “We are also pleased that the Vendor is taking back units, and we welcome such an experienced industry owner and developer as a significant investor in Summit.”

SOURCE Summit Industrial Income REIT