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| Source: Dream Industrial REIT
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This press release constitutes a “designated news release” for the purposes of Dream Industrial REIT’s prospectus supplement dated February 26, 2021 to its short form base shelf prospectus dated October 11, 2019
This press release contains forward-looking information that is based upon assumptions and is subject to risks and uncertainties as indicated in the cautionary note contained within this press release.
TORONTO, Oct. 13, 2021 (GLOBE NEWSWIRE) — Dream Industrial REIT (DIR.UN-TSX) or (the “Trust” or the “REIT” or “we”) today announced the launch of a $250 million equity offering and an update on its robust pace of capital deployment.
The Trust continues to execute on its strategy to grow and upgrade portfolio quality in its target markets. Below, the Trust has provided an update on its acquisition activity since Q2-2021.
- Completed the acquisition of seven assets totalling approximately 1.4 million square feet for a total purchase price of over $202 million, equating to a weighted average capitalization rate (“cap rate”) of approximately 4.7%;
- Waived all conditions on four assets totalling approximately 1.1 million square feet for a total purchase price of over $209 million, equating to a weighted average cap rate of approximately 4.6%;
- The Trust is also in exclusive negotiations on seven assets totalling approximately 2.6 million square feet for a total purchase price of approximately $420 million.
“Our acquisition pipeline remains robust, and we have completed or secured over $700 million of acquisitions in addition to approximately $100 million of acquisitions announced along with our Q2-2021 results. These acquisitions are consistent with our strategy of adding high-quality logistics assets in markets with significant barriers to entry that offer strong organic growth potential over the long term,” said Brian Pauls, Chief Executive Officer of Dream Industrial REIT. “Our on-the-ground local acquisition teams allow us to consistently access a deep pool of investment opportunities, through both marketed and off-market deals at attractive economics to the REIT. We are poised to complete over $3 billion of acquisitions since we announced our European expansion at the beginning of 2020, significantly enhancing our portfolio quality, diversification, growth potential, and balance sheet flexibility. With a high-quality $5 billion global industrial portfolio and an investment grade balance sheet with access to financing at attractive rates, we are well-positioned to continue to create long term sustainable value for our unitholders.”
- A 360,000 square foot modern logistics facility located in the Tilburg Region, one of the top logistics nodes in the Netherlands, for a purchase price of EUR37 million ($55 million). Fully refurbished and expanded in the past year, the asset has a clear ceiling height of over 35 feet across nearly two-thirds of its footprint. The property is 100% leased to a logistics company for a 15-year term with the rental rate on the lease fully indexed to CPI.
- A 124,000 square foot asset located in the Greater Montreal Area for a purchase price of $26 million. Completely renovated in the early 2010s, this single-tenant asset is 100% occupied with a weighted average lease term (“WALT”) of approximately six years and in-place rents approximately 10% below current market rent, providing an attractive balance between stability and cash flow growth. This asset is LEED Gold certified. It features geothermal heating, energy efficient lighting, and skylights to provide additional natural light.
- A 118,000 square foot urban logistics asset in the Eindhoven Region, Netherlands for EUR14 million ($21 million). Substantially renovated in 2013/2014, the building has a clear ceiling height of 31 feet and is 100% occupied by a tenant in the Food and Beverage industry. It also includes full LED lighting and a rooftop solar array.
- The Trust also closed on four assets across Canada, Germany, and the Netherlands for a total purchase price of $100 million, which added approximately 770,000 square feet of high-quality logistics assets to the Trust’s portfolio. These acquisitions were previously announced in the “Business Update” section of the Trust’s Q2-2021 report.
Recently waived acquisitions
- In the Netherlands, the Trust waived all conditions on a 600,000 square foot urban logistics and high tech industrial campus located in the heart of the Randstad region, known as Technology Park Ypenburg (“TPY”), for EUR100 million ($144 million). TPY is well located at the junction of the A4, A12, and A13 motorways in a densely populated part of The Hague, where land is scarce and vacancy rates are amongst the lowest in the Netherlands. The complex has extensive public transport connections including a tram station that connects to The Hague’s central station. The asset is 100% occupied by tenants primarily in the technology and life sciences sector with a WALT of seven years. The going-in yield for the transaction is about 4.5%. There are significant upsides from growing rents which are lower than the market and fully index to CPI and increased density on the property. There are two pre-leased expansions for 65,000 square feet currently underway, the costs of which are included in the purchase price. These expansion projects are expected to be finalized in 2022.
The Trust has also identified a third expansion site that could accommodate approximately 39,000 square feet of additional density. The Trust expects to intensify this site in the next 24 months, with yields on cost forecast to exceed 6.5%.
- In Germany, the Trust waived all conditions on two logistics assets totalling 380,000 square feet for EUR33 million ($48 million). These assets are close to major transportation routes and are being purchased below replacement cost. These assets have the potential to increase rental rates through lease roll-over and to add density over time.
- In Canada, the Trust waived all conditions on a 78,000 square foot distribution facility in the Greater Toronto Area for $18 million. Built in the early 2000s, the asset has a clear ceiling height of 28 feet and is located just north of Highway 401 in Ajax, near Amazon’s new one million square foot distribution centre that is expected to be completed in late 2021. The Trust agreed to acquire the asset fully vacant and shortly after the completion of the due diligence period, leased the entire building for a 10-year term with 3.5% annual contractual rental rate growth, resulting in an initial yield of approximately 4.7%.
Furthermore, the Trust has approximately $270 million of assets totalling 1.4 million square feet in Ontario under contract and is currently in exclusive negotiations on an additional approximately EUR105 million ($151 million) of assets totalling 1.2 million square feet in Germany. These assets are expected to close in the next 60-90 days, subject to satisfactory due diligence. Including the acquisitions that are currently firm and in exclusivity, the Trust expects to complete at least $2.5 billion of acquisitions in 2021, representing an over 75% increase in the Trust’s investment properties value since the beginning of 2021.
The Trust continues to focus on growing and improving portfolio quality while maintaining a strong and flexible balance sheet. Subsequent to Q2-2021, the Trust repaid approximately $265 million of Canadian mortgages at an average interest rate of 3.54%. The Trust’s debt strategy has allowed it to reduce its average interest rate on its total debt outstanding by approximately 250 basis points or approximately 70% over the past 12 months, from over 3.4% to 1% currently. At the same time, the Trust’s secured debt as a proportion of total debt outstanding is now below 40%, compared to 100% a year ago.
The Trust today announced that it has entered into an agreement to sell, on a bought deal basis, 15,160,000 units of the Trust (“Units”) at a price of $16. 50 per Unit to a syndicate of underwriters led by TD Securities Inc. (the “Underwriters”) for total gross proceeds of approximately $250 million (the “Offering”). In addition, the Trust has granted the Underwriters an over-allotment option to purchase up to an additional 2,274,000 Units, exercisable in whole or in part, for a period of 30 days following closing of the Offering. If the over-allotment option is exercised in full, the gross proceeds of the Offering will total approximately $288 million. Closing the Offering is subjected to certain conditions, including approval by the Toronto Stock Exchange. The Offering is expected to close on or about October 22, 2021.
The Trust intends to use the net proceeds from the Offering, together with cash on hand: (i) to fund the closing of the aforementioned acquisitions and (ii) for general trust purposes.
“This equity offering allows us to continue to execute on our growth strategy while retaining ample financial flexibility to capitalize on the deep pool of investment opportunities available to the REIT,” said Lenis Quan, Chief Financial Officer of Dream Industrial REIT. “We expect this offering will allow us to execute on our near-term acquisition pipeline, while keeping leverage in our targeted mid-to-high 30% range.”
The Units will be offered by way of a shelf prospectus supplement to the Trust’s base shelf prospectus dated October 11, 2019, to be filed on or about October 15, 2021 with the securities commissions and other similar regulatory authorities in each of the provinces of Canada.
This news release does not constitute an offer to sell securities, nor is it a solicitation of an offer to buy securities, in any jurisdiction in which such offer or solicitation is unlawful. This news release does not offer securities for sale in the United States. The securities being offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and accordingly are not being offered for sale and may not be offered, sold or delivered, directly or indirectly within the U.S., its possessions and other areas subject to its jurisdiction or to, or for the account or for the benefit of a U.S. person, except pursuant to an exemption from the registration requirements of that Act.
About Dream Industrial Real Estate Investment Trust
Dream Industrial REIT is an unincorporated, open-ended real estate investment trust. As at June 30, 2021, Dream Industrial REIT owns and operates a global portfolio comprising approximately 39 million square feet of gross leasable area in key markets across North America and Europe. Dream Industrial REIT’s goal is to improve and grow its portfolio while also providing attractive returns to unitholders. For more information, please visit www.dreamindustrialreit.ca
Forward looking information
This press release may contain forward-looking information within the meaning of applicable securities legislation, including statements regarding the potential upside from growing rents; expected timing of expansion projects and potential for densification, including expected yield on costs; the potential to grow rental rates on lease roll-over of certain assets; the potential to add incremental density over time with certain assets; the Trust’s intended use of the net proceeds from the Offering; the Trust’s ability to execute on its near-term acquisition pipeline; the filing date of the Trust’s shelf prospectus supplement and timing for closing of the Offering; the effect of acquisitions on its leverage levels; the anticipated timing of closing of the acquisitions referred to in this press release; the expected going-in cap rate of the acquisitions; and the Trust’s acquisition pipeline and the expected costs of such acquisitions;. Forward-looking information is based upon a variety of assumptions. Actual results could differ materially from the ones projected or implied by forward-looking information. These risks and uncertainties include, but are not limited to, general and local economic and business conditions; employment levels; mortgage and interest rates and regulations; the uncertainties around the timing and amount of future financings; uncertainties surrounding the COVID-19 pandemic; the financial condition of tenants; leasing risks, including those associated with the ability to lease vacant space; rental rates on future leasing; and interest and currency rate fluctuations. Forward-looking statements and objectives of the Trust are based on certain assumptions. These assumptions include that the general economy, interest rates, and conditions in the real estate sector remain stable; that competition for acquisitions continues to be consistent with current conditions and that capital markets continue to offer easy access to equity or debt. This press release contains forward-looking information that is current as of the date it was issued. Dream Industrial REIT is not obligated to update forward-looking information as a result or new information, future events, or any other reason than required by law. Additional information regarding these assumptions, risks and uncertainties can be found in Dream Industrial REIT’s filings with securities regulators. These include its most recent annual information form (Annual Information Form) and MD&A. These filings are also available at Dream Industrial REIT’s website at www.dreamindustrialreit.ca.
For further information, please contact:
Dream Industrial Real Estate Investment Trust
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