Pure Industrial Real Estate Trust’s busy 2014 has carried over into this year, with announcements it has closed on 60 acres of development land in Vaughan, Ont., for $45 million and intends to acquire majority ownership of a property portfolio in North Carolina.
“The Vaughan development will be one of the most important and valuable industrial real estate development projects ever undertaken in Canada, and we’re proud to be associated with it and deliver stable cash flow and added value for our investors,” said PIRET president and co-chief executive officer Kevan Gorrie.
PIRET (AAR.UN-T) is partnering with Indianapolis-based build-to-suit developer Scannell Properties to create a state-of-the-art distribution and sorting facility that will occupy approximately 422,000 square feet of the 60-acre parcel in Vaughan. Fedex Ground has signed a 15-year lease for the building, which is part of the $128-million development project.
North Carolina portfolio
PIRET has entered into a definitive agreement to acquire a 51 per cent interest in a 1.33-million-square-foot portfolio of bulk distribution and warehouse facilities in the Greensboro/Winston-Salem markets of North Carolina. The other partner is “a Canadian and U.S. private equity group with experience in U.S. industrial real estate,” according to Gorrie. The purchase price is US$57 million, with PIRET’s share being US$29.1 million.
“The North Carolina acquisition provides us with the opportunity to add scale in one of our target markets in the U.S. on an accretive basis and add value over time,” said Gorrie.
Proctor & Gamble is the largest tenant, occupying 861,000 square feet at 6104 and 6105 Corporate Park Dr. The two properties are located within a kilometre of the company’s Browns Summit manufacturing facility, where it recently announced a US$100-million expansion. Sonoco Display and MWI Veterinarian Supply are the other two tenants.
Growth and profitability strategy
Despite the fast start to the year, Gorrie doesn’t expect PIRET to keep up this pace. And while the company will consider selling smaller, non-core assets, that’s not a priority either.
“We don’t feel the need to do deals for growth’s sake and are happy to wait for the right opportunities for our company,” said Gorrie.
“Our strategy has been and will continue to be to build the strongest portfolio of modern distribution and logistics product available to Canadian investors, and to build a platform that has true value.”
Gorrie said the company’s growth and profitability strategy is based on a “strong leasing and operations focus, active asset management, design-build opportunities with our existing tenants, profitable recycling of capital through full or partial divestment of existing assets, and select accretive acquisition.”
Gorrie expects demand for industrial real estate to remain very high in Canada and continue to grow in the United States, keeping capitalization rates at or below current levels in PIRET’s key markets.
The latest acquisitions follow a year in which PIRET disposed of some smaller non-core assets to fund these closings:
• three logistics properties in Edmonton, Calgary and Winnipeg and an industrial building in Cambridge, Ont., for $55 million;
• a portfolio of income-producing properties in Montreal, City of Industry, Calif., West Palm Beach, Fla., Newton, N.C., Barrington and Dover, N.J., and properties under development in Rock Island and Wheeling, Ill., Baton Rouge, La., and Austin and San Antonio, Texas for US$221 million;
• three Greater Toronto Area industrial properties for $25.8 million;
• an industrial property in Calgary for $12.1 million;
• and five industrial properties in Bolton, Hamilton, Stoney Creek, Burlington and Woodstock, Ont., for $93 million.
PIRET launched in 2007 with a $19-million initial public offering and it trades on the Toronto Venture Exchange. It owns 164 Canadian properties occupying 14.17 million square feet and 10 American properties comprising 1.76 million square feet.