PROREIT Announces Agreement to Acquire Six Industrial Properties in Winnipeg for an Aggregate Purchase Price of $96.5 Million Français
Acquisition of a portfolio of six institutional quality industrial properties totaling 678,177 square feet of gross leasable area ("GLA")
Increases PROREIT's industrial exposure to approximately 88% of GLA and 83% of base rent
Expands PROREIT's Winnipeg small- and mid-bay portfolio to 22 properties (including one parcel of development land) and approximately 1.3 million square feet of GLA
Transaction accretive to adjusted funds from operations (AFFO) per unit
Establishes a strategic relationship with Parkit for future growth opportunities
MONTRÉAL, May 13, 2025 /CNW/ - PRO Real Estate Investment Trust (TSX: PRV.UN) ("PROREIT" or the "REIT") today announced that it has entered into an agreement to acquire a 100% interest in a portfolio of six high-quality industrial properties located in Winnipeg, Manitoba totaling 678,177 square feet of GLA (the "Portfolio") for an aggregate purchase price of $96.5 million (excluding closing costs) from Parkit Enterprise Inc. (TSX.V: PKT) ("Parkit") representing approximately $142 per square foot and a mid-six percent capitalization rate, and in addition, realizing management platform synergies (the "Transaction").
"This accretive acquisition meaningfully expands our industrial footprint in Winnipeg and supports our growth strategy focused on scaling our platform through high-quality industrial properties in strong secondary markets," said Gordon Lawlor, President and CEO.
"As part of the Transaction, we are pleased to establish a strategic relationship with Parkit through the issuance of units and by welcoming Parkit's Steven Scott to our board of trustees following closing. Given Parkit's value-add expertise and aligned interests, we see meaningful opportunities to pursue further growth together," Mr. Lawlor added.
Steven Scott, Chairman of Parkit's board, stated "We are excited to make this significant investment in PROREIT and look forward to working with Gordon and his team on future opportunities."
The Portfolio
The Portfolio consists of six high-quality properties totaling 678,177 square feet of GLA, featuring weighted-average clear heights of 21 feet, and is comprised of warehouse, light industrial and flex industrial spaces. The Portfolio is currently 99.7% leased to a diverse roster of 26 tenants with a weighted average remaining lease term ("WALT") of approximately 4.2 years, and in-place leases within the Portfolio are approximately 8% below current market industrial rents in Winnipeg. The Portfolio is complementary to PROREIT's existing portfolio and will increase PROREIT's exposure to the Winnipeg region to 1.3 million square feet of GLA. This enhanced scale in the Winnipeg market will expand PROREIT's existing operating capabilities.
Parkit Strategic Relationship
In connection with the Transaction, PROREIT will pay approximately $40 million of the purchase price by issuing to Parkit an aggregate of approximately 6.45 million trust units of PROREIT and Class B LP Units of PRO REIT Limited Partnership, each of which is exchangeable for a trust unit of PROREIT, at a price of $6.20 per unit.
The issuance price represents premiums of 21.8% and 24.4% to the closing price of the PROREIT units on May 12, 2025 and the 20-day volume-weighted average trading price of the PROREIT units as at that date, respectively. Following the Transaction, Parkit will hold an approximate 9.6% ownership interest in PROREIT.
Concurrent with the closing of the Transaction, PROREIT and Parkit will enter into an investor rights agreement providing for, among other things, certain lock-up and standstill provisions, pre-emptive and registration rights, as well as the right for Parkit to nominate one trustee to PROREIT's board.
The initial Parkit nominee will be Steven Scott who currently serves as Chairman on Parkit's board. Mr. Scott is also current Chair and Chief Executive Officer of StorageVault Canada, Principal and Chief Executive Officer of The Access Group of Companies, and Director and Treasurer of the Canadian Self Storage Association.
PROREIT and Parkit collectively believe the Transaction establishes the framework for a strategic relationship which embraces PROREIT's stable real estate portfolio and operating platform and Parkit's extensive value-add experience.
Financing of the Portfolio
The purchase price of $96.5 million (excluding closing costs) for the Portfolio is expected to be satisfied with approximately $63 million from a 3-year secured non-revolving credit facility at an anticipated fixed swap rate of approximately 4.4% and the issuance of $40 million of units to Parkit. The balance of any proceeds after closing costs is expected to be used to repay a portion of indebtedness outstanding under the REIT's existing credit facilities and for general business purposes.
Impact of the Transaction on PROREIT
Upon completion of the Transaction, the REIT's portfolio will be comprised of 118 income producing commercial properties representing approximately 6.7 million square feet of GLA and $1.1 billion of total assets with a WALT of approximately 4.5 years. The addition of the Portfolio will increase PROREIT's exposure to the industrial segment to approximately 88% by GLA and 83% by base rent.
The Transaction is expected to be accretive to 2025 consensus AFFO per unit.
Closing
The closing of the Transaction is subject to customary closing conditions, including Toronto Stock Exchange and TSX Venture Exchange approval, and is expected to close in the second quarter of 2025.
Scotiabank acted as financial advisor to PROREIT in connection with the Transaction.
About PRO Real Estate Investment Trust
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.
For more information on PROREIT, please visit the website at: https://proreit.com.
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 expected closing of the Transaction and the timing thereof, the financing of the Transaction and the use of the proceeds of the financing, the impact of the Transaction on the portfolio of the REIT and AFFO, the future growth opportunities of the REIT and the execution of its strategy, and the entering into of an investor rights agreement. 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, which is available under PROREIT's profile on SEDAR+ at www.sedarplus.ca.
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