Agellan Commercial Real Estate Investment Trust (the “REIT”) (TSX: ACR.UN)
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISTRIBUTION IN THE UNITED STATES
Agellan Commercial Real Estate Investment Trust (the “REIT”) (TSX: ACR.UN) announced today that it has acquired an industrial distribution facility located in Flint, Michigan (the “Distribution Facility” or the “Acquisition”).
The Distribution Facility comprises approximately 400,000 square feet of gross leasable area and was acquired for a purchase price of approximately US$16.0 million (before closing costs), representing a going-in capitalization rate of approximately 12%.
The Distribution Facility is fully leased to General Motors LLC, a subsidiary of GM Co., for a remaining lease term of approximately 4.35 years. The REIT financed the Acquisition by drawing down on its operating credit facility.
- The Acquisition is expected to be immediately accretive to the REIT’s adjusted funds from operations (“AFFO”) per unit.
- The Distribution Facility is strategically located in close proximity to GM’s Flint assembly plant allowing for just-in-time delivery of products to this 5.2 million square foot facility.
- GM has previously disclosed that it has made investments approaching US$2 billion in this assembly plant since 2008.
- The Distribution Facility is situated within a strong performing submarket, which in the last five years has seen market vacancy rates decline from 10.5% in 2011 to 3.8% in 2016. Among warehouse and distribution type facilities, the market vacancy rate is even lower at 1.7% for buildings over 100,000 square feet, creating strong demand for this asset class.
- As the water supply for the Distribution Facility is provided by the local township, the Distribution Facility has not been directly affected by recent water issues identified in the City of Flint.
“The REIT has continued to benefit from the strategic partnerships of its external manager, acquiring this modern and functional distribution facility at a high capitalization rate,” said Richard Dansereau, Chair of the Board of Trustees. “Our external manager’s 11 year history with this property is expected to benefit the REIT as we look to capitalize on recently proposed commitments to bolster the U.S. auto-industry.”
About Agellan Commercial Real Estate Investment Trust
The REIT is an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. The REIT has been created for the purpose of acquiring and owning industrial, office and retail properties in select target markets in the United States and Canada.
The REIT’s current portfolio aggregates approximately 6.3 million square feet of gross leasable area in 35 wholly owned properties. The properties are located in major urban markets in the United States and Canada.
Non-IFRS supplemental measures:
Certain terms used in this press release are not recognized under International Financial Reporting Standards (“IFRS”) and therefore these terms should not be construed as alternatives to IFRS measures, such as net income or cash flow from operating activities, nor are these terms necessarily comparable to similar measures presented by other reporting issuers. These terms are used by management to measure, compare and explain the operating results and financial performance of the REIT. Management believes that these terms are relevant measures in comparing the REIT’s performance to industry data and the REIT’s ability to earn and distribute cash to holders of the REIT’s units. These non-IFRS measures are defined, and FFO and AFFO are reconciled to net income, in management’s discussion and analysis for the year ended December 31, 2016, which should be read in conjunction with this press release.
This press release contains forward-looking information within the meaning of applicable securities legislation, which reflects the REIT’s current expectations regarding future events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the REIT’s control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. These forward-looking statements are made as of the date of this press release and, except as expressly required by applicable law, the REIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Agellan Commercial Real Estate Investment Trust
Frank Camenzuli, 416-593-6800 x226