The transaction reduces leverage, accelerates recurring fee income, and expands a key institutional partnership
TORONTO, March 29, 2021 (GLOBE NEWSWIRE) -- WPT Industrial Real Estate Investment Trust (the “REIT”) (TSX: WIR.U; WIR.UN; OTCQX: WPTIF) announced today that it will contribute a portfolio of 13 U.S. distribution and logistics properties (the "Portfolio") with a value of approximately $370 million into a newly established joint venture with the Investment Management Corporation of Ontario (the “Joint Venture”).
All dollar amounts are stated in U.S. funds.
Completion of the Joint Venture advances the REIT’s previously announced capital recycling initiative, while reducing overall leverage and increasing liquidity. The REIT will retain a majority ownership interest in the Portfolio and continue to manage and operate the properties on behalf of the Joint Venture. The Joint Venture, which will hold stabilized, income producing properties, expands the REIT’s base of recurring third-party management fee income and includes future leasing and incentive fees.
“The formation of a new stabilized joint venture represents meaningful progress on our capital recycling initiative and underscores the REIT’s ability to attract and expand our relationships with strong institutional capital partners. The transaction strengthens our balance sheet, provides additional capacity to fund our growing development pipeline, and accelerates growth in our private capital management platform,” commented Scott Frederiksen, Chief Executive Officer of the REIT.
Key Highlights
- Generates approximately $255 million in sale and financing proceeds, which will be used by the REIT to pay down debt and fund future development and investment activity
- Decreases debt-to-assets by approximately 4% on a consolidated basis and approximately 2% on a proportionate share basis, resulting in liquidity of approximately $153 million
- Facilitates capital recycling out of select markets and large, single-tenant properties while maintaining existing operational scale
- Increases recurring third-party management fee revenue
Portfolio Overview
- Approximately 4,750,000 square feet of gross leaseable area (GLA)
- Average tenant size of 317,000 square feet
- 100% leased with a weighted average lease term of approximately 5.5 years
- Initial capitalization with debt-to-total-assets of 45%
- Portfolio contribution value slightly above current IFRS fair value
Additional property information regarding the Portfolio is set out below:
| Property | Market | Property Size (SF) | Year Built/Ren | Clear Height | # Tenants | Avg Tenant Size (SF) |
| 320 East Fullerton Ave | Chicago | 263,208 | 1999 | 32 | 2 | 131,604 |
| 535 Shingle Oak Dr | Chicago | 150,000 | 2007 | 30 | 1 | 150,000 |
| 99 Ave A | N. New Jersey | 160,575 | 1983/2020 | 26.5 | 1 | 160,575 |
| 105 Ave A | N. New Jersey | 188,343 | 2020 | 36 | 1 | 188,343 |
| 2940 Old Norcross Rd | Atlanta | 132,394 | 1994 | 28 | 1 | 132,394 |
| 8 Mount Moriah Rd | Atlanta | 202,250 | 2007 | 28 | 1 | 202,250 |
| 6751 Discovery Blvd | Atlanta | 115,000 | 2001 | 30 | 1 | 115,000 |
| 1975 Sarasota Parkway | Atlanta | 145,262 | 1993 | 25 | 1 | 145,262 |
| 1871 Willow Springs Church Rd | Atlanta | 1,512,552 | 2010 | 32 | 1 | 1,512,552 |
| 2401 Midpoint Dr | Kansas City | 180,000 | 2005 | 30 | 1 | 180,000 |
| 2440 Midpoint Dr | Kansas City | 330,000 | 2006 | 30 | 1 | 330,000 |
| 8500 Hedge Lane Terrace | Kansas City | 111,000 | 1999 | 26 | 2 | 55,500 |
| 5620 Inner Park Dr | St. Louis | 1,262,648 | 2003 | 32 | 1 | 1,262,648 |
| Total/ Average | 4,753,232 | 2005 | 31 | 15 | 316,882 |
While the REIT’s contribution of the Portfolio to the Joint Venture was structured in a tax efficient manner, the REIT anticipates that the transaction will give rise to some taxable income for Canadian tax purposes. Such income may result in an increase in the taxable portion of the REIT’s regular distributions or be distributed to the REIT’s unitholders as a special distribution of cash or additional trust units of the REIT. Any such special distribution must be declared before December 31, 2021 and will be announced prior to the end of 2021.
About WPT Industrial Real Estate Investment Trust
WPT Industrial Real Estate Investment Trust 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 acquires, develops, manages and owns distribution and logistics properties located in the United States. WPT Industrial, LP (the REIT’s operating subsidiary) indirectly owns or manages a portfolio of properties across 20 U.S. states consisting of approximately 37.2 million square feet of GLA and 109 properties. The REIT pays monthly cash distributions, currently at $0.0633 per Unit, or approximately $0.76 per Unit on an annualized basis, in US funds.
For more information, please contact:
Scott Frederiksen, Chief Executive Officer
WPT Industrial Real Estate Investment Trust
Tel: (612) 800-8501
Forward-Looking Statements
This press release contains “forward-looking information” as defined under applicable Canadian securities law (“forward-looking statements”) which reflect management’s expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance, business prospects and opportunities of the REIT, including, but not limited to, statements concerning anticipated management fees, leasing and incentive fees the REIT expects to receive from the Joint Venture, certain tax implication to the REIT and its unitholders that may result from the contribution of the Portfolio to the Joint Venture, including the potential for special distributions, and the amount and intended use of liquidity generated by the contribution of the Portfolio to the Joint Venture. The words “plans”, “expects”, “scheduled”, “estimates”, “intends”, “anticipates”, “projects”, “believes” or variations of such words and phrases (including negative variations) or statements to the effect that certain actions, events or results “may”, “will”, “could”, “would”, “might”, “occur”, “be achieved” or “continue” and similar expressions identify forward-looking statements. Certain statements included in this press release may be considered a “financial outlook” for purposes of applicable Canadian securities laws, and as such, the financial outlook may not be appropriate for purposes other than to understand management’s current expectations and plans relating to the future, as disclosed in this press release. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management of the REIT as of the date of this press release, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Such estimates, beliefs and assumptions include, but are not limited to, results of operations and the REIT’s income for tax purposes for the current taxation year (including income to be realized as a consequence of the contribution of the Portfolio to the Joint Venture), future prospects and opportunities, the demographic and industry trends remaining unchanged, future growth opportunities for the REIT and its properties, no change in legislative or regulatory matters, future levels of indebtedness, the amount of ordinary cash distributions to be paid by the REIT in the current year remaining unchanged, the tax laws as currently in effect remaining unchanged, the continual availability of capital, the current economic conditions remaining unchanged, continued positive net absorption and declining vacancy rates in the markets in which the REIT’s properties are located, and the scope and duration of the COVID-19 pandemic and its impact on the REIT.
When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be achieved, if achieved at all. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed or referenced under “Risk Factors” in the REIT’s most recently filed annual information form and management’s discussion and analysis, each of which are available under the REIT’s profile on SEDAR at www.sedar.com. These forward-looking statements have been approved by management to be 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.
The COVID-19 pandemic has cast additional uncertainty on the REIT’s prior expectations, future outlook, anticipated events and projections. There can be no assurance that they will continue to be valid. Given the rapid pace of change with respect to the impact of the COVID-19 pandemic, it is premature to make further assumptions about these matters. The duration, extent and severity of the impact the COVID-19 pandemic, including measures to prevent its spread, will have on the REIT’s business is highly uncertain and impossible to accurately predict at this time.