GIC, Dream Industrial buy Canadian Summit Industrial REIT

By Mario Marroquin

A syndicate of Singapore sovereign wealth fund GIC and Dream Industrial REIT of Toronto penned a $4.4 billion acquisition of Canadian Summit Industrial income REIT this week. GIC and Dream Industrial agreed to acquire Summit in an all-cash transaction that includes the assumption of some of Summit’s outstanding debts and a 21.6 million-square-foot portfolio of industrial properties largely in Ontario, British Columbia and Alberta.

A prepared statement from GIC says Summit unitholders will receive $23.50 per unit, which according to GIC represents a 31.1% premium to Summit’s closing price November 4.

GIC and Dream Industrial will form a limited partnership with a 90% - 10% ownership structure, respectively and a subsidiary of Dream Unlimited Corporation will be the asset manager for the joint venture.

A ratings report from DBRS Mornigstar said the purchaser “will assume Summit’s outstanding Senior Unsecured Debentures amounting to $925 million, and intends to assume Summit’s existing mortgages, subject to lender consent.

“As backstop for nonconsenting mortgage lenders, the joint venture has arranged committed bank financing. The purchaser will also have access to a new $400 million committed revolving credit facility for future liquidity requirements, which is expected to be largely undrawn at closing.”

Reuters reported the deal will more than double the scale of Dream Industrial’s portfolio under management in Canada and that Summit’s total net book value approached $US$5 billion by June 30.

The acquisition by GIC and Dream Industrial comes one week after the sovereign wealth fund from Singapore set up a $600 million joint venture with UK investment manager ESR Group to buy industrial and logistics assets in India.

GIC and Oak Street Real Estate Capital, a division of Blue Owl Capital, also agreed to acquire STORE Capital in September for US$14 billion in September.

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