Summit Industrial Income REIT Announces Property Acquisition and $30 Million Equity Offering

TORONTO, ONTARIO--(Marketwired - May 30, 2016) -

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Summit Industrial Income REIT ("Summit" or the "REIT") (TSX:SMU.UN) announced today it will be acquiring 100% of a 309,077 square foot light industrial property in Edmonton, Alberta (the "Edmonton Property") for a purchase price of approximately $33.0 million, representing a capitalization rate of approximately 6.8%. Summit plans to finance the purchase with the assumption of a $23.5 million mortgage maturing in November 2025 bearing an interest rate of 3.85%, with the balance in cash. The Edmonton Property is 100% occupied by a single-tenant with 11 years remaining on its lease term, including contracted rent escalations resulting in 1.4% annual increases. The vendor has recently completed significant improvements to the property including a roof replacement and sprinkler system upgrade. Summit is currently undergoing customary due diligence with respect to the Edmonton Property, and anticipates completion of the acquisition on or before June 30, 2016.

"We are pleased to be adding to our presence in Edmonton," commented Paul Dykeman, Chief Executive Officer. "We believe Edmonton, Canada's fifth largest industrial market, presents a real opportunity as the Canadian energy industry begins to recover, and that now is the right time to invest in the region. Rising vacancies have resulted in reductions in rental rates while leasing and property sale activities have remained low as both tenants and investors have remained cautious. As a result, cap rates have been trending upwards, and we believe acquiring high quality properties now will generate significant returns for our Unitholders over the long term. Importantly the acquisition will generate a strong and accretive spread between the in-place cap rate and the related interest cost, further strengthening the long-term stability of our cash flow."

The REIT also announced today that it had entered into an agreement with a syndicate of underwriters led by BMO Capital Markets (collectively, the "Underwriters") to sell, on a bought deal basis, 5,000,000 units of the REIT (the "Units") at a price of $6.05 per Unit for gross proceeds to Summit of $30,250,000 (the "Offering"). In addition, Summit has granted the Underwriters an over-allotment option to purchase up to an additional 750,000 Units on the same terms and conditions, exercisable at any time, in whole or in part, up to 30 days after the closing of the Offering. The Offering is expected to close on or about June 17, 2016 and is subject to customary conditions, including regulatory approval and the approval of the Toronto Stock Exchange.