Montreal-based Pro Real Estate Investment Trust (PROREIT) is closing its purchase of nine industrial properties in Winnipeg, part of a $86.8 million March agreement that also includes three industrial assets in Ottawa.
Details of the Winnipeg deal remain under wraps, but it has sparked a buzz in the Manitoba capital.
PROREIT executive vice-president and chief financial officer Gordon G. Lawlor told Western Investor April 13 that the price and the vendors of the Winnipeg buildings would remain confidential until the deal finalizes in late April.
Winnipeg sources, however, have told Western Investor that the nine buildings include at least part of a QuadReal portfolio in the Boniface industrial area that was bought as a package in an open-bid process.
The total price, sources said, was in the neighbourhood of $32 million to $34 million.
In a statement, PROREIT said it has entered into letters of intent with two vendors to acquire the buildings, which have a combined 288,000 square feet of gross leasable space, “further expanding PROREIT's footprint in the city.”
The buildings are in industrial parks within close proximity to downtown and Trans-Canada highway and feature clear heights of 14 to 21 feet.
They are all currently 97 per cent occupied by a diverse mix of local and national tenants with a weighted average lease term of three years, according to the company statement. Many of the leases include contractual rent steps.
If sources are accurate, it would not be the first Winnipeg deal involving QuadReal and PROREIT.
In the second quarter of 2018, PROREIT bought a QuadReal portfolio of six Winnipeg industrial buildings with a total of 237,000 square feet, along with 2.1 acres of fully service land for future development. PRO paid $27.3 million for the portfolio, which was its first entry into Winnipeg’s industrial market.
Lawlor said that industrial portfolio “has done very well.”
“We see Winnipeg as a safe, secure industrial market,” Lawlor said.
Winnipeg's proximity to the Canada-US border along with its central location positions the city well as a distribution hub within North America. The market has an industrial vacancy rate of 3.9 per cent and has shown remarkable stability with vacancy staying within 3 per cent to 5 per cent over the past decade and held solid during the pandemic.
It is also growing as an e-commerce logistic centre, as evidenced by Amazon's new delivery centre in the city which is slated to open this year.
PROREIT intends to finance the acquisitions via $33.1 million in cash from the private placement and $53.7 million of new five-year mortgage financings.
Once the acquisitions close, PROREIT’s portfolio will include 102 income-producing commercial properties comprising five million square feet of gross leasable space and $700 million of gross book value.