WPT Industrial Real Estate Investment Trust Completes US$51.5 Million Acquisition of Industrial Property in Atlanta, GA
/NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE SERVICES/
TORONTO, April 29, 2014 /CNW/ - WPT Industrial Real Estate Investment Trust (the "REIT") (TSX: WIR.U) announced today that it has completed the previously announced acquisition of an industrial property located in Atlanta, Georgia. The property is a LEED gold certified, state-of-the-art, cross-dock distribution facility, built in 2010, with approximately 1.5 million square feet of gross leasable area ("GLA"). It is located on the eastern edge of Atlanta at a major I-20 interchange, and is 100% leased on a net basis to General Mills Operations, LLC (guaranteed by General Mills, Inc.) with a remaining lease term of approximately 6.1 years. The lease contains a contractual 10% increase in the tenant's rental rate commencing in June 2015.
With the completion of this transaction, the REIT's portfolio now consists of 38 industrial properties and 2 office properties totaling approximately 11.7 million square feet of GLA.
The REIT indirectly acquired the property from a third party vendor for a purchase price of approximately US$51.5 million (exclusive of closing and transaction costs and acquisition fee), representing a capitalization rate of approximately 6.8%. The capitalization rate is expected to increase to approximately 7.3% once contractual increases in rental rates take effect.
The REIT has also arranged a US$28.3 million five-year loan for the property with a per annum fixed rate of 3.41%.
"The attributes of this new property complement our existing portfolio, and it is leased on a net basis to a high-quality, credit-worthy tenant," commented Scott Frederiksen, Chief Executive Officer. "This new property is also expected to be immediately accretive to our AFFO per unit and to lower the REIT's payout ratio."
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 has been formed to own and operate an institutional-quality portfolio of primarily industrial properties located in the United States, with a particular focus on warehouse and distribution industrial real estate. WPT Industrial, LP (the REIT's operating subsidiary) indirectly owns a portfolio of properties consisting of approximately 11.7 million square feet of gross leasable area comprised of 38 industrial properties and 2 office properties located in 12 states within the United States.
This press release contains "forward-looking information" as defined under applicable Canadian securities law ("forward-looking information" or "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. The words" plans", "expects", "does not expect", "scheduled", "estimates", "intends", "anticipates", "does not anticipate", "projects", "believes" or variations of such words and phrases 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. Some of the specific forward-looking statements in this press release include, but are not limited to, statements with respect to expectations regarding accretion to the REIT's AFFO per Unit and the effect of the acquisition on the REIT's payout ratio and the expected future increase in the capitalization rate for the acquired property. 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. The REIT's estimates, beliefs and assumptions, which may prove to be incorrect, include the various assumptions set forth herein, including, but not limited to, the REIT's results of operations, future prospects and opportunities, the demographic and industry trends remaining unchanged, no change in legislative or regulatory matters, future levels of indebtedness, the tax laws as currently in effect remaining unchanged, the continual availability of capital, the current economic conditions remaining unchanged, and continued positive net absorption and declining vacancy rates in the markets in which the REIT's properties are located.
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. 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 under "Risk Factors" in the REIT's annual information form for the year ended December 31, 2013, which is available under the REIT's profile on SEDAR at www.sedar.com. 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.
Funds from operations ("FFO"), adjusted funds from operations ("AFFO"), net operating income ("NOI"), capitalization rate and payout ratio are not measures recognized under International Financial Reporting Standards as issued by the International Accounting Standards Board and as adopted by the Canadian Institute of Chartered Accountants in Part I of The Canadian Institute of Chartered Accountants Handbook — Accounting, as amended from time to time ("IFRS") and do not have standardized meanings prescribed by IFRS. Management believes that these terms are supplemental measures of a Canadian real estate investment trust's performance and the REIT believes they are relevant measures of the ability of the REIT to earn and distribute cash returns to investors in the REIT's trust units and to evaluate the REIT's performance. The IFRS measurement most directly comparable to FFO, AFFO and NOI is net income.
"FFO" is defined as net income in accordance with IFRS, (i) plus or minus fair value adjustments on investment properties; (ii) plus or minus gains or losses from sales of investment properties; (iii) plus or minus other fair value adjustments; (iv) plus amortization of tenant incentives; (v) plus transaction costs expensed as a result of the purchase of a property being accounted for as a business combination; (vi) plus distributions on redeemable or exchangeable units treated as interest expense; (vii) plus or minus any negative goodwill or goodwill impairment; and (viii) plus deferred income tax expense, after adjustments for equity accounted entities and joint ventures calculated to reflect FFO on the same basis as consolidated properties. FFO has been prepared consistently with the definition presented in the White Paper on funds from operations prepared by the Real Property Association of Canada for all periods presented.
"AFFO" is defined as FFO subject to certain adjustments, including: (i) amortization of fair value mark-to-market adjustments on long-term debt and amortization of financing costs; (ii) adjusting for any differences resulting from recognizing property rental revenues or expenses on a straight-line basis; (iii) amortization of grant date fair value related to compensation incentive plans; (iv) adjusting for any non-cash compensation expense; and (v) deducting a reserve for normalized maintenance capital expenditures, tenant inducements and leasing commissions, as determined by the REIT. Other adjustments may be made to AFFO as determined by the trustees of the REIT in their sole discretion. FFO and AFFO should not be construed as alternatives to net income and comprehensive income determined in accordance with IFRS as indicators of the REIT's performance. The REIT's method of calculating FFO and AFFO may differ from other issuers' methods and accordingly may not be comparable to measures used by other issuers.
"NOI" is used by industry analysts, investors and management to measure operating performance of real estate investment trusts. NOI represents revenue from properties less property operating expenses as presented in the consolidated statements of net income and comprehensive income prepared in accordance with IFRS.
"capitalization rate" is defined as NOI divided by purchase price.
"payout ratio" is defined as distributions of the REIT (including distributions on Class B Units) divided by AFFO.
SOURCE WPT Industrial Real Estate Investment TrustFor further information: WPT Industrial Real Estate Investment Trust, Scott Frederiksen, Chief Executive Officer, (952) 897-7737, (952) 842-7737 (FAX), www.wptreit.com