TORONTO, May 17, 2019 /CNW/ - Summit Industrial Income REIT ("Summit" or the "REIT") (TSX: SMU.UN) announced today that it has completed the previously announced internalization of the REIT's asset and property management functions (the "Internalization").
With the closing of the Internalization, a subsidiary of the REIT has acquired the REIT's external manager for total consideration of $95.0 million (the "Purchase Price"). $20.0 million of the consideration was satisfied with cash funded from the REIT's revolving operating facility, and $75.0 million of the consideration was satisfied with 6,666,666 units of the REIT, based on the 30-day volume weighted average trading price of the REIT's units on all exchanges on which there was trading, up to and including March 20, 2019 of $11.25 per unit. The units issued as consideration are subject to contractual lock-up periods.
At the REIT's annual general and special meeting of unitholders held on May 8, 2019, unitholders overwhelmingly voted in favour of the Internalization, with the Internalization receiving approval by over 99.8% of votes cast by disinterested unitholders.
The Internalization results in a number of benefits to the REIT, including the elimination of the annual asset management fee based on the gross value of assets managed, the property management fee, the acquisition fee, the incentive fee and other fees that would have been payable by the REIT to its former external manager, which fees were established when the REIT was smaller and these expenses were considerably lower. The REIT will continue to benefit from the expertise, platform and industry relationships of the former external manager's key employees who will continue on with the REIT after closing, including Paul Dykeman who will continue as the Chief Executive Officer of the REIT pursuant to a five year agreement.
"This initiative will result in increased NOI and AFFO, enable us to make more accretive acquisitions, and fully aligns the interests of our management team and other insiders with all Unitholders, who collectively hold a 12.6% ownership interest in the REIT" said Paul Dykeman, Chief Executive Officer of the REIT. "This is a highly positive transaction, and everyone at Summit remains committed to further enhancing Unitholder value in the years ahead." said Paul Dykeman, Chief Executive Officer of the REIT.
Summit Industrial Income REIT is an unincorporated open-end trust focused on growing and managing a portfolio of light industrial properties across Canada. Summit's units are listed on the TSX and trade under the symbol SMU.UN. For more information, please visit our web site at www.summitIIreit.com.
Caution Regarding Forward Looking Information
This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends", "goal" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this news release contains forward looking statements and information concerning: the anticipated benefits of the Internalization. Although Summit believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Summit can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed, including, but not limited to, the risk that the Internalization may not close. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date hereof, and to not use such forward looking information for anything other than its intended purpose. Summit undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
SOURCE Summit Industrial Income REIT
For further information: Paul Dykeman, CEO at (902) 405-8813, email@example.com