TORONTO, Dec. 27, 2017 /CNW/ - Summit Industrial Income REIT ("Summit") (TSX: SMU.UN) announced today that it has entered into a joint venture partnership with Urbacon Montreal Limited Partnership ("Urbacon") to develop, own and operate high-yielding, state-of-the-art digital data centres in key markets across Canada. Summit has exclusive rights to participate in Urbacon's future data centre projects in Canada.
"We are very pleased to be establishing this new relationship with Urbacon, Canada's most experienced participant in building and operating complex data centre properties. With more than twenty-five years of experience in design-built data centre development and operations, to date Urbacon has built more than 2.1 million square feet of data centre properties," commented Paul Dykeman, Summit's Chief Executive Officer.
Summit's initial investment is the purchase of a 50% interest in Urbacon's Data Centre One ("DC1"), located in the Barker Business Park Digital Campus in Richmond Hill, Ontario. DC1 is a brand new, purpose-built, state-of-the-art 10 MW data centre currently 50% leased to a major global cloud provider under a fifteen-year term. The property is designated as Tier IV, the highest standard within the industry. Summit will acquire a 50% interest in the property, assuming its 50% share of construction debt for a total equity investment of $15 million. DC1 is the first of five stand-alone data centres to be built in the Barker Business Park Digital Campus on land that is currently owned by Urbacon.
Summit also announced that it has extended a $15.8 million mezzanine loan to Urbacon with which Urbacon will purchase its current partner's 50% interest in the recently completed state-of-the-art data centre located in downtown Montreal, Quebec, the only stand-alone, purpose-built data centre in the city. Summit has the option to convert its loan into a 50% ownership interest in the property. The nine-storey property is power-ready for occupancy with 16 MW of power available, and Urbacon has received significant interest in leasing space in the building.
Also, Summit announced that it has extended a three-year $14.3 million working capital loan to Urbacon primarily to be invested to develop additional data centres in the Barker Business Park Digital Campus and other key markets.
The overall $45 million initial cash investment in the data centre program produces a going in accretive yield of between 8%-10%. The already accretive returns will be further enhanced once both projects are fully leased.
"We are very excited to be entering this high yielding and fast growing market, another example of how, with the significant increase in the size and scale of our asset base over the last year, we are now able to do more highly accretive value added investing for the benefit of our Unitholders," Mr. Dykeman added.
"With these transactions, and the other acquisitions totaling $138 million recently announced, we have now fully invested the proceeds of our $103.5 million equity offering completed on December 13, 2017 while maintaining a debt leverage ratio of approximately 54%," Mr. Dykeman concluded.
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.
Urbacon has been a leader in the Canadian construction industry for over 30 years. It has successfully completed numerous projects in a variety of markets for a range of clients, from government office and hotel fit-outs to educational facility additions and mission critical design-builds. At the forefront in developing innovative power and communication systems and resolving mission-critical business continuity and IT infrastructure challenges, Urbacon's expertise and experience is extensive.
Drawing on their long-time success in design, data centre construction, operation and maintenance of mission critical infrastructure, their subsidiary Urbacon Data Centre Solutions Inc. is now emerging as a leading wholesale colocation provider in Canada with multiple next generation data centres in diverse locales around the country - offering high connectivity, high efficiency, high security, flexible geography, expansion potential and organizational depth and breadth to ensure data security.
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 use of estimated yield on cost once DC1 and the Montreal property are fully leased. The forward-looking statements and information are based on certain key expectations and assumptions made by Summit, including general economic conditions. 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. These risks and uncertainties include, but are not limited to, tenant risks, current economic environment, environmental matters, general insured and uninsured risks and Summit being unable to obtain any required financing and approvals. 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: please contact: Paul Dykeman, CEO at (902) 405-8813, [email protected]