Granite Real Estate Investment Trust has acquired two income producing properties and has agreed to acquire a third property, together comprising approximately 1.4 million square feet at a combined purchase price of approximately $120 million, representing an in-going weighted average yield of approximately 5.8%.
According to a prepared release, the properties are fully leased with a weighted average lease term of 5.4 years and will be immediately accretive to funds from operations and adjusted funds from operations per unit. In addition, Granite has acquired, through a joint venture with NorthPoint Development, a 191 acre parcel of land in Houston, Texas for the development of a multi-phased business park comprising a total of approximately 2.5 million SF.
Granite has acquired 1901 Beggrow Street, a 802,390 SF, 36′ clear height distribution center situated on 51.1 acres of land in Columbus, Ohio. This state of the art facility was completed in 2018 and is 100% leased to a subsidiary of Pepsico, Inc. for a remaining lease term of 4.7 years. The acquisition was previously announced on April 11, 2019 and closed on May 23, 2019.
The property is well located within the major southeast Columbus industrial market, benefiting from a strong labor pool and providing access to nearly 60% of the U.S. and Canadian population within a day’s drive. The property is also strategically located within two miles of the Rickenbacker International Airport, one of the only cargo-dedicated airports in the world. Further broadening the property’s appeal, the building can be expanded by approximately 200,000 SF providing attractive site flexibility and growth potential.
Heirweg 3 Born, Netherlands
Granite has acquired Heirweg 3, a 259,388 SF distribution center situated on 7.4 acres of land in Born, Netherlands. Constructed in 2008, the property is 100% leased to Broekman Logistics for a remaining lease term of 7.6 years. The acquisition closed on July 8, 2019.
The property is well located in an established business park in Born. Its strategic location and close proximity to an inland port, rail and the A2 motorway provide excellent distribution access serving the local Dutch market as well as broader European markets.
1222 Commerce Parkway, Horn Lake, Mississippi, USA
Granite has agreed to acquire 1222 Commerce Parkway, a 300,145 SF, 32′ clear height distribution center situated on 20.9 acres of land in Horn Lake, Mississippi. The property was constructed in 2018 and is 100% leased to DSV Solutions and EPE Industries for a remaining weighted average lease term of 4.8 years. The acquisition is subject to customary closing conditions and is expected to close in the third quarter of 2019.
The property is located within the DeSoto County submarket, less than 15 miles from downtown Memphis, Tennessee. The property offers exceptional access to Interstate 55 and proximity to the Memphis International Airport which is home to the FedEx World Hub, the busiest air cargo airport in the United States.
Houston, Texas Development
On July 1, 2019, Granite, in partnership with NorthPoint Development, acquired a 191 acre greenfield site in Houston, Texas for C$33.9 million for the future development of a 2.5 million SF multi-phased business park capable of accommodating buildings ranging from 250,000 SF to 1.2 million SF. Speculative construction of the initial phase, consisting of two buildings totaling 625,000 SF, is anticipated to begin in Q3 2019. The project is expected to generate a development yield spread of greater than 200 basis points. Granite’s partner NorthPoint Development, will act as development manager for the project.
The site is strategically located within Houston’s northeast submarket, approximately 12 miles from downtown Houston and 10 miles from the Port of Houston, the largest export port in the United States. The property, located directly on U.S. Highway 90, benefits from exceptional access to Houston’s extensive interstate system, the city’s three class I railroads and the Houston International Airport.
Granite funded the completed acquisitions and expects to fund the Mississippi acquisition with existing cash on hand.
Kevan Gorrie, Granite’s President and CEO, commented that, “These acquisitions and development will further advance our strategy of acquiring and developing leading core product in key e-commerce and distribution markets in North America and Europe. Collectively, we expect these transactions to further enhance the quality of our portfolio, generate stable and growing cash flow and provide an opportunity to create significant net asset value growth for our unitholders.
The acquisition of the Heirweg 3 property in the Netherlands represents our first acquisition following the opening of our new office in Amsterdam. This office will increase our presence in a key target market and enhance our ability to execute on a strong pipeline of opportunities in Europe.
Finally, we are pleased to launch our first partnership with NorthPoint Development, a leading developer of new generation distribution properties in the U.S. The Houston project will enable us to build scale in a strategic location in one of our target U.S. markets and the project is expected to generate superior returns and net asset value growth, both important components of our investment strategy.”