Granite, a Canadian-based REIT engaged in the ownership and management of predominantly industrial, warehouse and logistics properties in North America and Europe, has recently agreed to purchase a portfolio in the US. The $122.8-million portfolio consists of approximately 2.2 million square feet of gross leasable area in three properties.
Two of the properties are located in Monroe, Ohio, 30 miles north of Cincinnati and the third in Olive Branch, Mississippi, 27 miles southeast of Memphis. The properties are located in two central US logistic markets that are experiencing rapid growth in tenant demand, rental rates and absorption. In addition, the Cincinnati properties continue to build on Granite’s presence within the fast growing e-commerce quadrant bounded by Cincinnati, Columbus, Indianapolis and Louisville, according to a statement.
The modern properties, with an average age of less than six years, are 100% occupied, have a flexible design and multiple enhanced features including excess truck and trailer storage, cross dock capabilities and clear heights of 32 feet. There are five diverse, non-auto related tenants with a weighted average lease term of approximately 4.9 years.
Michael Forsayeth, Granite’s CEO, commented that “Granite has recently increased its focus to thoughtfully deploy its balance sheet and recycle its property portfolio. The acquisition of this U.S. portfolio is a significant step that is consistent with Granite’s strategy to accelerate growth and diversify. Pro-forma, this acquisition will further reduce Granite’s Magna concentration from 70.2% of gross leasable area to 65.5%.”
The acquisition is subject to customary closing conditions and closing is anticipated to take place in October 2017. The acquisition represents an in-going yield of approximately 6.1% and will be immediately accretive to funds from operations and adjusted funds from operations. Granite expects to fund the purchase through a combination of cash on hand and a drawdown of its unsecured credit facility, the statement says.
Granite also recently revealed significant progress in the re-positioning and re-leasing of its Novi, Michigan property which was vacated by Magna in March 2017. Granite has re-leased 71% of the building (216,830 square feet) for a lease term of 20 years with occupancy expected to begin in January 2018.