TORONTO--(BUSINESS WIRE)--Dream Industrial REIT (TSX: DIR.UN) (“Dream Industrial”, “DIR”, or the “Trust”) announced today that it has priced a private placement of senior unsecured debentures (the “Offering”) consisting of C$250 million principal amount of 1.662% Series A Debentures maturing on December 22, 2025 (the “Series A Debentures”). The Trust has entered into a cross-currency interest rate swap (“CCIRS”) arrangement to convert the proceeds into Euros, which is expected to result in an effective yield of 0.489% on the Series A Debentures. The closing of the Offering and CCIRS arrangement is expected to take place concurrently on or about December 22, 2020.
The Series A Debentures have been assigned a provisional rating of BBB with a Stable Trend by DBRS Limited earlier today. The Series A Debentures will be direct senior unsecured obligations of the Trust and will rank equally and rateably with all other unsecured and unsubordinated indebtedness of the Trust, except to the extent prescribed by law. The Series A Debentures are being offered on a private placement basis in each of the provinces of Canada in reliance upon exemptions from the prospectus requirements under applicable securities legislation. The Series A Debentures are being offered on an agency basis by a syndicate of agents led by TD Securities Inc., Scotia Capital Inc. and RBC Dominion Securities Inc.
The net proceeds from the Offering will be utilized to fund future acquisitions, repay existing indebtedness, and for general trust purposes. Since the end of the third quarter of 2020, the Trust has closed on two acquisitions in Europe for a gross purchase price totalling approximately €31 million (C$48 million), representing a weighted average going-in capitalization rate of 6.0%.
- The Trust completed the previously announced acquisition of a 302,000 square foot urban logistics property in the Greater Frankfurt Area in Germany. The building has a clear height of 34 feet and is currently 93% occupied by five tenants in the logistics and healthcare sectors, with a weighted average lease term (“WALT”) of approximately four years; and
- The Trust closed on an 86,000 square foot urban logistics property located in close proximity to Schiphol Airport near Amsterdam, Netherlands. Built in 2017, the building has a clear height of 39.5 feet and is occupied by a tenant specializing in logistics for the healthcare sector, with a WALT of approximately seven years.
These acquisitions were funded with a portion of the proceeds from the previously announced three-year US$150 million unsecured term loan that closed in November 2020 and bears interest at an effective fixed rate of 0.86%, after swapping to Euros. The Trust’s investment pipeline continues to be strong and it is currently in advanced negotiations on approximately C$300 million of investment opportunities across its target markets.
“This inaugural unsecured debenture offering represents a significant milestone for the Trust,” said Brian Pauls, Chief Executive Officer of Dream Industrial REIT. “Within a year of announcing our European expansion and debt strategy, we have acquired or are in advanced negotiations on nearly $400 million of high-quality European assets and lowered our average in-place cost of debt by close to 100 basis points. These initiatives have materially improved our growth outlook for 2021 and beyond and will allow us to continue to create significant value for our unitholders.”
Osler, Hoskin & Harcourt LLP acted as counsel to the Trust and Torys LLP acted as counsel to the agents.
The Series A Debentures have not been and will not be qualified for sale to the public under applicable securities laws in Canada and, accordingly, any offer and sale of the Series A Debentures in Canada will be made on a basis which is exempt from the prospectus requirements of such securities laws. The Series A Debentures will not be listed on any stock exchange and there will be no market for such securities. The Series A Debentures have not been, and will not be, registered under the United States Securities Act of 1933, as amended, or any state securities law and may not be offered or sold in the United States and may not be offered or sold to other persons who are not residents of a province of Canada.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Series A Debentures in any jurisdiction in which such offer, solicitation or sale would be unlawful.
About Dream Industrial Real Estate Investment Trust
Dream Industrial REIT is an unincorporated, open-ended real estate investment trust. As at September 30, 2020, the Trust owns and operates a portfolio of 172 assets (266 industrial buildings) comprising approximately 26.6 million square feet of gross leasable area in key markets across North America and a growing presence in strong European industrial markets. The Trust’s objective is to continue to grow and upgrade the quality of its portfolio and to provide attractive overall returns to its unitholders. For more information, please visit www.dreamindustrialreit.ca.
Forward Looking Information
This press release may contain forward-looking information within the meaning of applicable securities legislation, including statements regarding our objectives and strategies to achieve those objectives; expectations regarding the industrial real estate market and the future performance of our portfolio; our ability to access new sources of capital at acceptable rates; our ability to improve our growth outlook for 2021 and future years; our ability to create value for our unitholders; the strength of our investment pipeline; our ability to obtain a BBB rating from DBRS on the Series A Debentures; future acquisition activity; anticipated timing of acquisition closings; the expected effective interest rate on the Series A Debentures after swapping the proceeds to Euro; and the timing of closing of our Series A Debenture offering. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Trust’s control, which could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to: general and local economic and business conditions; uncertainties surrounding the COVID-19 pandemic; the financial condition of tenants and borrowers; mortgage and interest rates and regulations; leasing risks, including those associated with the ability to lease vacant space; rental rates on future leasing; interest and currency rate fluctuations; and competition. Assumptions upon which forward-looking information is based may include, but are not limited to: a gradual recovery and growth of the general economy over the remainder of 2020 and 2021; relatively historically low interest costs; access to equity and debt capital markets to fund, at acceptable costs, future capital requirements and to enable our refinancing of debts as they mature; the availability of investment opportunities for growth in our target markets; the timing and ability to sell certain properties; the valuations to be realized on property sales relative to current IFRS values; maintaining occupancy levels; and anticipated replacement of expiring tenancies. All forward-looking information in this press release speaks as of the date of this press release. The Trust does not undertake to update any such forward looking information whether as a result of new information, future events or otherwise, except as required by law. Additional information about these assumptions and risks and uncertainties is disclosed in filings with securities regulators filed on SEDAR (www.sedar.com). These filings are also available at the Trust’s website at www.dreamindustrialreit.ca.