(To read more on the industrial market, click here.)
WINNIPEG-Artis REIT is in the midst of closing 10 industrial and office property acquisitions totaling $197.6 million. The locally headquartered public company formerly known as Westfield says it will complete a series of acquisitions by the end of March, taking its portfolio to 3.9 million sf.
Of the 10 properties being acquired, there are five office properties totaling approximately 233,000 sf and four industrial properties totaling approximately 420,000 sf. The other property is a small retail center.
The weighted average going-in cash yield, or capitalization rate, on the completed acquisitions is 7.53%. The cap rate on the remainder of the purchase agreements is 6.70%.
Artis CEO Armin Martens expects that yield to grow as leases roll. "Management estimates that the weighted average in-place rents for these acquisitions are currently 40% below today's market rates," he explains.
The company thus far closed on four of the 10 acquisitions for the aggregate price of $31.9 million. The acquisitions were financed with cash and from the proceeds of new mortgage financing, bearing a weighted average interest rate of 5.16% per annum.
The most recent of the closed acquisitions is Clareview Town Centre, a 55,900-sf retail center in Edmonton, AB whose main tenants are Empire Theaters and XS Cargo. Also in Edmonton, the company acquired Delt Centre, a 35,488-sf industrial asset leased to Saputo.
The two other properties, located in Winnipeg, MB are Keewatin Distribution Centre, a 201,154-sf industrial development whose tenants include Rosedale Transport, Portage Cartage and UPS, and a 24,300-sf office building leased to CDI College.
Of the six properties that it will close on in the coming weeks, five are located in Alberta, including three in Calgary and two in Red Deer. The sixth property is in Winnipeg. Four of the six properties are office properties and the remainder is industrial properties. Westfield has received acquisition financing commitments from lenders at a weighted average interest rate of 5.12%.
Upon completion of the acquisitions, Artis REIT's portfolio will consist of 45 commercial properties with an approximate gross book value of $660 million. The portfolio will total 3.9 million sf of leasable space that is 39.2% retail, 49.2% office and 11.6% industrial. The portfolio will have an estimated average lease term to maturity of 4.8 years and occupancy rate of 96.3%.
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