GIC, Dream Acquire Summit REIT for $3.3B

GIC, the sovereign wealth fund of Singapore, and Dream Industrial REIT have formed a joint venture to buy Summit Industrial Income REIT in a transaction valued at $3.3B, including assumed debt.

Summit holds a portfolio of light industrial properties across Canada.

According to the agreement, GIC and Dream will pay $23.50 per unit in cash for the REIT, which closed at $17.93 per unit on the Toronto Stock Exchange, in Canadian dollars, which are trading for about 75 cents US.

Dream Industrial, which owns and operates a portfolio of 258 industrial assets, will hold a 10% stake in the joint venture, while GIC will own 90%. Dream Asset Management will be the property manager for the venture.

The joint venture will assume Summit’s $925M of outstanding unsecured debentures, as well as Summit’s existing mortgages. TD Securities is providing financing to backstop the mortgages and Toronto-Dominion Bank has underwritten a revolving credit facility for future liquidity requirements.

The acquisition is expected to close in the first quarter of next year. Upon closure of the Summit acquisition, Dream Industrial will manage 69M SF globally, including 32M SF on behalf of its institutional clients in North America.

Dream Industrial’s Canadian industrial portfolio under management will grow to a total GLA of 43M SF, about 53% of the REIT’s business. The combined portfolios are focused on high-quality logistics and warehousing assets in Canada’s largest urban markets, including Toronto and Montreal.

The Summit acquisition will increase Dream Industrial’s development pipeline from 6.5M SF to 11.1M SF.

“Summit has a premier portfolio of industrial properties defined by strong sector fundamentals, resilient cash flows, and stable market rent growth in key markets across Canada,” said Adam Gallistel, head of Americas real estate for GIC, in a statement.

Dream REIT CEO Brian Pauls called the transaction “transformational” for Dream, doubling the scale of its Canadian industrial portfolio assets under management and provide new sources of capital to pursue acquisitions in Canada.

“Combining with Summit will add scale and quality to our Canadian platform and amplify our fee generation business,” Pauls said, in a statement. “This transaction will provide DIR with the ability to grow accretively with a more diversified source of growth capital.”

The deal to acquire Summit is the second major REIT acquisition GIC has made this fall. In September, GIC partnered with Oak Street to STORE Capital, the net lease REIT, in a cash deal worth $14B.

The acquisition of STORE, which is expected close in the first quarter of 2023, included a 30-day “go-shop” period—in which competing offers could be solicited—which expired on October 15.

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