Dream Industrial REIT & Dream Unlimited Corp. Establish $1.5B GTA Dev. JV w Global Inst. Investor
TORONTO, April 28, 2022--(BUSINESS WIRE)--Dream Industrial Real Estate Investment Trust (TSX: DIR.UN) (the "Trust" or the "REIT") and Dream Unlimited Corp. (TSX: DRM) ("Dream") announced today the formation of a $1.5 billion develop-to-hold joint venture (the "Joint Venture") with a leading global sovereign wealth fund (the "Partner"). The Joint Venture will target to buy $500 million of well-located development sites in the Greater Toronto Area ("GTA") and other select markets within the Greater Golden Horseshoe Area ("GGHA"), to build high-quality, best-in-class industrial assets with the intention to hold the properties following stabilization. The Partner will commit to a 75% ownership interest in the Joint Venture with the Trust maintaining a 25% ownership interest. The Joint Venture intends to keep the development projects unlevered within the venture, with each party utilizing debt on their respective balance sheets to fund their respective share of the land acquisition and construction costs.
The Trust believes that this Joint Venture allows it to build up more scale in longer-term development sites as well as be competitive in acquiring near-term development sites. As a result, the Trust can participate in the upside of a larger number of development projects, improving the overall quality of its business and its development program while diversifying its development risk. Furthermore, the Joint Venture will significantly expand the Trust’s footprint in the GTA and GGHA over time.
A subsidiary of Dream Asset Management Corporation ("DAM") will be the asset manager for the Joint Venture and the Trust would continue to pay fees on its 25% interest under its current asset management agreement with DAM. The Trust is expected to provide property management and accounting, construction management, and leasing services to the Joint Venture at market rates, providing a growing income stream as the Joint Venture deploys its committed capital.
The Trust intends to contribute two development sites to the Joint Venture at a sale price of approximately $98 million:
Brampton East Lands is a 30-acre land parcel located in Brampton, Ontario that can support an over 550,000 square foot logistics facility with targeted construction completion in the first half of 2025. The Trust acquired the site in April 2021 and will contribute it to the venture at a price of $70.5 million;
Maple Grove Road is a 28-acre land parcel in Cambridge, which should support the development of approximately 420,000 square feet in the next 24 months. The Trust acquired the site in late December 2021 and the site is being contributed at a price of $27.5 million; and
The Joint Venture will close on a 10-acre site located immediately adjacent to the Brampton East Lands for a purchase price of $23 million in Q2-2022. Together with the existing 30-acre site, this land parcel can support a 300,000 square foot building with targeted construction completion in the first half of 2025.
Following the initial vend-in and the acquisition of the 10-acre site in Brampton by the Joint Venture, the Trust is expected to realize net proceeds of approximately $67 million. The closing of the initial vend-in to the Joint Venture is expected to occur at the end of April 2022. The Joint Venture will continue to source attractive land opportunities in the GTA and GGHA that meet its investment criteria.
"We are excited to work with a reputed global partner in building best-in-class assets in one of the strongest industrial markets in the world globally," said Alexander Sannikov, Chief Operating Officer of Dream Industrial REIT. "We are extremely bullish on the GTA industrial market due to the strong demographics and significant scarcity of buildable land. With older vintage well-located product trading at record high valuations, we will remain opportunistic in sourcing properties that are attractive against our target hurdles and screen well against economic rent and replacement cost. We believe that developments are an attractive way to add brand-new product at attractive economics to the REIT. We believe that this partnership will allow us to enhance our exposure to developments and allow us to improve the overall quality and value of the business quickly and safely."
About Dream Industrial Real Estate Investment Trust
Dream Industrial REIT is an unincorporated, open-ended real estate investment trust. As at December 31, 2021, Dream Industrial REIT owns, manages and operates a portfolio of 239 industrial assets (351 buildings) comprising approximately 43 million square feet of gross leasable area in key markets across Canada, Europe, and the U.S. Dream Industrial REIT’s objective is to continue to grow and upgrade the quality of its portfolio which primarily consists of distribution and urban logistics properties and to provide attractive overall returns to its unitholders. For more information, please visit www.dreamindustrialreit.ca.
About Dream Unlimited Corp.
Dream is a leading developer of exceptional office and residential assets in Toronto, owns stabilized income generating assets in both Canada and the U.S., and has an established and successful asset management business, inclusive of $15 billion of assets under management across three Toronto Stock Exchange listed trusts, our private asset management business and numerous partnerships. Dream also develops land and residential assets in Western Canada. Dream expects to generate more recurring income in the future as its urban development properties are completed and held for the long term. Dream has a proven track record for being innovative and for our ability to source, structure and execute on compelling investment opportunities. For more information please visit www.dream.ca.
Forward Looking Information
This press release contains forward-looking information within the meaning of applicable securities legislation. Forward-looking information generally can be identified by the use of forward-looking terminology such as "objective", "will", "expect", "intend", "believe", "should", "plans", "allow" or "continue", or similar expressions suggesting future outcomes or events. 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; employment levels; mortgage and interest rates and regulations; uncertainties around the timing and amount of future financings; uncertainties surrounding the COVID-19 pandemic; geopolitical events, including disputes between nations, war and international sanctions; the financial condition of tenants; leasing risks, including those associated with the ability to lease vacant space; rental rates and the strength of rental rate growth on future leasing; and interest and currency rate fluctuations. The Trust’s and Dream’s objectives and forward-looking statements are based on certain assumptions, including that the general economy remains stable, interest rates remain stable, conditions within the real estate market remain consistent, rising replacement costs in the Trust’s operating markets remain steady, competition for acquisitions remains consistent with the current climate and that the capital markets continue to provide ready access to equity and/or debt. All forward-looking information in this press release speaks as of the date of this press release. Neither the Trust nor Dream 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 contained in the Trust’s and Dream’s respective filings with securities regulators, including their respective latest annual information form and MD&A. These filings are also available at the Trust’s and Dream’s website at www.dreamindustrialreit.ca and www.dream.ca respectively.
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Contacts
DREAM INDUSTRIAL REAL ESTATE INVESTMENT TRUST
Brian Pauls Chief Executive Officer (416) 365-2365 bpauls@dream.ca
Lenis Quan Chief Financial Officer (416) 365-2353 lquan@dream.ca
Alexander Sannikov Chief Operating Officer (416) 365-4106 asannikov@dream.ca
DREAM UNLIMITED CORP.
Deb Starkman Chief Financial Officer (416) 365-4124 dstarkman@dream.ca
Kim Lefever Director, Investor Relations (416) 365-6339 klefever@dream.ca