• Sun. Aug 7th, 2022

PROREIT to Joint Venture with Crestpoint Real Estate Investments in $228 Million Deal

ByWillie M. Evans

Jun 21, 2022

(RTTNews) – PRO Real Estate Investment Trust (PRV.UN), on Tuesday announced a joint venture agreement with Crestpoint Real Estate Investments Ltd., a manager of commercial real estate and mortgage investments, to each acquire a 50% stake in 21 primarily industrial properties currently held by a third party, for a price of $228 million.

In this regard, PROREIT would sell to Crestpoint a 50% interest in 21 of its currently owned properties, valued at $227 million, for consideration to PROREIT of approximately $113.5 million (before closing costs).

The strategic agreement consists of jointly owning an industry-focused portfolio comprising nearly 3.1 million square feet of gross leasable area of ​​42 properties, including 41 properties in Halifax, Nova Scotia, and one property in Moncton, in New Brunswick.

The combined transaction, which would immediately increase profits, would see PROREIT and Crestpoint each have a 50% stake in the 42-property portfolio. PROREIT, through its wholly owned property management business Compass Commercial Realty, would act as sole property manager for the entire portfolio and collect industry standard fees.

PROREIT’s acquisition of the 50% interest in the 21 properties, totaling 1.6 million square feet, at a cost to PROREIT of approximately $114 million (excluding closing costs), would funded from the proceeds of a 50% interest in approximately $148 million of new fixed rate mortgages and the balance of approximately $40 million would be satisfied with available cash, including cash from proceeds the sale of a 50% interest in the existing properties to Crestpoint.

PROREIT’s sale of a 50% interest in 21 of its currently owned properties, totaling 1.5 million square feet, will result in approximately $49 million in cash consideration receivable from Crestpoint (before closing costs ), which will also assume a 50% interest in approximately $129 million of fixed rate mortgages currently held by PROREIT.

The balance of the proceeds to PROREIT, net of the acquisition payment, will be used to reduce the REIT’s credit facility. The transaction is expected to close in the coming weeks and is subject to customary closing conditions.

The 21 properties acquired are located in the Halifax Burnside Industrial Park, bringing PROREIT’s presence in the region to 42 properties.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.