Click here to close now.

SYS-CON MEDIA Authors: Mike Kavis, Elizabeth White, John Treadway, SmartBear Blog, Liz McMillan

News Feed Item

WPT Industrial Real Estate Investment Trust Announces Proposed Acquisition of US$45.4 Million Industrial Property near Louisville, Kentucky

TORONTO, April 14, 2014 /CNW/ - WPT Industrial Real Estate Investment Trust (the "REIT") (TSX: WIR.U) announced today that it has entered into an agreement to indirectly acquire an industrial property located near Louisville, Kentucky (the "Louisville Property") for a purchase price of  approximately US$45.4 million (exclusive of closing and transaction costs), representing an initial capitalization rate of approximately 6.35%. The REIT, through WPT Industrial, LP (the "Partnership") (the REIT's operating subsidiary), will indirectly acquire the Louisville Property from Welsh Property Trust, LLC ("Welsh"), the external asset and property manager of the REIT.

The Louisville Property, located in Shepherdsville, Kentucky, is a multi-tenant distribution building, totaling 936,000 square feet of gross leasable area. The Louisville Property is currently 100% leased to two tenants, Clorox Co. and a major online retailer, with leases expiring in July 2018 and July 2019, respectively. The leases in place for the Louisville Property are triple net and contain aggregate annual rental assessment escalations of approximately 3%. Based on the findings of the building condition report for the Louisville Property prepared for the REIT by an independent third party consultant, the REIT anticipates a five-year average capital expenditure for the Louisville Property of US$0.02 per square foot annually. Additionally, based on the leasing profile of the Louisville Property, management of the REIT has assumed a reserve of US$0.15 per square foot annually for leasing costs (including tenant improvement costs and leasing commissions). The year-two stabilized capitalization rate for the Louisville Property is expected to increase to approximately 6.68% once rent concessions have expired and contractual increases in rent take effect.

"We are pleased to announce the proposed acquisition of the Louisville Property. When Welsh originally acquired this property, two-thirds of the building was vacant. After Welsh stabilized the property with two new leases to high-quality tenants, we are now able to acquire this property through our right of first opportunity to acquire assets from Welsh. In addition to being our fourth announced acquisition since the completion of our initial public offering in April 2013, the proposed acquisition is a direct example of the benefits of our relationship with Welsh. The acquisition of this property is also anticipated to be immediately accretive to the REIT's AFFO per unit and is expected to lower the REIT's payout ratio," commented Scott Frederiksen, Chief Executive Officer.

The Louisville Property is being acquired pursuant to the terms of a contribution agreement dated April 14, 2014 (the "Contribution Agreement") among the REIT, the Partnership, WPT Industrial, Inc. (the general partner of the Partnership) and Welsh. The purchase price for the Louisville Property (exclusive of closing and transaction costs) will be satisfied by: (i) the issuance of approximately US$20.4 million Class B partnership units of the Partnership ("Class B Units") (being 2,165,605 Class B Units) to Welsh; and (ii) US$25 million in cash, to be funded by new, fixed rate term mortgage financing to be placed on the Louisville Property at closing of the acquisition. No acquisition fee is payable to Welsh in connection with the acquisition of the Louisville Property pursuant to the terms of the asset management agreement dated April 26, 2013 among the REIT, the Partnership and Welsh.

The acquisition is expected to close in June 2014 and is subject to certain closing conditions, including the REIT receiving TSX conditional listing approval in respect of the Units underlying the Class B Units to be issued to Welsh pursuant to the Contribution Agreement, the REIT receiving unitholder approval on a disinterested basis, as required by the Toronto Stock Exchange (the "TSX"), in respect of certain aspects of the acquisition (as described below), the receipt of due diligence results satisfactory to the independent members of the REIT's board of trustees (the "Independent Trustees") and the REIT closing mortgage financing for the Louisville Property on terms satisfactory to the Independent Trustees. There can be no assurance that these closing conditions will be satisfied, or that the acquisition will be completed on its present terms or at all. A copy of the Contribution Agreement will be filed by the REIT under its profile on the SEDAR website at www.sedar.com.

Pursuant to the TSX Company Manual, the REIT is required to obtain unitholder approval, on a disinterested basis, for the issuance of the Class B Units to Welsh and the Units issuable upon redemption of such Class B Units in accordance with the terms and conditions of the agreement of limited partnership governing the Partnership. The REIT will seek this unitholder approval at the annual and special meeting of unitholders to be held on May 15, 2014 (the "Annual Meeting"). The REIT intends to mail an information circular providing further details on the business of the Annual Meeting, including the acquisition, to the REIT's unitholders in the second half of April 2014.

The number of Class B Units to be issued to Welsh has been determined by applying a price of US$9.42 per Class B Unit, which is the 20-trading day volume-weighted average price for the Units for the period immediately prior to today's date. The closing price of the Units on the TSX on April 11, 2014 (the last trading day before this press release) was US$9.60.

Following completion of the acquisition, it is expected that Welsh will own, directly and indirectly, 752,700 Units and 15,225,314 Class B Units, representing an approximate 54.3% effective interest in the REIT as of the closing of the acquisition (assuming all Class B Units are redeemed for Units, but otherwise on a non-diluted basis); provided, however, that the Class B Units issued to an affiliate of Welsh in connection with the acquisition of an industrial property in Pontoon Beach, Illinois on July 15, 2013 (the "Illinois Property Class B Units") may not be redeemed for Units until the REIT has satisfied all of the conditions of TSX for issuance of the Illinois Property Class B Units and the listing of the underlying Units as described in the REIT's annual information form for the year ended December 31, 2013.

Since the acquisition constitutes a "related party transaction" under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"), the acquisition was examined, reviewed and considered by the Independent Trustees. As part of their review and consideration of the transaction, the Independent Trustees retained, on behalf of the REIT, independent Canadian and U.S. legal counsel and an independent appraiser to conduct an appraisal of the Louisville Property. Based upon, among other things, a number of factors, the recommendations of, and discussions with management of the REIT, discussions with management of Welsh, considering the advice of its legal advisors and its own review and consideration of the independent appraisal, the acquisition and related agreements, the Independent Trustees determined the acquisition to be on commercially reasonable terms and in the best interests of the REIT and the REIT's unitholders, unanimously approved the acquisition and unanimously recommended that unitholders of the REIT vote in favour of the approvals related to the acquisition at the Annual Meeting.

MI 61-101 provides a number of circumstances in which a transaction between an issuer and a related party may be subject to valuation and minority approval requirements. An exemption from such requirements is available when the fair market value of the transaction is not more than 25% of the market capitalization of the issuer. The REIT has been granted exemptive relief from the requirements of MI 61-101 that, subject to certain conditions, permits it to be exempt from the minority approval and valuation requirements for transactions that would have a value of less than 25% of the REIT's market capitalization if the Class B Units (other than the Illinois Property Class B Units, unless and until the REIT has satisfied all conditions of the TSX in respect of the issuance of the Illinois Property Class B Units and the listing on the TSX of the underlying Units) held by Welsh and any of its permitted transferees (as set out in section 11.3A(1) of the agreement of limited partnership dated April 26, 2013 governing the Partnership) (the "Permitted Transferees") are included in the calculation of the REIT's market capitalization. As a result, the 25% threshold, above which the minority approval and valuation requirements would apply, is increased to include the approximately 50.3% indirect effective interest held by Welsh and its Permitted Transferees in the REIT in the form of Class B Units as of the date hereof (assuming all Class B Units, other than the Illinois Property Class B Units, are redeemed for Units, but otherwise on a non-diluted basis). Accordingly, the 25% threshold for the purposes of MI 61-101 is approximately US$51.4 million. Consequently, the acquisition is not subject to the valuation and minority approval requirements under MI 61-101.

About WPT Industrial Real Estate Investment Trust

WPT Industrial Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario. The REIT has been formed to own and operate an institutional-quality portfolio of primarily industrial properties located in the United States, with a particular focus on warehouse and distribution industrial real estate.  WPT Industrial, LP (the REIT's operating subsidiary) indirectly owns a portfolio of properties consisting of approximately 10.2 million square feet of gross leasable area comprised of 37 industrial properties and two office properties located in 12 states within the United States.

Forward-Looking Statements

This press release contains "forward-looking information" as defined under applicable Canadian securities law ("forward-looking information" or "forward-looking statements") which reflect management's expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance, business prospects and opportunities of the REIT. The words" plans", "expects", "does not expect", "scheduled", "estimates", "intends", "anticipates", "does not anticipate", "projects", "believes" or variations of such words and phrases or statements to the effect that certain actions, events or results "may", "will", "could", "would", "might", "occur", "be achieved" or "continue" and similar expressions identify forward-looking statements. Some of the specific forward-looking statements in this press release include, but are not limited to, statements with respect to: the closing of the acquisition of the Louisville Property and the expected closing date thereof; expectations regarding capital expenditures and leasing costs; expectations regarding accretion to the REIT's AFFO per Unit and the effect of the acquisition on the REIT's payout ratio; the expected future increase in the capitalization rate for the Louisville Property, the REIT's plans for financing the acquisition, including the REIT's intention to fund the cash portion of the purchase price with new, fixed rate term mortgage financing to be placed on the Louisville Property at closing of the acquisition; the REIT's intention to seek unitholder approval for certain aspects of the acquisition at the Annual Meeting; and Welsh's expected effective interest in the REIT following closing of the acquisition. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management of the REIT as of the date of this press release, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The REIT's estimates, beliefs and assumptions, which may prove to be incorrect, include the various assumptions set forth herein, including, but not limited to, the REIT's and the Louisville Property's future growth potential, results of operations, future prospects and opportunities, the demographic and industry trends remaining unchanged, no change in legislative or regulatory matters, future levels of indebtedness, the tax laws as currently in effect remaining unchanged, the continual availability of capital, the current economic conditions remaining unchanged, and continued positive net absorption and declining vacancy rates in the markets in which the REIT's properties are located.

When relying on forward-looking statements to make decisions, the REIT cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed under "Risk Factors" in the REIT's annual information form for the year ended December 31, 2013, which is available under the REIT's profile on SEDAR at www.sedar.com. These forward-looking statements are made as of the date of this press release and, except as expressly required by applicable law, the REIT assumes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Non-IFRS Measures

Funds from operations ("FFO"), adjusted funds from operations ("AFFO"), net operating income ("NOI"), capitalization rate and payout ratio are not measures recognized under International Financial Reporting Standards as issued by the International Accounting Standards Board and as adopted by the Canadian Institute of Chartered Accountants in Part I of The Canadian Institute of Chartered Accountants Handbook — Accounting, as amended from time to time ("IFRS") and do not have standardized meanings prescribed by IFRS. Management believes that these terms are supplemental measures of a Canadian real estate investment trust's performance and the REIT believes they are relevant measures of the ability of the REIT to earn and distribute cash returns to investors in the REIT's trust units and to evaluate the REIT's performance. The IFRS measurement most directly comparable to FFO, AFFO and NOI is net income.

"FFO" is defined as net income in accordance with IFRS, (i) plus or minus fair value adjustments on investment properties; (ii) plus or minus gains or losses from sales of investment properties; (iii) plus or minus other fair value adjustments; (iv) plus amortization of tenant incentives; (v) plus transaction costs expensed as a result of the purchase of a property being accounted for as a business combination; (vi) plus distributions on redeemable or exchangeable units treated as interest expense; (vii) plus or minus any negative goodwill or goodwill impairment; and (viii) plus deferred income tax expense, after adjustments for equity accounted entities and joint ventures calculated to reflect FFO on the same basis as consolidated properties. FFO has been prepared consistently with the definition presented in the White Paper on funds from operations prepared by the Real Property Association of Canada for all periods presented.

"AFFO" is defined as FFO subject to certain adjustments, including: (i) amortization of fair value mark-to-market adjustments on long-term debt and amortization of financing costs; (ii) adjusting for any differences resulting from recognizing property rental revenues or expenses on a straight-line basis; (iii) amortization of grant date fair value related to compensation incentive plans; (iv) adjusting for any non-cash compensation expense; and (v) deducting a reserve for normalized maintenance capital expenditures, tenant inducements and leasing commissions, as determined by the REIT. Other adjustments may be made to AFFO as determined by the trustees of the REIT in their sole discretion. FFO and AFFO should not be construed as alternatives to net income and comprehensive income determined in accordance with IFRS as indicators of the REIT's performance. The REIT's method of calculating FFO and AFFO may differ from other issuers' methods and accordingly may not be comparable to measures used by other issuers.

"NOI" is used by industry analysts, investors and management to measure operating performance of real estate investment trusts. NOI represents revenue from properties less property operating expenses as presented in the consolidated statements of net income and comprehensive income prepared in accordance with IFRS.

"capitalization rate" is defined as NOI divided by purchase price.

"payout ratio" is defined as distributions of the REIT (including distributions on the Class B Units) divided by AFFO.

SOURCE WPT Industrial Real Estate Investment Trust

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
SYS-CON Events announced today that Vicom Computer Services, Inc., a provider of technology and service solutions, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. They are located at booth #427. Vicom Computer Services, Inc. is a progressive leader in the technology industry for over 30 years. Headquartered in the NY Metropolitan area. Vicom provides products and services based on today’s requirements...
Dave will share his insights on how Internet of Things for Enterprises are transforming and making more productive and efficient operations and maintenance (O&M) procedures in the cleantech industry and beyond. Speaker Bio: Dave Landa is chief operating officer of Cybozu Corp (kintone US). Based in the San Francisco Bay Area, Dave has been on the forefront of the Cloud revolution driving strategic business development on the executive teams of multiple leading Software as a Services (SaaS) ap...
The 5th International DevOps Summit, co-located with 17th International Cloud Expo – being held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the...
What exactly is a cognitive application? In her session at 16th Cloud Expo, Ashley Hathaway, Product Manager at IBM Watson, will look at the services being offered by the IBM Watson Developer Cloud and what that means for developers and Big Data. She'll explore how IBM Watson and its partnerships will continue to grow and help define what it means to be a cognitive service, as well as take a look at the offerings on Bluemix. She will also check out how Watson and the Alchemy API team up to off...
The IoT Bootcamp is coming to Cloud Expo | @ThingsExpo on June 9-10 at the Javits Center in New York. Instructor. Registration is now available at http://iotbootcamp.sys-con.com/ Instructor Janakiram MSV previously taught the famously successful Multi-Cloud Bootcamp at Cloud Expo | @ThingsExpo in November in Santa Clara. Now he is expanding the focus to Janakiram is the founder and CTO of Get Cloud Ready Consulting, a niche Cloud Migration and Cloud Operations firm that recently got acquir...
The 17th International Cloud Expo has announced that its Call for Papers is open. 17th International Cloud Expo, to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, APM, APIs, Microservices, Security, Big Data, Internet of Things, DevOps and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding bu...
How do you securely enable access to your applications in AWS without exposing any attack surfaces? The answer is usually very complicated because application environments morph over time in response to growing requirements from your employee base, your partners and your customers. In his session at 16th Cloud Expo, Haseeb Budhani, CEO and Co-founder of Soha, will share five common approaches that DevOps teams follow to secure access to applications deployed in AWS, Azure, etc., and the frict...
SYS-CON Media announced today that John Treadway’s blog has exceeded 475,000 page views. John Treadway, Vice President at Cloud Technology Partners, has surpassed 475,000 page views on the SYS-CON family of online magazines, which includes Cloud Computing Journal, Internet of Things Journal, Big Data Journal, Microservices Journal, and several others. His blog home page at SYS-CON can be found at JohnTreadway.SYS-CON.com.
SYS-CON Events announced today that Column Technologies, a global technology solutions company, will exhibit at SYS-CON's DevOps Summit 2015 New York, which will take place June 9-11, 2015, at the Javits Center in New York City, NY. Established in 1998, Column Technologies is a leader in application performance and infrastructure management for commercial and federal markets. The company is headquartered in the United States, with a diverse and talented team of more than 350 employees around th...
ProfitBricks has launched its new DevOps Central and REST API, along with support for three multi-cloud libraries and a Python SDK. This, combined with its already existing SOAP API and its new RESTful API, moves ProfitBricks into a position to better serve the DevOps community and provide the ability to automate cloud infrastructure in a multi-cloud world. Following this momentum, ProfitBricks has also introduced several libraries that enable developers to use their favorite language to code ...
SYS-CON Events announced today that Blue Box has been named “Bronze Sponsor” of SYS-CON's DevOps Summit New York, which will take place June 9-11, 2015, at the Javits Center in New York City, NY. Blue Box delivers Private Cloud as a Service (PCaaS) to a worldwide customer base. Built on a technology platform leveraging decades of operational expertise in cloud and distributed systems, Blue Box Cloud is a managed private cloud product available in both hosted and on-prem versions. Each Blue Box ...
SYS-CON Events announced today Sematext Group, Inc., a Brooklyn-based Performance Monitoring and Log Management solution provider, will exhibit at SYS-CON's DevOps Summit 2015 New York, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Sematext is a globally distributed organization that builds innovative Cloud and On Premises solutions for performance monitoring, alerting and anomaly detection (SPM), log management and analytics (Logsene), search analytics (S...
SYS-CON Events announced today Isomorphic Software, the global leader in high-end, web-based business applications, will exhibit at SYS-CON's DevOps Summit 2015 New York, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Isomorphic Software is the global leader in high-end, web-based business applications. We develop, market, and support the SmartClient & Smart GWT HTML5/Ajax platform, combining the productivity and performance of traditional desktop software ...
SYS-CON Events announced today Arista Networks will exhibit at SYS-CON's DevOps Summit 2015 New York, which will take place June 9-11, 2015, at the Javits Center in New York City, NY. Arista Networks was founded to deliver software-driven cloud networking solutions for large data center and computing environments. Arista’s award-winning 10/40/100GbE switches redefine scalability, robustness, and price-performance, with over 3,000 customers and more than three million cloud networking ports depl...
SYS-CON Events announced today that SoftLayer, an IBM company, has been named “Gold Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place June 9-11, 2015 at the Javits Center in New York City, NY, and the 17th International Cloud Expo®, which will take place November 3–5, 2015 at the Santa Clara Convention Center in Santa Clara, CA. SoftLayer operates a global cloud infrastructure platform built for Internet scale. With a global footprint of data centers and network points...