Singapore’s GIC, Dream Industrial to buy Summit REIT for $5.9 billion

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Singapore’s sovereign wealth fund GIC and Dream Industrial REIT join forces to raise Summit Industrial Income REIT for $5.9 billion

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Under the new agreement, GIC will own 90 percent of a joint venture vehicle, while Dream will own the remaining 10 percent. The company is managed by Dream Asset Management.

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Summit shareholders will receive a cash distribution of $23.50 per share in the form of a special distribution and a redemption of shares, a premium of 31.1 percent over Summit’s closing price on November 4, 2022.

Summit recommended that shareholders vote in favor of the transaction after determining it served the best interests of REIT shareholders.

“We are pleased to offer immediate and secure premium value to our shareholders through this cash transaction with GIC and Dream,” Paul Dykeman, Summit Chief Executive, said in a press release. “We are confident that this transaction is in the best interests of the REIT and shareholders.”

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“Supply has not been able to grow to keep up with demand for Canadian industrial leaders,” Tsichlas said in an interview. “The current actual rents are well below the estimated current market rents. So that provides a lot of buffer when leases expire, and then also a buffer when there are recessionary forces leading to less demand in the near future.”

Matt Kornack, an analyst at the National Bank of Canada Financial Markets, said that while the deal makes sense on some levels, he also has some reservations about the valuation.

“It’s a logical acquisition, the prices reflect how strong the Canadian markets are,” Kornack said. “It doesn’t make 100 percent sense for Dream Industrial from a valuation perspective, but with the property management fees they will generate from GIC for the 90 percent they don’t own, it helps earn some to get them to a point where they can use the numbers to buy a good quality portfolio.”

Upon approval of the Summit deal, Michael Cooper, Founder of the Dream Group of Companies and Trustee of Dream Industrial REIT, will manage the venture.

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