Canadian-based Pure Industrial Real Estate Trust (PIRET) is expanding its footprint in two major Southeast U.S. markets—Atlanta and Charlotte, N.C.—with the purchase of a six-property portfolio of industrial assets from STAG Industrial Inc. for $81 million.
The United States acquisitions comprise roughly 1.6 million square feet and consist of four assets in the Atlanta metro area and two in Charlotte. They increase PIRET’s investment in the U.S. to 19 properties totaling 4.6 million square feet and its Southeast U.S. holdings to 10 properties with a total of 3 million square feet of gross leasing area.
“PIRET remains focused on executing its plan to build an industry-leading portfolio of modern distribution properties in key U.S. industrial markets with strong long-term growth prospects,” Kevan Gorrie, president & CEO, said in a prepared statement. “We believe in the continued strength of the U.S. economy, and specifically the anticipated demand for larger, high quality distribution facilities in the Southeast U.S. This acquisition fits perfectly with our plans to expand our portfolio in select growth markets in the U.S.”
PIRET noted that the acquisition gave the REIT the opportunity to “acquire critical mass in two of the Southeast U.S.’s most established and fastest-growing markets” and that the firm had targeted Atlanta and Charlotte for expansion.
The properties are described as high-quality functioning warehouse/distribution facilities that are close to major interstate highways and airports. The buildings are all fully leased to seven tenants with a weighted average lease of 4.5 years. The tenants have an average tenure of 11 years at their properties. Three of the Atlanta-area properties are located in Conyers, Ga., and the fourth, the largest of the Georgia assets at 407,981 square feet, is at 3755 Atlanta Industrial Parkway in Atlanta and is leased to Empire Distributors Inc. The larger of the two Charlotte properties is a 465,323-square-foot facility leased by International Paper Co. at 3700 Display Drive.
PIRET said the acquisition was financed with a $40.5 million mortgage with an eight-year term and fixed-interest rate of 3.06 percent. The balance of the purchase price is being funded with proceeds of a recent equity offering. Both PIRET and STAG said the going-in capitalization rate was 6.9 percent.
For STAG, a Boston-based REIT that focuses on the acquisition and operation of single-tenant industrial properties throughout the U.S., the portfolio sale was part of its ongoing acquisition and disposition program.
“This was a great outcome to a process we first announced this summer and marks an important milestone in the STAG story,” Ben Butcher, STAG CEO, said in a prepared statement.
The REIT currently has a portfolio of 294 buildings in 37 states with approximately 57 million square feet. In its third-quarter earnings report released Nov. 3, STAG noted it had sold 14 buildings for a total of $51.4 million through Sept. 30. The pending sale to PIRET was noted but will be included in the fourth quarter earnings. On the acquisition front, STAG had acquired 23 properties through Sept. 30 for a total of $252.1 million. In the third quarter alone, the REIT paid $166 million for 13 buildings.