ARTIS REIT (AX-UN-T) has an unconditional agreement to sell nine of its U.S. industrial properties for $272.6 million (all figures Cdn), its second major U.S. property divestment in recent months.
The portfolio includes industrial buildings in Arizona and Minnesota. It comprises six sites located in the Greater Phoenix Area, totalling 822,393 square feet of leasable area, and three properties located in the Twin Cities Area (Minneapolis-St. Paul), totalling 317,646 square feet of leasable area.
The sale price represents a price per-square-foot value of $239, and the properties have approximately $81.2 million of mortgage financing.
The Winnipeg-based REIT has been actively marketing and selling assets to reduce its debt and improve its balance sheet.
ARTIS did not identify the buyer.
Artis ‘on track’ for $1B in dispositions
“We continue to make solid progress in the execution of our disposition strategy,” Samir Manji, the president and chief executive officer of Artis, said in the announcement. “Along with the closing of the sale of Park 8Ninety announced earlier this month, this portfolio disposition will move us closer to achieving our goal of reducing overall leverage to below 45 per cent and will lower our borrowing costs significantly moving forward.
“With today’s announcement, we are on track to completing a billion dollars of dispositions this year. This will result in a profound change to our balance sheet by year end relative to where we finished 2023. At the same time, it will put Artis in a strong liquidity position that we intend to harness on an opportunistic basis going forward.”
The transaction is expected to close in the third quarter of 2024.
In April, ARTIS announced a deal to sell one of its premium industrial properties, the newly developed 1.8-million-square-foot Park 8Ninety in Houston, to U.S.-based KKR for $320 million (a per-square-foot price of $178).
Park 8Ninety is fully leased and consists of 12 single- and multi-tenant buildings across 127 acres. It was constructed over a six-year period through 2022.
Artis also announced in December a deal to sell eight retail properties in Calgary and Winnipeg for a total of $222 million.
In a letter to shareholders released in March, prior to its Q1 2024 results, Manji discussed the challenges facing the REIT, including its units continuing to trade at “significant discount to NAV”, and efforts to improve that gap.
The REIT’s NAV at the end of Q1 was $14.06 per unit. Its units were trading this morning at $6.76 on the TSX.
Manji said the REIT expects to provide further updates on its plans on August 8 when its Q2 2024 results are to be released.