ING Real Estate Canada Trust to make public offer for Summit REIT in Canada
* Summit is Canada’s largest industrial property owner with over 300 properties
* Offer of CAD 30 per unit reflects an 18% premium to the closing price of 30 August 2006 and values Summit at CAD 2.2 billion (EUR 1.5 billion)
* Total transaction value is CAD 3.4 billion (EUR 2.4 billion) including assumed debt
* Summit Board unanimously recommends offer to unit holders
* Summit to be delisted upon closing
ING Real Estate Canada Trust, a subsidiary of ING Real Estate, announced today a public offer for all issued and outstanding units of Summit Real Estate Investment Trust, Canada’s largest owner of industrial investment property and the fourth largest REIT listed on the Toronto Stock Exchange.
The offer, at CAD 30 per unit, reflects a premium of 18% to the 30 August closing price and values the company at CAD 2.2 billion (EUR 1.5 billion). Including the assumption of existing Summit debt, the total value of the transaction equals CAD 3.4 billion (EUR 2.4 billion). Summit’s Board of Trustees has unanimously approved the public offer and has recommended holders to tender their units.
The offer is being made by ING Real Estate Canada Trust, a newly formed subsidiary of ING Real Estate. On completion of the transaction, ING Industrial Fund (an Australian listed property trust managed by ING Real Estate) will take a 50% equity interest in the Canadian fund valued at CAD 818 million. ING Real Estate intends to progressively sell its remaining 50% equity interest, valued at CAD 818 million (EUR 575 million), to third-party institutional clients over the following twelve months. The remaining sums to complete the offer have been raised through non-recourse financing.
The Offer will be subject to customary conditions including acceptance of the offer by unit holders owning not less than 66 2/3% of the units on a fully-diluted basis, required regulatory approvals, the absence of a material adverse change with respect to Summit REIT and certain other conditions.
For ING Industrial Fund, the acquisition will further its strategy to invest in international industrial property markets for third-party investors. The fund is Australia’s largest listed industrial property fund with assets of more than AUD 2.8 billion. The Canadian industrial property market represents a significant growth opportunity for the fund given low levels of vacancy and strong tenant demand, setting the conditions for future rental and capital growth.
The acquisition also provides ING Real Estate with a large real estate investment management platform in Canada with a first-class portfolio and management team with a strong track record.
Impact on ING Group
The transaction will have a positive impact on the Tier-1 ratio of ING Bank N.V. of 9 basis points. However, this will be reduced to zero as ING Real Estate sells its 50% interest to third-party institutional clients over the coming twelve months. The transaction will have no impact on the debt/equity ratio of ING Group.
Summit is Canada’s largest owner of industrial investment property and the fourth largest REIT listed on the Toronto Stock Exchange. Summit has a portfolio of 33 million square feet (3.1 million sq.m.) and over 300 properties. The trust has over 180 staff with the group’s vertically integrated management platform encompassing property and asset management, leasing and property development.
The portfolio has exposure to a broad spectrum of industrial property with the largest segment of the portfolio being light industrial properties. Industrial property represents 85% of the portfolio by value of Summit. The assets are located across eight major industrial markets in Canada, with the portfolio having significant exposure to the strongly performing provinces of Western Canada. These regions have benefited substantially from improved commodity prices, which has driven demand for industrial space throughout the region.
Summit’s significant market presence is reflected in its position as the largest industrial landlord in Calgary, Edmonton and Halifax as well as being the second largest industrial landlord in the greater Toronto area. The portfolio has an occupancy level of 96% with a weighted average lease term to expiry of 4.5 years.
About ING Real Estate
ING Real Estate is an international real estate company active in investment management, development and finance. With a total business portfolio of EUR 75 billion and offices in 17 countries in Europe, America, Asia and Australia, ING Real Estate ranks among the world’s strongest real estate companies. ING Real Estate is part of ING Group, a global financial institution of Dutch origin offering banking, insurance and asset management to over 60 million private, corporate and institutional clients in more than 50 countries.
About ING Industrial Fund
The ING Industrial Fund (IIF) is a publicly listed property trust in Australia and is included in the S&P/ASX 100 index. IIF invests in prime industrial properties and business parks in key global markets and its operations include property investment, property development and property services. The fund presently owns a highly diversified industrial property portfolio located throughout Australia and Western Europe, and is the largest industrial property trust listed in Australia with total assets in excess of AUD2.8 billion (EUR1.7bn).
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