Watch the Industrial REIT – Fund President Q2 2024 Update
Transcript
Mike Bonneveld:
Hi, everyone. Welcome to the Q2 2024 update for Skyline Industrial REIT. We decided to change the format of this quarter’s update and provide investors with deeper insights into the REIT’s development and acquisition strategies.
Financial portfolio highlights for the second quarter are as follows: Portfolio occupancy of 98.8%. Average portfolio rent at $8.83, up from $8.54 only the quarter before. Funds From Operations (FFO) is $500,000 above the initial budget for the first half of the year.
And, as hopefully all of you are aware, effective July 11, 2024, the Industrial REIT Board approved a $0.25 increase in the Unit Value, now sitting at $22.75. The only acquisition or disposition update during the quarter was a sliver of land we acquired at 555 Conestoga Parkway in Cambridge [Ontario], an asset we acquired from the municipality to complete the land site and hopefully redevelop in the future. During the quarter, we had good leasing activity, completing 220,000 square feet in deals.
As at June 30, 2024, we have now completed 74% of our 2024 expiries, and 22% of our expected 2025 expiries, with an average increase in in-place rents of 34%. Now, I want to focus on our development program and provide some highlights to you, the investors, about where we’re at and some of the things that we continue to work on. To date, the REIT, in partnership with Rosefellow, [has] completed five development projects and acquired the unowned interest in each one, namely Reverchon, Victor Davis, Notre Dame, Mascouche, and Place Marien.
These five projects total 1.28 million square feet. They are all 100% occupied, with a weighted average lease term of over 12 years. Additionally, we expect by the end of 2024 to have substantial completion of construction on eight additional projects. These projects would total approximately 3 million square feet. Leasing is progressing well across most of these assets, and we expect stabilization to occur on each of these within the next 12 to 18 months.
137 Boulevard Bellerose, Laval [Quebec].
This is a two-building, 293,000 square foot warehouse project, already 40% leased. Offers for an additional 10% of this space are under negotiation and construction is expected to be completed in Q4 2024. The complex is also Zero Carbon and LEED standard.
Kirkland, Montreal [Quebec].
This is a three-building, 588,000 square foot warehouse complex. It’s already 44% pre-leased, with another 25% already being negotiated with a separate tenant. Construction is expected to be completed in Q3 2024, and the project is Zero
Carbon and LEED standard.
131 Montcalm Boulevard North Candiac [Quebec].
This is a single-building, 491,000 square foot warehouse property. The leasing team is currently negotiating an offer to lease with a 300,000 square foot tenant, and has been shortlisted with another tenant for the balance
of the property. Construction is expected to be completed in Q3 of 2024. This complex is also built to a Zero Carbon standard.
450 rue Paul Gauguin, Candiac [Quebec].
This is a single-building, 126,000 square foot warehouse property. The property has already completed construction and is 50% pre-leased. This project is built to a LEED standard. Rampart III, Edmonton [Alberta]. This development is 100% owned by the REIT and is the last component of the Rampart Industrial Complex we acquired out of the HOOP portfolio two years ago. This 97,000 square foot building will reach substantial completion by the end of August 2024. The leasing team is working with two potential tenants for approximately 70% of the building. The development of this site will add flexibility to the tenants within the complex and enhance the overall value of the project.
Susie Lake Crescent, Halifax [Nova Scotia].
This is a two-building, 400,000 square foot warehouse development built in conjunction with Lindsay Construction, Secure Capital, and Nicola Wealth. The project is expected to complete construction in November 2024. The project will be Zero Carbon and bring much-needed modern warehouse space to the city of Halifax. This is the REIT’s first foray into Eastern Canada. Looking back, it appears that the REIT’s timing to invest capital in development projects was quite good.
While developments, much like a house [renovation], are rarely on time or on budget, we are very happy with the partners we have chosen to work with and the results for the REIT so far. As discussed previously, we anticipate the financial benefits resulting from the completion of these development projects to become evident in 2025 and in 2026. We are extremely proud of the portfolio and the team in place to look after your investment. Skyline Industrial REIT is open for new investment.
If you have any questions, please reach out to a Skyline Representative to learn more. Thanks for watching.