Dream Global to buy $903M Dutch properties, raise $300M
Dream Global Real Estate Investment Trust plans to buy 135 office and light industrial properties in the Netherlands for $903-million. The REIT has also arranged a $300-million bought deal. It also plans to complete a $544.3-million financing in Europe.
DREAM GLOBAL Real Estate Investment Trust has entered into a binding sale and purchase agreement relating to a portfolio of 135 office and light industrial properties located in the Netherlands. The total purchase price for the transaction is approximately 622.1 million euros ($903-million), representing a going-in capitalization rate of 8 per cent. The vendors for the transaction are TPG Real Estate, TPG Sixth Street Partners and Patron Capital Partners. The Dutch assets are currently operated under the name Merin.
Transaction portfolio overview
The transaction portfolio consists of 135 properties (approximately 7.7 million square feet of GLA) that are complementary to the REIT’s existing portfolio and are well diversified by asset type, geography and size. The office portfolio consists of 101 properties, or approximately 4.8 million square feet of GLA, and the industrial portfolio consists of 34 properties, or approximately 2.9 million square feet of GLA.
The transaction portfolio has a total property gross asset value of approximately 622.1 million euros ($903-million), of which approximately 502 million euros ($728.7-million) of gross asset value consists of the office portfolio and approximately 120 million euros ($174.2-million) of gross asset value consists of the industrial portfolio.
The overall occupancy of the transaction portfolio is currently 82 per cent, and the transaction portfolio currently includes 734 tenants with a weighted average lease term of 4.1 years.
The balance of the transaction portfolio consists of value-add properties that are being repositioned to drive NOI growth and increase value through occupancy and rental rate increases. In addition, the REIT has identified certain properties that it intends to sell over the next 12 to 18 months.
The Merin management team, led by Mr. van Holten, is complementary to the REIT’s existing European platform and will add scale and expertise across the real estate value chain. Equity offering
To provide partial financing for the transaction, the REIT has entered into an agreement to sell, on a bought deal basis in each of the provinces of Canada, 28,575,000 units of the REIT at a price of $10.50 per unit, to a syndicate of underwriters. The total gross proceeds of the equity offering will be $300-million. The REIT has granted the underwriters an overallotment option to purchase up to an additional 4,286,250 units, exercisable in whole or in part for a period of 30 days following the closing of the equity offering. If the overallotment option is exercised in full, the gross proceeds of the equity offering will total approximately $345-million.
European debt offering
The REIT has obtained committed financing from Morgan Stanley and will launch an expected 375-million-euro ($544.3-million) European offering of senior unsecured notes. The notes will have a fixed interest rate and an expected term of 4.4 years. The final terms of the notes, including the interest rate and the issue price, will be announced following the conclusion of bookbuilding.
The REIT has agreed to satisfy 60 million euros ($87.1-million) of the purchase price for the transaction through the issuance of units to the vendors, on a private placement basis, at an agreed-upon value equal to the closing price per unit on the date of this announcement. The vendors have agreed not to sell any units of the REIT for a period of six months from the closing of the transaction.
“We believe this transaction will meaningfully improve the REIT’s payout ratio and capital structure,” said Tamara Lawson, chief financial officer of Dream Global REIT. “The term of the unsecured debt offering complements our existing debt maturities very well, and the all-in coupon rate is expected to compare favourably to the unsecured debenture rates for REITs in Canada.”
We seek Safe Harbor.
Erika Flores condensed this news release (email@example.com).
R Sacha Bhatia, Detlef Bierbaum, Michael J Cooper, P Jane Gavan, Duncan Newton Rowell Jackman, John Michael Arthur Knowlton, Johann Olav Koss, John Sullivan
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