Skyline Industrial REIT: 2023 Mid-Year in Review

[Guelph, Ontario – 2023]

Skyline Industrial REIT, a Guelph, Ontario-based Real Estate Investment Trust (REIT) focused on acquiring, managing, and developing modern warehouse and logistics facilities, is looking back on its notable achievements and other activities throughout the first half of 2023.

Economic uncertainty amid the rising interest rate and inflationary environment has created challenges for many industries. With a robust and diverse tenant portfolio backed by long-term leases, Skyline Industrial REIT has been able to mitigate risk and demonstrate stability to its unitholders. As a result, in March 2023, the REIT announced an increase in distribution rates.

Key Transactions in 2023

In the first half of 2023, Skyline Industrial REIT completed three strategic dispositions:

• The REIT completed its first transaction of the year in March when it sold a single-tenant industrial building located at 500 Saint-Louis Street, Saint-Jean-sur-Richelieu, Quebec. The total sale price was $10.8M.
• In February 2023, the REIT sold an office building located at 380 Hunt Club Rd. in Ottawa, Ontario, the last office asset in the portfolio. The total sale price was $4.08M.
• The REIT also sold its interest in a 26.17-acre industrial redevelopment site located at 2800 Rue Andre in Dorval, Quebec. The property was sold for $88M (100% value).

New Development Projects

Skyline Industrial REIT continues to focus on developing new, purpose-built industrial properties to capitalize on the growing needs of the supply chain.

To date in 2023, the REIT has broken ground on four new development projects and has several others that are nearing completion (three of which are in partnership with Rosefellow Developments), including:

• A development in Kirkland, Quebec, that will bring approximately 588,000 square feet of logistical space to the Island of Montreal. Construction began in June 2023 and all three phases are slated for completion in 2024.
• 131 Montcalm Boulevard North in Candiac, Quebec. This project will bring 491,000 square feet of industrial space to the city by the end of 2024. The development began construction in June 2023.
• 450 Rue Paul-Gaugion, Candiac, Quebec, which will add 126,000 square feet of industrial space to the market by the end of 2023. Construction began in June 2023.
• 3601 Avenue de la Gare, Mascouche, Quebec, which will bring more than 320,000 square feet of purpose-built logistical space to Mascouche. The property will include a 226,000 square foot cold storage facility with Congebec Inc. as the long-term primary tenant. The building will be completed in Q3 2023.
• 6010 Rue Notre Dame, Est., Quebec, which will bring approximately 97,000 square feet of best-in-class logistical space to the east end of the Island of Montreal, near the island’s port facilities. The building is 100% leased and nearly complete.
• 6000 Trans Canada Highway, Pointe-Claire, Quebec, a 270,000 square foot warehousing and storage facility, that is fully leased to two tenants and nearly complete, with delivery to tenants expected in mid-July 2023.
• A multiphase, net zero development that will bring approximately 400,000 square feet to the Bayer’s Lake Business Park in Halifax, Nova Scotia. Construction has commenced, and the project is slated for completion in Q3 2024.

Together, these new developments will add more than 2.2 million square feet of new, best-in-class, industrial space to the Montreal and Halifax Industrial markets.

Outlook for the Remainder of 2023

With rising interest rates and the rising cost of supplies, new construction in the industrial sector has slowed since 2022¹. According to a study by Prologis, the current environment has had a more significant impact on development than demand. While some sectors of the industrial market may find this to be true, Skyline Industrial REIT is focused on modern industrial assets, primarily in the warehousing and logistics sector, where rate growth and tenant demand continues to be strong.²

The REIT continues to incorporate annual rental rate increases in new leases, which have historically contributed to top line portfolio growth. To date, many of these developments have been pre-leased prior to completion, showing that demand for quality industrial space remains strong.

On the existing building front, Skyline Industrial REIT continues to leverage strong relationships with its tenants and works to accommodate their needs while surfacing value for investors. Recently, the REIT extended its lease with ZF Automotive in Windsor, Ontario, securing its tenancy through 2036. ZF Automotive will also be expanding with a 52,000 square foot addition to the existing building, to be completed by Q4 2023.

“We’re delighted to announce the renewal and expansion of our lease with ZF Automobile in Windsor, Ontario. This enhanced collaboration not only solidifies our commitment to growth and innovation, but also reaffirms Windsor’s standing as a hub for automotive excellence,” said Dominic Bonin, Vice President, Skyline Industrial REIT.

“We will continue to answer the demand with our state-of-the-art development projects to allow tenants to operate more efficiently,” said Mike Bonneveld, President, Skyline Industrial REIT.

“We are excited to see what opportunities the rest of the year will bring and are confident in our ability to continue to provide stability to our investors and stakeholders.”

For the remainder of 2023 and beyond, Skyline Industrial REIT will continue to focus on acquiring and developing light industrial, logistics, and warehousing properties along major highway corridors, transportation routes, and global shipping outlets across Canada.

Skyline Industrial REIT is now on Fundserv (Code: SKY2012). For more information, please contact Invest@SkylineWealth.ca or visit SkylineWealth.ca/Advisory for more details.

¹ Paul Morassutti’s 2023 Real Estate Outlook: Short-term bumps … – CBRE. (n.d.). www.cbre.ca

² Solomon, M. (2023, May 19). Real estate rents to rise 10% this year, Prologis report says. FreightWaves. www.freightwaves.com

About Skyline Industrial REIT

Skyline Industrial REIT (the “REIT”) is a privately owned and managed portfolio of industrial properties, focused on acquiring warehousing and logistics-centred properties along major highway corridors and transportation routes in Canada.

Skyline Industrial REIT is distributed as an alternative investment product through Skyline Wealth Management Inc. (“Skyline Wealth Management”), the preferred Exempt Market Dealer for the REIT. It is also available on Fundserv (Code: SKY2012).

Skyline Industrial REIT is committed to providing outstanding places to do business and superior service to its tenants, while surfacing value with a goal to deliver stable returns to its investors.

To learn more about Skyline Industrial REIT, please visit SkylineIndustrialREIT.ca.

To learn about additional alternative investment products offered through Skyline Wealth Management, please visit SkylineWealthManagement.ca.

Skyline Industrial REIT is operated and managed by Skyline Group of Companies.

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