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Summit Sale Part of a Larger Trend

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The news of the week is the purchase of Summit REIT by a joint venture involving the Singapore Government Investment Corporation (GIC). The GIC is a top five global sovereign wealth fund, larger than CPPIB or any Canadian investor (GIC holds ~$700B assets). Why is a global mega investor buying a portfolio of largely Ontario and Quebec industrial assets?

While Canada industrial rents are at all-time highs, it’s all relative for global investors. $15/psf rental rates are eye-popping for us, but adjusting for currency these are still ~40% lower than California and ~60% lower than London (UK). And the fundamentals are so strong for Canada industrial – record low vacancies, land scarcity and a booming population – that investors still see significant upside.

This acquisition is part of a bigger investment trend in Canada. Cross border investors have been the largest buyers of industrial over the past five years (chart is prior to this acquisition). Industrial brokers are surely familiar with the activities of large US players like Blackstone/Pure, Lasalle and Panattoni. GIC’s major purchase only continues a trend that has been accelerating for years, and suggests global investors have a continued appetite for the stability and growth of the Canadian market. 

Canada Industrial New Acquisitions

Summary

A sovereign wealth fund’s purchase of Summit REIT is part of a larger trend, with foreign investors valuing the rent growth and relative affordability of Canada industrial.

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