PROREIT's Winnipeg Acquisition: Strategic Value Creation Through Accretive Growth and Partnerships

PROREIT's recent acquisition of six industrial properties in Winnipeg, Manitoba, marks a significant step in its strategy to expand its industrial footprint in secondary markets while creating accretive value for unitholders. The $96.5 million transaction, completed in June 2025, combines strategic asset acquisition with a partnership that could unlock future growth opportunities. This move positions PROREIT as a leader in industrial real estate while demonstrating disciplined capital allocation in a competitive market.

The Transaction: A Strategic Play for Industrial Dominance
The acquisition adds 678,177 square feet of gross leasable area (GLA) to PROREIT's portfolio, bringing its total industrial exposure to 88% of GLA and 83% of base rent. The properties, which are 100% leased to 26 tenants with a weighted average remaining lease term (WALT) of 4.2 years, are strategically located in Winnipeg's key industrial zones. Notably, in-place rents are 8% below current market rates, suggesting significant upside potential for rental growth.

The transaction was financed through a mix of debt and equity. A $63 million secured credit facility at a fixed rate of 4.4% and $40 million in equity issuance (6,451,613 units priced at $6.20 each) were used to fund the deal. The equity portion, representing a 21.8% premium over PROREIT's May 12, 2025, closing price, signals confidence from Parkit Enterprise Inc., the seller, in PROREIT's long-term prospects.

Accretive Value Creation: AFFO and Portfolio Strength
PROREIT emphasized that the acquisition is accretive to its adjusted funds from operations (AFFO) per unit. The transaction's financing structure—leveraging low-interest debt and equity at a premium—minimizes dilution while aligning with PROREIT's target to maintain a conservative debt-to-EBITDA ratio. The inclusion of assets with below-market rents further strengthens the case for accretion, as rental increases over time could boost cash flows.

The Winnipeg portfolio now totals 22 properties, contributing to PROREIT's 1.3 million square feet in the city. This expansion reinforces its presence in a market with strong demand for industrial space, driven by e-commerce growth and logistics needs.

Strategic Synergies: Beyond the Deal
The transaction extends beyond asset acquisition. PROREIT and Parkit entered an investor rights agreement that grants Parkit preemptive rights, registration privileges, and a board seat through Steven Scott, Parkit's Chairman. This partnership creates synergies:
1. Operational Expertise: Parkit's industrial real estate experience could enhance PROREIT's value-add strategies, such as repositioning underperforming assets.
2. Future Collaborations: The agreement paves the way for joint ventures or future acquisitions, leveraging Parkit's local market knowledge.
3. Capital Flexibility: Parkit's 9.6% equity stake and governance role align their interests with PROREIT's unitholders, reducing agency risks.

Risks and Considerations
While the transaction is compelling, risks remain. Economic downturns could pressure rental growth, and regulatory hurdles (e.g., zoning changes) might impact future developments. Additionally, the equity issuance slightly dilutes existing unitholders, though the premium paid mitigates this concern.

Investment Implications
PROREIT's acquisition exemplifies a disciplined approach to growth, combining accretive metrics with strategic partnerships. Investors should focus on:
- AFFO Per Unit Growth: The deal's accretive nature supports long-term unitholder value.
- Industrial Sector Momentum: Winnipeg's industrial market aligns with broader trends favoring secondary markets, where vacancies remain low and demand is robust.
- Parkit's Role: The partnership reduces execution risk and opens avenues for future synergies.

For unitholders, the transaction reinforces PROREIT's focus on high-quality, income-producing assets. With a portfolio now totaling 118 properties and $1.1 billion in assets, PROREIT is well-positioned to capitalize on industrial real estate's structural tailwinds.

Conclusion
PROREIT's Winnipeg acquisition is more than a property deal—it's a strategic move to solidify its leadership in industrial real estate while building a partnership that could fuel future growth. The accretive financing, synergistic alignment with Parkit, and exposure to a high-demand market make this transaction a win for both parties. For investors seeking exposure to resilient, income-focused real estate, PROREIT's disciplined approach underscores its appeal in an uncertain economic environment.

Consider PROREIT units if you believe in the long-term demand for industrial space in secondary markets, and monitor AFFO growth and Parkit's involvement for further upside.