Summit Industrial Income REIT establishes data center JV

Summit Industrial Income REIT has entered into a joint venture partnership with Urbacon Montreal Limited Partnership to develop, own and operate high-yielding, state-of-the-art digital data centers in key markets across Canada. Summit has exclusive rights to participate in Urbacon's future data center projects in Canada.

Summit's initial investment is the purchase of a 50 percent interest in Urbacon's Data Centre One (DC1), located in the Barker Business Park Digital Campus in Richmond Hill, Ontario. DC1 is a brand new, purpose-built, state-of-the-art 10-megawatt data center currently 50 percent leased to a major global cloud provider under a 15-year term.

The property is designated as Tier IV, the highest standard within the industry. Summit will acquire a 50 percent interest in the property, assuming its 50 percent share of construction debt for a total equity investment of $15 million. DC1 is the first of five stand-alone data centers to be built in the Barker Business Park Digital Campus on land that is currently owned by Urbacon.

Summit also announced that it has extended a $15.8 million mezzanine loan to Urbacon with which Urbacon will purchase its current partner's 50 percent interest in the recently completed state-of-the-art data center located in downtown Montreal, Quebec, the only stand-alone, purpose-built data center in the city. Summit has the option to convert its loan into a 50 percent ownership interest in the property. The nine-story property is power-ready for occupancy with 16 MW of power available, and Urbacon has received significant interest in leasing space in the building.

Also, Summit announced that it has extended a three-year $14.3 million working capital loan to Urbacon primarily to be invested to develop additional data centers in the Barker Business Park Digital Campus and other key markets.

The overall $45 million initial cash investment in the data center program produces a going in accretive yield of between 8 percent-10 percent. The already accretive returns will be further enhanced once both projects are fully leased.