Dream Industrial REIT and the Canada Pension Plan Investment Board have formed a new joint-venture with $1.1 billion in total equity to acquire Canadian industrial real estate.

Under a definitive agreement, Dream Industrial REIT has agreed to sell a 12-property industrial portfolio totalling 3.6 million square feet to the newly created JV for $805 million. The assets are located across Ontario, Quebec and Alberta, and the pricing is slightly above the portfolio’s International Financial Reporting Standards value, representing what the REIT described as a substantial premium to the value implied by its unit trading price.

CPPIB will own 90% of the JV, while Dream Industrial will hold a 10% interest. The partners plan to deploy the $1.1 billion of allocated equity over time, with the intention of acquiring up to $3 billion of additional industrial assets across Canada.

Dream Industrial is controlled by Dream Unlimited. Dream Industrial is controlled by Dream Unlimited. CPPIB said Dream Asset Management is also a partner in the JV. A Dream Unlimited subsidiary is slated to serve as the asset manager for the JV and a Dream Industrial affiliate will provide property management and leasing services.

“This new venture with one of the largest and most respected institutional investors globally is a testament to the strength of our platform, our reputation in the sector, and our asset and property management capabilities,” said Michael Cooper, Dream’s founder and chief responsible officer. “With this partnership, we expect to surpass $30 billion of assets under management and increase our growth rate as we continue to build out our institutional asset management business.”

The Canadian industrial sector continues to demonstrate resilient demand supported by a “structurally high need” for well-located space as supply chains and logistics continue to evolve, said Sophie van Oosterom, a CPPIB managing director and head of real estate investments. And by partnering with Dream, the pension-fund manager can efficiently scale its exposure in the Canadian market to capture the growth and drive long-term value.

“This transaction is a testament to the quality of our assets, the strength of our platform, and the opportunities in the Canadian industrial market,” said Alexander Sannikov, CEO of Dream Industrial. “With this transaction and joint-venture with [CPPIB], we are reinforcing the intrinsic value of our assets, growing our private-capital partnerships business, and unlocking an additional avenue for portfolio growth. We look forward to building on our partnership with [CPPIB] and delivering market-leading returns for all stakeholders.”

Dream Industrial expects to receive more than $730 million in net proceeds following financing within JV. The REIT said the proceeds will be used on an accretive basis, including $100 million to $200 million in unit buybacks through its normal-course issuer bid, as well as funding strategic growth initiatives such as acquisitions, development and ancillary revenue programs.

“Over the past several years, our [funds from operations] payout ratio has improved to the mid-60% range and our retained cash flows have grown, driven by strong organic growth and multiple growth levers embedded within the business,” said Lenis Quan, CFO for Dream Industrial. “We expect the transaction to be accretive to FFO and cash flow while maintaining our credit metrics and balance-sheet flexibility, which allows us to continue to add scale in our target Canadian markets at attractive economics to the REIT.”

The transaction is expected to close in two tranches in the first half of 2026, subject to customary closing conditions.

The partners were advised by TD Securities, RBC Capital Markets, Colliers Capital Markets and CBRE. Meanwhile, law firms Stikeman Elliot and King & Spalding LLP provided legal advice in connection with creating the JV.

Image: CPPIB