Dream Industrial REIT has officially entered the U.K. multi-let industrial market by acquiring Chancerygate Limited, a well-established asset manager and developer with three decades of expertise in the field. The acquisition is valued at about £78 million and grants the Canadian real estate investment trust access to seasoned professionals and assets in the industrial property sector.
Bruce Traversy, Chief Investment Officer of Dream Industrial REIT, emphasized that the move fits within the company's broader vision. He said, 'This strategy aligns with our plans to grow in a market that is experiencing increased demand due to limited supply and favorable market conditions.'
Portfolio breakdown and expected returns
Chancerygate’s portfolio includes approximately 0.5 million square feet of development assets spread across the U.K. and Spain. These assets are at different stages of development, with two anticipated to complete in 2026 and the rest to finish by the end of 2027. The real estate investment trust expects these assets to yield an 8% unlevered return once fully operational.
In addition to the owned properties, the acquisition includes Chancerygate’s private ventures, which have a total gross asset value of £1.2 billion. Dream Industrial REIT will acquire the minority stake in these ventures for about £23 million, with the ventures forecasted to provide a cap rate of over 7.5% when stabilized.
Expanding through joint ventures in Europe
Dream Industrial REIT, in collaboration with Dream Unlimited Corp. and Chancerygate, is in talks to launch a new pan-European joint venture with a global institutional investor. The venture's focus will be on identifying and developing multi-let industrial opportunities throughout Europe. The goal is to achieve a total asset value of approximately €500 million, allowing the REIT to significantly expand its property management activities and diversify its European presence.
Alexander Sannikov, CEO of Dream Industrial REIT, expressed confidence in the U.K. multi-let industrial market. 'This market is ideal for expansion due to its structural advantages, including constrained supply and a growing demand,' Sannikov stated. He also noted that the acquisition should boost the REIT’s diluted FFO per unit as the properties mature and become fully operational.
Financing the acquisition and the project timeline
The REIT plans to fund the £78 million acquisition using a combination of existing cash reserves, assumed debt, and its unsecured revolving credit facility. An additional £25 million is set aside for completing the development projects.
The properties in the U.K. and Spain are at various stages of development, with three almost ready for completion and the other two still in progress. The REIT is anticipating gradual stabilization of the assets over the next 18 months, which should enhance the overall return on investment.
The newly acquired assets include five development sites under Chancerygate, totaling approximately 510,000 square feet. These sites are spread across key U.K. markets such as the Southeast, Midlands, and Northwest, as well as one site in Valencia, Spain. The project in the U.K., totaling 104,000 square feet, has reached substantial completion in the first quarter of 2026. Two other U.K. projects, totaling 184,000 square feet, are expected to reach completion in the third quarter of 2026.
The remaining two projects, both in the U.K., are designed as multi-tenant spaces and can accommodate up to 20 tenants. These are set to be completed by the end of 2027. The REIT expects to spend around £80 million (C$150 million) in total for these assets, which includes £25 million ($47 million) for finalizing the developments. The REIT's private ventures approach offers opportunities to scale further by partnering with top global institutional investors in areas like development and value-added investments.
Chancerygate's private ventures already boast £1.2 billion in asset value. Dream Industrial REIT's acquisition of the minority stake for £23 million ($43 million) offers the potential for returns with a cap rate over 7.5%. These ventures also allow Dream Industrial to strengthen its property management operations and enhance returns by leveraging its operating platforms to generate ongoing revenue.