The purchase of an industrial distribution facility in Michigan by a Toronto-headquartered investment company has been described by its chief executive as a "bargain."

It was the right timing to buy the facility in Flint, said Frank Camenzuli, CEO of Agellan Commercial Real Estate Investment Trust (REIT).

"We have actually managed this asset for 12 years, so it was transferred from one entity to another," Camenzuli told Toronto Business Daily.

He said that the trust bought the facility for $40 per square foot, with a purchase price of $16 million. He added that the owners needed to offload the asset, so the trust was able to secure a bargain. The facility has a leasable area of approximately 400,000 square feet.

It is currently leased to General Motors LLC, with a remaining term of approximately 4.35 years. The REIT financed the acquisition by drawing down on its operating credit facility, the REIT said in a press release.

The REIT said that it is strategically located close to GM’s 5.2 million-square-foot Flint assembly plant, allowing for just-in-time delivery of products. GM has previously disclosed that it has made investments approaching $2 billion in this assembly plant since 2008, the company said.

It also said that that the water supply for the facility is provided by the local township, so it has not been affected by the lead-contaminated water in Flint.

“The REIT has continued to benefit from the strategic partnerships of its external manager, acquiring this modern and functional distribution facility at a high capitalization rate,” Richard Dansereau, chair of the board of trustees, said. “Our external manager’s 11-year history with this property is expected to benefit the REIT as we look to capitalize on recently proposed commitments to bolster the U.S. auto industry.”

Among warehouse and distribution-type facilities, the market vacancy rate has dropped to 1.7 per cent for buildings over 100,000 square feet.

The REIT, which was created to acquire and own industrial, office and retail properties in urban markets in the United States and Canada, currently has approximately 6.3 million square feet of gross leasable area in 35 wholly owned properties.