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Dundee Industrial REIT will use the IPO proceeds to buy up 70 “light industrial properties,” or warehouses and manufacturing plants, in seven provinces.Fernando Morales/The Globe and Mail

Dundee Industrial REIT's leasable land in Canada is about to get 2.5-million-square-feet larger as the asset-hungry firm moves to acquire C2C Industrial Properties Inc.

The deal brings an end to C2C's ambitions to create a real estate investment trust. The company came to the market in May, 2011, through a capital pool company program that saw it team up with Sargasso Capital Corp. At the time, the C2C said it wanted to specialize in acquiring, owning and operating industrial properties across Canada and convert to a real estate investment trust.

But the plan hinged on robust financial and market conditions, according to the company's press release two years ago. While REITs are in high demand thanks to investor's thirst for yield, growth at C2C has been a struggle.

Shares have languished in the market, falling from about $7.50 at their 2011 high to $3.70 before the Dundee announcement. The price rebounded by more than one dollar on Tuesday.

The deal is a good fit for Dundee, which favours short-term leases that allow it to upgrade properties and renew tenant leases at higher prices.

Dundee will pay about $90 per square foot by exchanging 0.4485 of its units for each C2C share, which works out to $4.85. The deal is worth about $226-million total.

Dundee Industrial is Canada's largest in the category with nearly 160 properties, but the deal further diversifies its portfolio of tenants, regions or industry sectors across the country.

The properties are in Halifax, Toronto, Montreal and Edmonton.

(Jacqueline Nelson is a Globe and Mail Financial Services Reporter.)

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