Two Ontario-based real estate investment trusts announced their $292.5 million purchase of 15 rental apartment buildings in Vancouver’s West End, South Granville, West Point Grey, Kitsilano and Marpole areas.
Ottawa’s InterRent REIT and Toronto’s Crestpoint REIT said in a news release that they’re under contract to buy the portfolio of older rental buildings, which include a total of 614 units. The companies expect the sale to close Jan. 28.
The deal comes as commercial brokers have said that real estate investment trusts, and other financial companies that make investments so they can pay shareholders, are increasingly interested in buying rental apartment buildings in Vancouver and B.C., and there is an accelerating trend away from mom-and-pop or larger, family run company landlords.
Vancouver-based Hollyburn Properties Ltd ., which has owned and managed some of these concrete, mid-rise and wood-frame apartment properties for decades, had originally listed 10 of them for sale, a number that represented about a third of the 33 multi-family rental buildings it owns in the Vancouver area. It also owns and manages rental buildings in Calgary, Ottawa and Toronto.
InterRent and Crestpoint said they’ll each own 50 per cent of the portfolio of 15 apartment buildings, and InterRent will property-manage them. The purchase will be financed with a combination of cash and new, short-term debt of about $190.1 million, they said.
“We are thrilled to enter the Vancouver market, with scale, through the acquisition of this institutional-quality portfolio that is extremely well-located. The Vancouver rental market continues to exhibit strong, sustainable market fundamentals, with exposure to a growing tech sector,” said Mike McGahan, CEO of InterRent in the release. “This is a market we have targeted for a long time.”
To put the $292 million deal size in context, in the first half of 2020, for the sale of multi-family buildings in B.C. over $5 million each, there were 30 transactions valued at $620 million, which was the third-highest volume on record, according to broker Avison Young.
“While private investors made up the majority of vendors and purchasers in the first half of 2020, real estate investment trusts, or REITs, and institutions are likely to increasingly emerge as buyers, particularly on larger deals, in the back half of the year and into early 2021,” according to a fall 2020 Avison Young report.
Lance Coulson, executive vice-president of CBRE’s National Apartment Group in Vancouver, which was the broker for the 15-apartment-building sale to InterRent and Crestpoint, said he couldn’t make any comment on the deal at this time due to confidentiality agreements.