GWLRA acquires an industrial portfolio of 7 properties in Montreal | RENX
GWL Realty Advisors (GWLRA) is acquiring a portfolio of seven mid-bay industrial properties in the new Montreal node of Varennes as it continues to seek out high-quality properties and development land in the area.
GWLRA’s Steven Marino, executive vice president, portfolio management, told RENX that the buildings were all built within the last decade and were acquired on behalf of his No. 1 Canadian Real Estate Investment Trust (CREIF). .
Six of the properties have been acquired, while the closing of the seventh has been postponed until the fourth quarter.
“What’s quite interesting to us are the physical characteristics of the assets,” Marino said in an exclusive interview. “Mid-bay assets, with a mix of single-tenant and multi-tenant assets. Overall quality improvement was a key element that caught our attention.
“Equally important, I would say, is the location in the emerging node of Varennes and its location advantages, primarily its location in relation to the motorway. 30, access to a vast pool of labor and its ability to serve the city of Montreal, the American market as well as broader access to the Ontario market.
Marino said he was unable to disclose financial details, due to confidentiality clauses in the acquisition agreement.
The buildings, formerly owned by the Fonds immobilier Innoval de Varennes, are located on Jean Coutu, Lionel-Boulet and Samuel-Hatt streets in the industrial parks of Varennes and Chambly and have more than 416,000 square feet of leasable area.
Building sizes range from 15,530 square feet to 123,789 square feet.
“Growing portfolio” in Greater Montreal
“We have a growing portfolio in the Montreal market and I would say for this particular client (the CRIEF). . . with the addition of this portfolio, it now holds a 10 percent allocation to the Quebec market, which is primarily allocated to Montreal,” explained Marino. “This acquisition is strategic to pursue the achievement of our allocation objective to the City of Montreal.
“We made the decision a few years ago, when reviewing our portfolio strategy, to really continue to bet on Montreal based on some of the interesting infrastructure spending going on in Montreal, particularly by municipal governments. and provincial, and to continue to participate in part of the economic repositioning of the municipality itself.
The buildings offer a variety of sizes and unit options, with clear heights in the range of 24 feet and more. Marino said they were “well rented” but did not disclose occupancy.
The timing of the acquisition, he said, has already been favorable for Toronto-based GWLRA. Closing took some time after the marketed bidding process (led by CBRE). During this period, the Montreal industrial market experienced increased demand and a concomitant acceleration in rental rates.
“We believe that over the last six months in particular, Montreal has really seen a strong acceleration in rent growth, which continues to position itself well for this particular opportunity,” he observed. “This is a transaction that has taken a bit of time to close and over this period we have seen a very positive trend in terms of rental rate changes which we believe offers an advantage on rents.
“I think along with the fundamentals that attach to the city of Montreal and other major cities in Canada, we are seeing very strong demand quotients with limited new supply creating very favorable fundamentals for investors who can really continue to build on these strong fundamentals and really increase the income profiles of these assets.
Significant increase in rental rates
The average industrial rental rate in Montreal has climbed 63% over the past year, according to the most recent data from CBRE. Properties are now renting on average at $13.40 per square foot and the vacancy rate remains very tight at 1.3%.
This is a reflection of a trend across the country, as e-commerce has grown rapidly, we are seeing the offshoring of some manufactured goods and just in case replacing just supply chain management. on time in many sectors.
GWLRA has expanded its presence in the industrial acquisition and development sectors over the past few weeks, completing several other purchases for various clients.
– GTA North: purchase of 44.7 acres of industrial land in Richmond Hill, which will be developed into a multi-building industrial site.
– Stony North Logistics Centre: a 128-acre parcel of industrial land in Calgary’s market area, which is in pre-development. Once built, the site will have approximately 2.2 million square feet of leasable space.
– 261 Abbotside Way: a 138,000 square foot state-of-the-art Class A warehouse under construction in Caledon, just north of Toronto. The target completion date is 2023.
– Plains68: a joint venture development involving two small/mid-bay industrial buildings totaling 205,075 square feet on a 10.1 acre site in Great Plains Business Park in Calgary, which is fully leased.
The transactions increased the value of GWLRA’s industrial portfolio to $5 billion, representing nearly 18 million square feet of single-tenant and multi-tenant assets.
Reassignment from office to industrial, multi-family
“In terms of asset class, we tactically rotated our allocations to increase the allocation to multi-family and industrial residences. It’s a decision we made about five years ago,” Marino said. “I think our timing was pretty good.
“We were able to execute a number of significant office disposals and this increased allocation to the industrial and multi-family sectors has certainly been beneficial to our clients.”
Recent acquisitions are primarily light industrial properties that can be configured or reconfigured for warehousing, light manufacturing, distribution centers or other needs. The land also gives GWLRA flexibility in what to build, for different types of tenants.
Buying both caters to the different needs of its different investors.
“For some of our clients, development is an attractive way to gain scale in markets that we believe might otherwise be very difficult to enter,” Marino said. “For other clients, they appreciate the income profile that buying an income-generating asset creates from the get-go.”
Platforms with both options can be lucrative for its customers.
“We certainly think about these investments from a long-term perspective, trying to look through short-term market cycles or market conditions and trying to build strategies that should have elements that are sustainable, that really allow clients to succeed over time.”
About GWL Realty Advisors
GWL Realty Advisors Inc. is a North American real estate investment advisor that provides comprehensive asset management, property management, development and specialized real estate advisory services to pension funds and institutional clients.
GWL Realty Advisors Inc. manages a diversified portfolio of office, industrial, retail and multi-residential assets as well as an active portfolio of new development projects.