Toronto Landlord Cancels Dividend Reinvestment Plan as Unit Price Dips Below Net Asset Value

Toronto Landlord Cancels Dividend Reinvestment Plan as Unit Price Dips Below Net Asset Value

One of Canada’s largest real estate investment trusts is canceling its dividend reinvestment plan because its unit price is too low and it’s become difficult for Summit Industrial to find accretive deals.

Toronto-based Summit suspended its dividend reinvestment plan on Friday until further notice, noting the REIT is well capitalized and has a strong balance sheet with significant financial flexibility and liquidity.

“In the best interests of the REIT and unitholders, the REIT wishes to avoid issuing equity at a discount to net asset value per unit, something that can occur from time to time under the DRIP. The suspension of the DRIP at this time is intended to preserve value and eliminate dilution,” said the REIT in a statement.

Paul Dykeman, chief executive of Summit, said the REIT would be issuing equity below net asset value, so it didn’t want to continue with the dividend reinvestment plan with about 15% to 20% unitholder participation.

“It wasn’t a small thing. It was a couple of million a month,” said Dykeman, about shares being issued for distributions. “I think it will be put back in place, but you never know.”

CBRE reported Monday that Canadian commercial real estate investment activity reached a quarterly record of $19.9 billion over 2,631 transactions in the first quarter. The industrial asset class was the most active in the quarter at $6.4 billion in deals.

Summit did a $200 million equity issue in March at $22.15 per share but its unit price has been dropping since and was barely above $16 earlier his month.

“We are sitting on some cash,” said Dykeman, who expects a $60 million deal in the Greater Toronto Area to close this week and another deal in Montreal expected to close soon.

“We don’t anticipate we will be very active beyond our development programs. We might buy some more land but are not going [to buy] until we get a better understanding of where the market is going,” said Dykeman. “We don’t want to issue debt where the market is right now. We are happy to sit on our hands for what hopefully is only a few quarters.”

He said deals are happening in Alberta, where cap rates are higher, but Dykeman believes people still like the fundamentals in industrial.

“Most of our new deals are at $14 [per square foot] or above, and Montreal is migrating to the same place,” said Dykeman. “There is a huge amount of upside in cash flow [on renewal]. The thing no one knows is where inflation will be and how long interest rates will rise. But with only 1% availability in Toronto and Montreal, we will have to have a significant downturn for a prolonged period to change that.”

Source CoStar. Click here to read a full story

Soneil Investments Bucks Fears of Inflation and Buys Properties in Greater Toronto Area

Investment Company Targets ‘Large Pieces of Land in Great Locations,’ Founder Says

Present market conditions aren’t scaring Soneil Investments off from acquisitions as the Toronto-based company pulls the trigger on $86 million in deals the founder hopes will one day benefit his heirs.

Privately held Soneil Investments paid $46 million for a Mississauga industrial portfolio comprising five properties with almost 140,000 square feet of space on nine acres at Dixie Road and Eglinton Avenue, just west of Toronto. The portfolio includes 1331 Crestlawn Drive, 1330 Eglinton Ave. E, and 4700, 4800, 4900 Dixie Road.

“In a high inflation and rising interest rate market, strategically acquiring properties becomes even more difficult,” said Neil Jain, president and CEO of Soneil Investments, in a statement. “We saw immense potential in the opportunity to fill vacancies, raise below market rents, and most importantly, capitalize on the location with a better use in the long-term.”

Canada’s central bank surprised the market last month with a 100 basis point increase in its overnight lending rate. The Bank of Canada is poised to raise rates again at its Sept. 7 meeting, with commentators expecting anywhere from a 50- to 75-basis point increase.

“Markets and policymakers were clearly caught off guard by this year’s inflation spike,” said Avery Shenfield, chief economist with CIBC, in a note issued Monday.

“Our own forecast for Canadian real gross domestic product growth has inflation coming down, and staying down, only because growth slows to well below what used to be considered its noninflationary potential,” Shenfield said.

Soneil’s industrial asset purchase comes with Avison Young describing the Greater Toronto Area as a hotbed of activity with the availability rate down to 0.9% in the second quarter.

“The majority of investor demand for spaces 10,000 square feet and greater during the same time frame was driven by private investors (51%), followed by users (31%) and institutional investors (9%),” said the real estate company in a report.

Soneil Investments has also been embracing the office market in the GTA, having paid $40 million for a 150,000-square-foot multitenant office asset located on six acres at 2233 Argentia Road in Mississauga in May. The company has purchased more than $180 million of assets so far this year.

“Both Dixie-Eglinton and Argentia have the same qualities that drew us to them – large pieces of land in great locations,” said Sach Jain, founder and chairman of Soneil Group of Cos., in a statement. “When the time comes for development, hopefully, my grandchildren will say that we made the right calls.”

Source CoStar. Click here to read a full story

Canadian Grocery Retail Head Touts Low Rents Driving Portfolio Valuation

Cap Rates ‘Somewhat Useless’ To Describe US Portfolio, Says Slate Grocery REIT CEO

The Canadian head of a real estate investment trust focused on U.S. grocery-anchored malls believes it is time to forget traditional capitalization rates or valuations when it comes to his properties.

Blair Welch, chief executive of Toronto-based Slate Grocery REIT, which owns 121 locations in 23 U.S. states, fired back at analysts asking how his company can grow in value even as cap rates continue to rise.

“I think a cap rate is somewhat useless if you don’t know what rate you’re capping. We believe at Slate Grocery REIT, with our rents at $11.82 [per square foot], we estimate that’s probably half of the market. At our existing cap rate, there is tons of room to run,” said Welch.

“You’re buying a significantly discounted rent that should grow your topline revenue. Last time I checked, the only way to make money in real estate is compression of cap rates or growing your rents. I think we all know that cap rates are going up. But Slate Grocery REIT has positive leverage because we can still buy wide cap rates, but we can get significant revenue growth because of our low in-place rents.”

Welch, a founding partner of Slate Asset Management, which owns almost 6% of the REIT, stepped into the top job at Slate Grocery on an interim basis in January of this year. The REIT announced a significant expansion in June when it agreed to purchase a 2.5 million-square-foot portfolio for 425 million U.S. dollars, or 543 million Canadian dollars, a move funded through an agreement with Slate North American Essential Real Estate Income Fund, which Slate Asset Management manages.

The deal with the North American fund brought some of the largest investors in the world into supporting the Slate strategy, Welch said.

Welch said investors need to know where rents are compared to the market and new supply. “I think the neighbourhood-anchored grocery space is extremely compelling because of that,” said Welch.

Jenny Ma, an analyst with BMO Capital Markets, said in an investment note that she believes there is still strong demand for essential retail.

“Notwithstanding our recent downgrade, which was mostly a valuation call, we believe the REIT’s grocery-anchored essential retail portfolio should remain resilient even in a challenging economic environment,” said Ma, who has said she is taking a more cautious view generally on strategies that are heavily reliant on acquisitions and dispositions because of market activity slowing down over the near term amid rising interest rates.

First American Financial Corp., a provider of title, settlement and risk solutions for real estate transactions, predicted at the end of June that slowing asset price growth would push cap rates higher.

“Given decelerating price growth in the first quarter and continued upward movement of interest rates, the potential cap rate is expected to increase in the second quarter,” the company said, noting performance will differ based on the asset class.

“It’s worth noting that decelerating CRE price growth was not distributed evenly across asset classes. Multifamily and industrial assets set first-quarter price growth records, increasing at a faster rate than any other first quarter in the past 20 years, while office and retail assets were a drag on overall CRE price growth in the first quarter.”

Source CoStar. Click here to read a full story

Lease Expiries Creep Up Much Faster Than Most Tenants Expect.

Lease expiries creep up much faster than most tenants expect.

Committing to a five-year term can seem like a lifetime for a business, but that deadline moves up in the blink of an eye.

For a tenant considering renewing or triggering an option to renew, taking care of this impending task is best handled early.

A tenant with no option to renew can approach the landlord at any time to commence early renewal.

Part of that strategy, for the tenant, is catching the landlord prior to them beginning to market the space. The tenant may be in a favourable position to negotiate their best terms before the landlord has to put too much effort forward.

Tenants with an option to renew must be mindful of the notice trigger date. Barring any conflict, there’s nothing to say a landlord wouldn’t renew after a notice to renew has passed, but they are no longer obligated to do this.

For tenants with substantial investment into their leasehold improvement, this could prove a risky mistake.

Tenants backing themselves into corner

Tenants considering a relocation will often ask how much time they need to plan ahead. Sometimes business owners do not want to end up paying rent at two locations, so they put off this task until it’s too late.

Tenants should leave at least a one- to two-month window from offer stage to executed lease, then possession to obtain a new location.

Summer months can take longer for responses to offers if decision makers are holidaying. The same can be said of school holidays as many people choose to take their vacations when their children are off.

The world is hyper-connected but that does not mean that everyone wants to work while on holiday.

The listing agent should know the reasonable time frame for an expected response on any listing, so it is best to ask them for what is achievable.

This is assuming the market has availability, which our current industrial market, for example, does not.

As a result, budgeting for overlap on locations may be necessary to ensure there is no disruption to the business.

Building in buildout time

Municipal permitting for any new improvements can take considerably longer than expected. Between quoting contractors to official approval, this process may take several weeks before work can commence.

Asking a landlord for a fixturing or a rent-free period may be necessary. However, in a market with low inventory they may not be willing to negotiate long timeframes for either of these things.

Budgeting appropriately for all potential expenses and putting in the planning time will place tenants into a much safer position to open their doors to business.

Source Real Estate News EXchange. Click here to read a full story

214 Carson Co. Builds Ontario Industrial Development Niche

Kris Carson’s entrepreneurialism has served him well over the years and he’s found another successful business with 214 Carson Co., which focuses on mid-sized industrial developments in Southwestern Ontario.

Carson has bought and sold a variety of businesses, and he made a handsome profit from buying BGI Retail in 2008 and selling it last year, after impressive growth, to TC Transcontinental.

His first building was constructed in 2013, when he started acquiring land, and a more focused effort on the 214 Carson enterprise began four years ago.

The company is involved with land acquisition, development, construction, site service work, facility maintenance, hardscaping, financing, mergers and acquisitions.

“We buy strategic and pad-ready land and typically build industrial class-A buildings ranging from 50,000 to 250,000 square feet,” Carson told RENX. “We don’t compete with the big guys that are doing 500,000 or more.

“We try to find them in three tiers of locations. Our tier-one locations are along the Highway 403 and 401 corridors. Our tier-two locations are along Queen’s highways, like Highway 24. Tier-three properties are in prestigious business parks that aren’t necessarily exposed to a secondary or major highway.

“We typically build and sell tier-three properties. We have a goal to get to two million square feet of rentable industrial assets. Once we get to that point, we’ll start to filter through and unload our tier-two stuff and replace it with more tier-one stuff.”

While the deal won’t close until October, 214 Carson has conditionally sold its first property: a 51,000-square-foot building in Brant County. A 120,000-square-foot facility built in Brant County in 2016 is going up for sale.

214 Carson’s portfolio

The Paris, Ont.-headquartered company’s properties are typically within a 45-minute driving radius of Brant County. Much of the land 214 Carson has acquired is from local municipalities and has ranged in size from four to 143 acres.

The company’s industrial land portfolio is comprised of 161 acres in Ingersoll, 26 acres in Brant County and 23 acres in Woodstock. It also owns 116 acres of residential land in Norfolk County.

The company has a strong relationship with CBRE senior vice-president and managing director Ted Overbaugh and his team members, whom 214 Carson relies on to source land and tenants for the facilities it builds.

Carson said the majority of its tenants are publicly traded Fortune 500 companies.

The company has several industrial developments under construction, including:

• adding 50,000 square feet to a two-year-old building in Brant County;
• a 51,000-square-foot building in Brant County;
• a 125,000-square-foot building in Brant County;
• demolishing a property on a three-acre parcel of land in Cainsville that’s being repurposed;
• a 151,000-square-foot speculative building in Woodstock;
• a 31,000-square-foot spec building in Woodstock;
• a 135,000-square-foot spec building in Woodstock;
• and a 120,000-square-foot spec building in Ingersoll.

Site plan approvals are also being sought for a 240,000-square-foot facility in Ingersoll and a 107,000-square-foot building in Woodstock.

Projects scheduled into 2029

The company has a development schedule, with land that’s already been secured, that goes into 2029. Since it works with many of the same tradespeople for its projects, that schedule is shared with them so they know what’s coming.

“Our goal is to maintain control of our business by being both the owner and landlord,” said Carson. “What makes us different from the next guy is that we control all of these things. We’re not chasing opportunities for projects.”

While 214 Carson does some residential development, its founder and president doesn’t consider the company to be a homebuilder. It’s a fast-growing operation, however, as its number of employees has risen from six last year to 31 now.

Carson said he doesn’t come from a privileged background, saying he was a sign installer as a teenager who made himself into an entrepreneur. He said he’s benefited from making good and timely business and investment decisions.

Land purchased at advantageous time

“We invested in land early so I wasn’t paying $1 million an acre, which is what we’ve got to pay today,” Carson said. “I was sometimes paying $25,000 an acre for 403-facing product.

“I’m looking at a parcel out my office window right now where I paid $125,000 an acre four years ago and could sell it for $1.2 million an acre right now.”

The industrial market remains strong and there’s plenty of activity in 214 Carson’s area of focus.

Carson said it took him more than a year to lease his first spec building in 2016, and now he’s getting six to 10 leasing inquiries within the first 30 days of a development getting underway.

With high land and construction costs, it’s more difficult for users to buy their own facilities. That opens up opportunities for 214 Carson, which constructs all of its buildings so they can be occupied by a single tenant or multiple tenants.

“We’ve created a breeding ground of facilities where we can put somebody in a 30,000-square-foot building and work with that tenant and grow them into a 60,000- or 90,000-square-foot building over windows of time,” said Carson.

Carson is an avid boater and fisherman who spends much of his summer leisure time at Turkey Point on Lake Erie, where he also owns vacation rental properties.

Carson 214 also owns a recently renovated luxury vacation property that can be rented in Great Exuma, Bahamas.

Source Real Estate News EXchange. Click here to read a full story

Soneil Buys Mississauga Ind. Portfolio, Office Bldg. For $86M

Soneil Investments has closed on two recent acquisitions in Mississauga, a five-property industrial portfolio on nine acres of land at the Dixie and Eglinton intersection, as well as a 150,000-square-foot office complex in the Meadowvale neighbourhood.

The transactions represent an $86 million investment – $46 million for the industrial assets and $40 million for the class-A office property at 2233 Argentia Rd.

“In a high inflation and rising interest rate market, strategically acquiring properties becomes even more difficult,” said Neil Jain, president and CEO of Soneil Investments. “We saw immense potential in the opportunity to fill vacancies, raise below market rents, and most importantly, capitalize on the location with a better use in the long term.”

The industrial properties, which closed last week, are located at 1331 Crestlawn Dr., 1330 Eglinton Ave. E., and 4700, 4800 and 4900 Dixie Rd. in an established industrial and commercial node.

They comprise a mix of small- and mid-bay buildings with building heights in the 18- to 24-foot range, Jain told RENX in an interview.

“We prefer the smaller tenants, the smaller and mid-bay stuff,” Jain explained. “Because of the location they’ve been able to use it as a quasi-retail type of use as well, which generally draws higher rents.

“Obviously the gap between retail and industrial has narrowed over time, but that also allows us to change some of the uses back over to industrial as time passes.”

Soneil’s acquisition of the industrial portfolio

The buildings combine for about 140,000 square feet, and the acquisition pushes Soneil’s portfolio over the four million square foot plateau. The buildings were constructed during the late 1970s and renovated just a couple of years ago.

The portfolio was acquired via a competitive bid process, which Jain said was occurring just as interest rates began to rise.

“It was interesting because during the time we were bidding, that was when interest rates really started to go up and the market started to change,” Jain said, noting private and public investors often have different risk profiles to consider.

“We were probably able to put in an aggressive offer at a time when people were unsure, putting their pens down from an investment perspective, similar to when COVID started.”

Jain said these situations, as long as lenders are on board, can offer private investors the chance to “jump on these opportunities pretty quickly.”

He said underlying the acquisition is the land itself, and that Soneil is a long-term investor.

“From a land perspective alone, this type of site is hugely valuable. One of the reasons that we are able to take on these types of sites is because if we are looking at it from a development perspective, our timeline isn’t necessarily five to seven years.

“Whenever the life of the buildings has run out, or it’s the right time to develop be it 10 years or 20 years, we are in it for the long haul.”

The 2233 Argentia Rd. office acquisition

The office acquisition involves a four-storey, multi-tenanted building in an established industrial and commercial district.

The building was constructed in the 1980s and renovated to become a BOMA 360 Performance Building about two years ago by former owner Crown Realty Partners, which sold the property on behalf of its third value-add fund.

Much of the surrounding real estate is occupied by industrial buildings, which was one of the attractions of the property, Jain said.

“This area of Mississauga, over time, will probably start to see shifts in what people are creating. Not a lot of people are looking to create too much office these days,” Jain said.

“It’s surrounded by a bunch of industrial assets; in the long term, whether it’s 10 or 20 years from now, industrial might be the right thing to build, or it might be something else. There’ll be a lot of potential once the life of this building runs out.

“But in the meantime there is a ton of life left in it . . .  it’s a great quality building and it’s been maintained very well.”

Both the industrial and office acquisitions are well-tenanted, with occupancy at about 95 per cent.

The office property also has a large and diverse mix of tenants. While the more intensive management requirements of such buildings might turn off some firms, Jain said that was another attraction for Soneil.

“A lot of the class-A office in this area is the same size, but only split among three or four tenants. It creates a lot of concentration of risk, which is something we like to avoid, especially in office. This building has close to 25 tenants,” he said.

“These are the sorts of (assets) we are drawn to, because we have all those management and leasing capabilities in-house.”

Soneil owns over $1B in properties

Soneil, which surpassed the $1 billion mark in its holdings earlier this year, has now acquired about $180 million in assets during 2022. Jain said it’s on the lookout for more.

“I always like to say that our strategy is flexible in the sense that when opportunities come, as they did during COVID, that we can afford to be aggressive,” he explained, “but strategically aggressive.

“If the right opportunities come at the right price, that are financeable and make sense based on what our core beliefs are in terms of add value, we are very much always in the acquisition mode.”

Source Real Estate News EXchange. Click here to read a full story

GTA Industrial Market Vacancy Remained At Record Low In Q2

Would-be commercial tenants in need of industrial space have had a tough time finding it in the Greater Toronto Area — and there’s no relief in the immediate term as the latest vacancy numbers reveal the region is among the tightest markets in North America.

The second-quarter Industrial Market Report from Avison Young reports an availability rate of just 0.9% in the industrial rental sector, remaining virtually unchanged from the previous quarter — the lowest on record — and reflecting a 135% increase over the past five years. In fact, there are only 16 available properties in the GTA measuring more than 250,000 sq ft. New supply is also slow to come online; currently, there is a total of 15M sq ft. under construction, a decline of 700,000 sq ft. from Q1.

That’s resulting in favourable conditions for landlords, as rental rates have continued to climb, hitting $15.09 psf, up 11% from the previous quarter. 

The GTA industrial market “remains a hotbed of activity,” reads the report, supported by strong fundamentals and a classic supply-and-demand imbalance; while a number of new building competitions came to market during the quarter, it barely made a dent, given 84% were leased prior to completion. 

A total of 20 buildings, totalling 2.8M sq ft., were delivered between April and June, with 15M remaining under construction across 64 buildings by quarter’s end, 45% of which have already been leased.

However, buildings under construction “equate to a mere 1.7% of the GTA’s existing industrial stock, split between design-build (36%) and speculative (64%) developments,” says the report. Meanwhile, pre-construction developments total 50M sq ft. in 143 buildings across the GTA, with the GTA West market leading the way with 62% of pre-construction opportunities, followed by 20% in the North, and 9% each in the Central and East markets.

However, supply conditions should ease slightly in the coming years. According to Avison Young, there’s currently 65M sq ft. in the development pipeline over the next three years (including existing and pre-construction projects). Given this, “rising availability will likely provide more space options to a broader spectrum of industrial tenants compared with today’s constrained supply environment.”

While the GTA’s availability rate remained flat QoQ, overall space has been on the decline over the long term, down 7.1% from the first quarter of 2010. As well, demand for spaces 10,000 sq ft. has surged, especially among the logistics and distribution sector, making up 38%. Manufacturing companies account for 19% of leasing demand, followed by consumer goods and services (15%), and retail/e-commerce (13%) tenants. 

The majority of investor demand for spaces 10,000 sq ft. and greater during the same time frame was driven by private investors (51%), followed by users (31%) and institutional investors (9%).

Notable large-block lease signings — a total of 11 with more than 100,000 sq ft. were inked during the quarter — include Pet Valu’s 670,500 sq ft. lease at 10750 Highway 50 in Brampton, Chrysler’s 513,500 sq ft. lease at 100 Edgeware Rd. in Brampton and Brimich Logistics & Packaging’s new deal for 467,500 sq ft. at 1330 Martin Grove Rd. in Etobicoke.

“Low availability rates have offset the high land values and construction costs evident in today’s market. Given the supply-demand imbalance, the consensus is for continued growth across the GTA industrial market for the foreseeable future,” reads the report.

Source Storeys. Click here to read a full story

In Vaughan Metropolitan Centre (VMC), the Final Structure Atop the High-Rise Portion of Menkes Developments and QuadReal Property Group’s Mobilio Was Recently Completed

As the last of the concrete was poured for the 13-storey south tower, employees and trades gathered in the retail space on the ground floor of the 18-storey east tower, for a “topping off” celebration.

The project first broke ground in June of 2020. Now, the three Turner Fleischer Architects-designed condominium buildings have all officially reached their final heights of 18, 15, and 13 storeys. Next steps for the buildings will include having cladding and glazing installed on their exteriors.

The east, west, and south towers will house 267, 232, and 186 units, respectively. 

The rest of the Mobilio site includes three separate blocks of three-storey, two-bedroom and three-bedroom townhomes, which are currently in the early stages of construction southwest of the three condo towers. Some of the townhome residents will also enjoy rooftop terraces.

The Mobilio community is walking distance from the VMC transit hub, and will be located right next to a linear park, which is part of Vaughan’s Black Creek Renewal project – bringing a series of promenades, plazas and parks to the area, spanning over 30 acres.

Mobilio will be the first project in VMC to incorporate a mix of high- and low-rise housing types, park space, and amenities all in one site. The expected occupancy for the west tower is in Fall of 2022. The east and south towers will follow shortly thereafter.

Source Urban Toronto. Click here to read a full story

Choice Properties Income Up, But Takes Q2 Loss As Fair Value Dips

Choice Properties REIT reported an $11.8-million net loss in Q2 2022, but some positives were also revealed in the July 22 earnings conference call covering the three months ended June 30.

Choice (CHP-UN-T) reported six-month net income of $375.2 million, compared to $22.4 million for the same period a year earlier. Net operating income (NOI) increased by $8.2 million and $15.9 million through three and six months, respectively, year-over-year.

Choice reported a net fair value loss on investment properties of $522.3 million on a proportionate share basis as fair value declines in the retail portfolio – due to capitalization rate expansion from rising interest rates and economic volatility – were partially offset by gains in the industrial portfolio and certain development properties.

The REIT anticipates rising interest rates may put further downward pressure on the fair value of properties in the second half of 2022.

Choice also recorded a $158.7-million unfavourable adjustment to the fair value of its investment in real estate securities of Allied Properties REIT, due to the decrease in Allied’s unit price.

These were held pursuant to its sale of six office properties to Allied in the first quarter of 2022.

Choice issued $500 million of unsecured debentures in the quarter to increase its liquidity position and further stagger its debt maturity profile.

It ended the quarter with a strong liquidity position, with approximately $1.3 billion of available credit and a $12-billion pool of unencumbered properties.

Improved occupancy at Choice properties

Overall occupancy in the quarter improved to 97.6 per cent, reflecting 420,000 square feet of positive absorption. Retail occupancy was 97.5 per cent, industrial was 99.2 per cent and mixed-use, residential and other properties were 87.5 per cent.

Choice’s portfolio is primarily leased to necessity-based tenants and logistics providers that are less sensitive to economic volatility and therefore provide stability.

“We continue to see strong new leasing velocity and tenant retention driven by increased consumer spending, retailer confidence in opening new locations and continued demand from industrial users,” executive vice-president of leasing and operations Ana Radic said during the call.

Choice completed 517,000 square feet of new leasing and renewed 1.3 million square feet of its 1.4 million square feet of lease expiries, at an average spread 7.8 per cent higher than expiring rents, during the quarter.

Office properties no longer core to portfolio

Choice decided in 2021 to focus on the opportunities available in its core business of essential retail and industrial properties, its growing residential platform and its development pipeline.

That led to the sale of six office properties to Allied and office no longer being a stand-alone asset class in the REIT’s reporting.

“The size, quality and growth potential of our industrial portfolio contributed to a strong operating performance in the quarter,” said president and chief executive officer Real Diamond.

“Our 17.4-million-square-foot industrial portfolio includes large, purpose-built distribution facilities for Loblaw as well as high-quality generic industrial assets which can accommodate a wide range of tenants.

“We have significantly embedded growth in our industrial portfolio, with non-Loblaw tenants representing two-thirds of NOI, with leases being on average 40 per cent below market.”

Subsequent to the second quarter, Choice and Loblaw Companies Limited renewed 42 of 44 retail leases from the initial public offering portfolio that expire in 2023.

They comprise 2.9 million of 3.1 million square feet at a weighted extension term of 7.7 years. The average rent increased by five per cent.

The two leases not renewed are both for vacant stores in Quebec that Radic said have “great redevelopment potential.” Choice is working with Loblaw with regards to the two stores and plans to reveal plans shortly.

Choice’s approximately 44-million-square-foot retail portfolio “is one of the best-performing in the Canadian REIT industry,” according to Diamond.

Q2 acquisitions and dispositions

Choice completed $211.3 million worth of acquisitions and $16.6 million of dispositions during the second quarter.

The REIT acquired an 85 per cent interest in an additional 97-acre land parcel in Caledon, Ont., which was part of an existing industrial development project totalling 380 developable acres, for $86.7 million.

“We are currently working through the rezoning process with the Town of Caledon to permit a total of approximately 5.5 million square feet of industrial space,” said Diamond.

Choice acquired a 75 per cent interest in 154 acres of industrial  development land in East Gwillimbury, Ont. for  $52.8 million by exercising the equity conversion option on a mezzanine loan advanced to Rice Group.

Both Caledon and East Gwillimbury are at the northern edges of the Greater Toronto Area.

The REIT completed the acquisition of strategic retail assets in Halifax and Burlington, Ont. for $57.3 million.

Choice acquired its partner’s 50 per cent interest in an industrial building in Edmonton for $14.5 million, bringing its interest in the building to 100 per cent.

The REIT sold a non-core retail asset and a development land asset for $16.6 million.

Development activity

Choice invested $19.7 million of capital in development on a proportionate share basis during the second quarter and transferred $16 million of properties under development to income-producing status, delivering approximately 108,000 square feet of new gross leasable area.

The REIT has a mix of active development projects ranging in size, scale and complexity, including retail intensification projects, industrial development and rental residential projects in urban markets with a focus on transit accessibility.

Choice continues to progress on the construction of two high-rise residential projects, one in Brampton, Ont. next to the Mount Pleasant GO Transit station, and the other in Ottawa’s Westboro neighbourhood.

The REIT has three active industrial development projects that it expects will deliver 1.5 million square feet, at share, of new generation logistics space in the near to medium term.

An industrial project at Horizon Business Park in Edmonton, comprising two buildings totalling 300,000 square feet, is progressing. Occupancy of the first building is underway and substantial completion and occupancy of the second building is anticipated in the second half of 2023.

Choice commenced construction of a 300,000-square-foot modern logistics facility in a prime industrial node in Surrey, B.C. that’s expected to be completed in the second half of 2023. Leasing is anticipated to be done before that time.

The plan for the East Gwillimbury property is to build a multi-phase industrial park with approximately 1.8 million total square feet of new-generation logistics space.

For the first phase, Choice has entered into an approximately 100-acre land lease with Loblaw, which intends to build a 1.2-million-square-foot, automated, multi-temperature industrial facility. Site preparation is underway.

“We believe that, over time, we have the ability to significantly increase our industrial portfolio through development,” said Diamond.

Choice also has a substantial pipeline of larger, more complex mixed-use developments and land held for future industrial development.

It’s advancing the rezoning process for several mixed-use sites, with 11 projects representing more than 10.5 million square feet in different stages.

Net-zero targets approved

Finally, the Science Based Targets initiative (SBTi) has validated Choice’s greenhouse gas emissions reduction targets, making it one of the first entities in Canada to have net-zero targets approved by the SBTi.

“Fighting climate change is fundamental to our purpose of creating enduring value for all stakeholders and we are proud to deepen our environmental commitment with these targets,” said Diamond.

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Ahmed Group Sees Opportunity In Mississauga, Plans Dundas Towers

Ahmed Group of Companies, a family-owned real estate investment firm, has launched its latest proposal for a purpose-built rental development in Mississauga as the company continues to expand its reach in the multiresidential market.

President and CEO Moe Ahmed told RENX there will be more to come.

The proposed development at 1000 and 1024 Dundas St. E. would include towers of 16 and 20 storeys over a four-storey podium that would bring a total of 462 rental units to the market.

Ahmed said the Region of Peel, and much of Ontario, is in the midst of a housing supply crisis. He said Canada needs 5.8 million new homes by 2030 to tackle the situation and the majority of the supply gap is found in Ontario.

“We hope that our project will (help) address the housing crisis by delivering essential rental housing to the residents of the City of Mississauga,” said Ahmed.

“Few places have been more impacted by the housing crisis in this country than the City of Mississauga. We’re looking at a shortage of 200,000 rental units over the next decade, according to the Federation of Rental-Housing Providers of Ontario. 

“Mississauga is a rapidly growing city, home to more than 700,000 residents, many businesses, the airport, post-secondary institutions and many more. A lot of people around the country don’t know about Mississauga. Similarly to us, it’s flown below the radar.

“Mississauga is the largest city in the region (surrounding Toronto). The largest city in the GTA – the third-largest in Ontario, the sixth-largest in Canada, so we’re very optimistic.”

Ahmed wants to break ground in 2024

Ahmed said the company intends to break ground on the project in 2024 and anticipates having occupancy ready for residents in late 2026.

Once completed, the transit-oriented, mixed-use development will feature one-, two- and three-bedroom apartments, green space, improvements to the public realm, community space and an urban farm.

The development, designed by WZMH Architects, is envisioned as a walkable community with a pedestrian-focused experience. It will also offer ground-level commercial space for retail and office use to support current and future businesses in the area.

Landscape architecture has been designed by the IBI Group Landscape Division.

Ahmed said the region has taken important steps to guide future urban growth and intensification, including a proposed bus rapid transit (BRT) system along Dundas Street.

The four levels of government have invested about $675 million to support transit initiatives in Mississauga. A new bus rapid transit system would create a new, stronger connection to Toronto.

“We have a BRT station right at the intersection (of the proposed rental development) on both sides of it. We think it’s a fantastic location, a very promising location and a location that’s going to be gentrified very quickly.”

Three facets to Ahmed Group

The Ahmed Group of Companies’ primary objective is to invest in the development and construction of Canadian real estate. The group consists of three primary subsidiaries: Ahmed Holdings, Ahmed Developments and Ahmed Asset Management.

The development arm of Ahmed Group has a pipeline of over $1 billion in completed value and the asset management arm has nearly $60 million in assets under management.

The Ahmed Group is involved in the development of over 1.5 million square feet of new purpose-built rental construction across Ontario.

“We have three main businesses. We have a real estate development business, we have an asset management business and we also have a holding company where we manage our own properties, our own portfolio,” said Ahmed.

The group traces its origins back to 1966 in Edmonton when the late Dr. Hashim M. Ahmed put down roots and  established his real estate investment business. Originally from Hyderabad, India, Dr. Ahmed was among the first Hyderabadis to migrate to Canada in the early ’60s.

The Ahmed Group also has additional projects at various planning and proposal stages in the Queen and Main, Dundas and Confederation, and Mississauga Road and QEW areas of the city.

Developments to focus on purpose-built rental

The developments will be geared toward the purpose-built rental market, further addressing Mississauga’s growing housing needs with the objective to support transit equity through bicycle facilities, walking paths and mass transit connections, Ahmed added.

“As city builders, we have a corporate social responsibility to help create more attainable rental housing options and contribute to the revitalization of neighbourhoods,” Ahmed said.

“Healthy, transit-oriented communities are an essential tool in building a thriving Mississauga. We take pride in our responsibility of developing new rental units that will enrich the lives of people in the community.”

He said more details about those projects will be coming in the near future. 

“One is very large and it’s also along the Dundas corridor. We are a very adamant supporter of the intensification of the corridor. But we do have other projects in the city,” he said, adding the company would be developing more than 1,000 rental units.

“The projects will be geared toward the purpose-built rental market . . . Mississauga needs these projects. There’s a housing crisis. We need to be building more.”

In a recent press release, several businesses and landowners from the Dundas Street corridor, including the Ahmed Group, announced they were pleased by Peel Region Council’s July 7 decision to remove the lands south of Dundas Street East from Employment Areas and allow for residential mixed-use developments.

This decision came despite Mother Parkers Tea & Coffee Inc.’s recent attempt to roll back planned land-use changes and maintain the lands’ designation as Employment Areas.

Ahmed said a Land Use Compatibility Study conducted by Rowan Williams Davies & Irwin Inc., affirmed that the residential mixed-use redevelopment of Ahmed Group’s lands would be compatible with Mother Parkers’ operations.

“Peel Council’s decision means we can build a true transit-oriented community where businesses operate, people work and families live,” Ahmed said.

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