Crombie REIT Aims To Continue Focusing on Smaller, Quicker Developments
Crombie REIT Aims To Continue Focusing on Smaller, Quicker Developments
REIT Associated With Sobey’s Grocery Chain Likes Return on Such Projects
Crombie Real Estate Investment Trust is thinking small again for 2024, as the Nova Scotia-based firm aims to focus on more compact developments that offer a solid return and can be completed in a shorter duration.
The chief executive of the REIT which is closely associated with the Sobey’s grocery retail chain revealed the company’s strategy in a recent earnings call. CEO Mark Holly said Crombie remains focused on shorter-term projects that involve modernizing or repurposing existing properties as opposed to largescale ground-up developments.
Such projects come with lower risk and require less time and capital requirements, Holly said. Crombie REIT undertook 24 such projects in 2023, resulting in respectable returns, he said.
“Minor developments are a quick in-and-out,” Holly told analysts on the call. “It’s a good use of capital and the yields have good returns of between 5.5% and 7%. That was our focus in 2023 and will likely be our focus for 2024.”
Crombie REIT’s portfolio is heavily weighted toward the retail sector, with 283 shopping properties spread out over 35 million square feet and having a total value of around $4.3 billion.
However, the REIT also has plans to take on bigger developments that promise to increase its mixed-use residential portfolio, currently consisting of three properties. Crombie is motoring ahead with its Marlstone project that will bring 291 units to downtown Halifax at a development cost of about $134 million. The REIT is also nearing completion of its The Village at Bronte Harbour apartment complex that will add another 481 units to Oakville Ontario.
Holly said that Crombie has canceled plans to build 282 homes in a 10-floor residential project at 1099 Broadview in Toronto and that the REIT plans to sell the property this year. The REIT has also sold its remaining parcel of land at the Opal Ridge project in Dartmouth, Nova Scotia.
2023 was a good year for retail property owners in Canada, Holly said, describing it as a “very strong year for necessity-based retailers due to population growth.” He said that he believes that the positive trend will continue through 2024.
Source CoStar. Click here to read a full story.
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