One of Canada's Largest REITs Pauses Spending, Suspends Talks to Buy CBC's Headquarters
One of Canada’s Largest REITs Pauses Spending, Suspends Talks to Buy CBC’s Headquarters
Toronto-Based Allied Properties Plans to Focus on Its Existing Operations
One of Canada’s largest real estate investment trusts is hitting the pause button on acquisitions in a decision that extends to Allied Properties’ interest in CBC’s headquarters in downtown Toronto.
Michael Emory, chief executive of Toronto-based Allied, said rising interest rates and inflation have created uncertainty for many businesses but the impact on Allied’s operations have been negligible. Still, the REIT is no longer in talks to buy CBC’s headquarters at 250 Front St.
“We don’t expect material impact over the remainder of the year,” said Emory on a call with analysts. “The impact of acquisition activity has been significant with the result we don’t expect to pursue new acquisitions of consequence in the near term.”
CoStar News reported previously that CBC had hired CBRE to value the 250 Front St. property and that Allied had the right of first refusal on any offer.
“We have suspended discussions indefinitely with respect to the possible acquisition of 250 Front Street in Toronto,” said Emory, noting the company still has rights to match any offer should it come up. “We are intent on growing our business, not shrinking it.”
The current uncertainty has Allied focusing on existing operations and developments for the remainder of the year. Allied owns about 14 million square feet of mostly office and retail properties across Canada.
Allied’s pause in acquisitions comes as some investment banks are factoring in higher cap rates for the valuations of REITs, with CBRE saying this month’s report of soaring inflation and interest rate hikes finally drove the commercial real estate investment market to a tipping point in the second quarter.
“Cap rates rose across nearly all sectors and geographies in the second quarter, driving up the national average cap rate figure to its highest level since before the pandemic,” said CBRE.
In the markets where Allied has operations — Canada’s six largest cities — Emory said he has not seen any evidence of declining valuations.
“We see no evidence of that whatsoever,” Emory said. “The intensity of interest on the part of vendors to transact now has diminished. All the vendors who own assets that could be of interest to Allied are very strong. They are not under any kind of financial pressure, and they are not about to succumb or capitulate to the fear in debt and equity capital markets.”
While some REITs have lowered the book value of their assets, Allied has no immediate plans to do so.
“We don’t expect there to be transactions in our markets that would signal the need for the cap rates applicable to our properties,” said Emory. “There are no trades of concern in our marketplaces at the point in time.”
Even Ottawa-based Shopify’s plans to lay off 10% of staff have not crossed over to Allied’s portfolio, which counts Shopify as a tenant. Shopify is finalizing its office space at Allied’s property at The Well in Toronto, Emory said.
Jenny Ma, an analyst with BMO Capital Markets, asked on the investors call what it would take to get Allied back into acquisition mode. Emory said more macro-certainty.
“If I’m honest, I expected stability [as the pandemic slowed],” said Emory.
Source CoStar. Click here to read a full story
Leave a Reply
Leave a Reply
FOR SUBLEASE – Industrial Space – Ajax
Available area: 1,810 Sq Ft Lease rate: $15.50 Sq Ft Net + $5.65/2023/T.M.I. Rare Small Bay Industri ...
FOR LEASE – Office Spaces – Scarborough
Available units: #218 – 1,248 SF – $11.00 psf + $19.01 TMI psf #221 – 777 SF ̵ ...
FOR LEASE – Retail Space – Toronto
Available area: 595 SF Lease rate: $1,800.00 Net Lease Located in Toronto’s upscale Leaside ne ...
BUSINESS FOR SALE – Sports Equipment Shop – Peterborough
Available area: 783 Sq Ft Asking Price: $300,000.00 An exclusive business opportunity awaits in Pete ...
FOR LEASE – Office Space – Toronto
Available area: 1,124 SF Lease rate: $17.00 Net Lease Perfectly located near the 401 with easy trans ...
FOR LEASE – Office Space – Toronto
Available area: 755 SF Lease rate: $1,800 Gross Lease CLICK HERE TO DOWNLOAD THE BROCHURE Prime Scar ...
FOR LEASE – Office Space – Toronto
Available area: 638 SF Lease rate: $1,700 Gross Lease CLICK HERE TO DOWNLOAD THE BROCHURE Prime Sc ...
FOR LEASE – Office Space – Toronto
Lease price: $23.50 Sq Ft Net + $17.68/2023/T.M.I. Available area: 3,901 Sq Ft 1,820 Sq Ft Elevate y ...
Toronto Commercial Properties
Stephen & Mariya Lilly
Brokers
Office: 416-494-7653
Mariya Cell: 416-824-5078
Stephen Cell: 416-802-4228