Rendering of the proposed redevelopment of the University Heights shopping centre in Saanich, B.C. The project was proposed by Wesbild and the mall site has now been sold to a joint venture including Minto Properties, an institutional investor and Greystar. (Courtesy Wesbild)

Minto Properties Inc., an institutional investor and subsidiaries of Greystar Real Estate Partners have created a joint venture to acquire the University Heights shopping centre in the Victoria-area municipality of Saanich. The 11.5-acre property is the site of a major planned mixed-use redevelopment, which was valued at $230 million when it was proposed in 2020.

The transaction also involves $51.7 million in convertible development funding from Minto Apartment REIT (MI-UN-T), which would go toward financing Minto’s 45 per cent interest in the venture.

The acquisition closed on Thursday. Financial detail have not been announced.

“Our first investment in the Greater Victoria Area represents an important strategic milestone for the REIT,” Michael Waters, CEO of Minto Apartment REIT, said in a media release. “It provides geographical diversification and exposure to a strong rental market.

“The Victoria rental market is characterized by low vacancy rates and is supported by strong population and employment growth. University Heights is located proximate to two post-secondary institutions.

“We see this attractive investment as a building block for continued growth in the region.”

The University Heights redevelopment

Minto Properties and the institutional investor, which is not named in the announcement, hold 45 per cent stakes in the venture. Greystar has a 10 per cent stake and will be the development manager.

The financing will accrue interest at seven per cent per annum. The REIT intends to fund the financing through existing cash on hand and its revolving credit facility.

Minto REIT retains an option to acquire Minto Properties’ stake in the project upon completion at a five per cent discount to its then-appraised fair market value.

The University Heights property is currently occupied by a 119,000-square-foot shopping centre and a 76,000-square-foot Home Depot store.

The Home Depot store will be expanded by about 9,200 square feet and a 20,000-square-foot seasonal outdoor area and garden centre will be added as part of the redevelopment.

The latest iteration of the redevelopment plan is to create a mixed-use multiresidential and retail property, with five six-storey, wood-frame buildings comprising 593 rental suites atop 113,485 square feet of grocery-anchored retail.

Wesbild, which bought the property in 2015, had originally proposed the redevelopment. The firm had taken it through a significant portion of the approval process with the municipality.

Development permit approval is now expected in the spring of 2022 and construction is expected to commence in late 2022 or early 2023, with stabilization anticipated in 2026.

The University Heights area

University Heights is located at Shelbourne Street And Mackenzie Avenue in the Shelbourne Valley neighbourhood, about 1.4 kilometres from the University of Victoria.

In its acquisition announcement, Minto states the site has good access to public transit and is surrounded amenities including parks, beaches and a library.

University Heights has a Walk Score of 77 and a Bike Score of 88.

Minto also believes there is significant demand for student rental housing in the area, “with little purpose-built rental supply and a historically low vacancy rate.”

Two of the five buildings in the redevelopment are planned to target students with smaller furnished suites and student-focused amenities.

About Minto Apartment REIT, Greystar

Minto Apartment REIT owns, develops and operates income-producing multiresidential properties in urban markets across Canada. The REIT owns a portfolio of income-producing multiresidential rental properties in Toronto, Montréal, Ottawa, Calgary and Edmonton.

Greystar is a global rental housing provider which owns, operates and develops collegiate, multiresidential, corporate, and senior housing around the globe. Greystar has 64 offices and over 22,000 employees in 215 global markets.

The firm’s associated business services include development and construction, property management and investment management and it has more than $49 billion in assets under management.