BMO Life Assurance has acquired a three-building industrial portfolio in Brampton and Burlington from Morguard, its latest move into acquiring real estate assets which it will wholly own.

Winton Realty Advisors president Keith Jameson advised BMO on the transaction, which was brokered by TD Cornerstone Commercial Realty Inc. The price of the all-cash transaction wasn’t disclosed.

“BMO has numerous investments through joint ventures and has . . . now made direct acquisitions, which includes an industrial asset in Quebec and now the Morguard portfolio,” Jameson told RENX.

Toronto-based Winton is a subsidiary of Winton Holdings.

The private investment and realty advisory business provides property acquisition, due diligence, strategic advisory, and asset and portfolio management services, as well as debt and equity strategies, to institutional and private high-net-worth clients across all commercial property asset classes.

Jameson said Winton sourced the Morguard portfolio – which went to market in March – underwrote it and bid on it on behalf of BMO. The company then brought in Kipling Group to complete the underwriting.

Winton is the new portfolio’s asset manager on behalf of its client, while Kipling Group was also engaged as the property manager.

The portfolio’s elements

The 7.47-acre Burlington property at 1205 Corporate Dr. has a 200,342-square-foot warehouse and light manufacturing facility fully occupied by cosmetic and personal care product manufacturer Hunter Amenities.

It has a weighted average lease term of 7.6 years and estimated 88 per cent gap to market rents.

The 10.45-acre property at 200 Westcreek Blvd. in Brampton has an 86,026-square-foot cross-dock facility fully occupied by transportation, warehousing and logistics company Simard.

It has a weighted average lease term of 13.1 years and estimated 8.8 per cent gap to market rents. Its recently negotiated lease has annual two per cent escalations.

“Cross-docks are very hard to replicate and (are) expensive,” Jameson said. “They definitely require a large piece of land so that there's sufficient room to move trucks in and out from both sides.

“The coverage is smaller and therefore the overall cost is more, which means there's upside both in the building and also in the land.” 

The 4.87-acre property at 55 Walker Dr. in Brampton has a 75,949-square-foot warehouse and light manufacturing facility fully occupied by Jones Healthcare Group, which provides packaging and medication dispensing solutions.

It has a weighted average lease term of 4.6 years and estimated 110 per cent gap to market rents.

“They’re good, quality assets with good, stable tenants and a good mix of lease terms,” Jameson said of the three properties.

Morguard had spent more than $1.7 million on improvements to the portfolio since 2015, including to the roofing and heating, ventilation and air conditioning systems.

The buildings have been well-maintained and will require minimal capital expenditures for the foreseeable future.

Each of the three properties are within a one-kilometre radius of major 400-series highway access, while both Brampton properties are also in close proximity to Toronto Pearson Airport and a CN intermodal yard.

BMO’s past and future real estate acquisitions

Winton and Kipling Group played similar roles in BMO’s $120-million acquisition of a new 512,070-square-foot warehouse and distribution facility on 20.6 acres at 4145 St-Elzear Blvd. W. in Laval, Que.

The class-A building, which has a 39-foot clear height, was under construction when it was acquired from Pure Industrial last October, but has since been completed. 

Dollarama signed a 20-year lease for the entire facility, which is in close proximity to major traffic routes, rail hubs, sea ports and airports.

“We're happy with what we've acquired and they fit the profile of our investment strategy,” Jameson said on behalf of BMO. 

“But having said that, we're going to take a bit of a breather and watch the market for the next while. I think pricing is reasonable but I also realize that, with debt where it is, most groups in the market cannot rationalize deals where financing has become expensive.” 

Winton, meanwhile, has also been involved with:

• acquiring and asset-managing three industrial buildings in Phoenix totalling 335,000 square feet on behalf of a high net worth investor;
• acquiring a 492,363-square-foot single-tenant industrial property in Cornwall, Ont., in a sale-leaseback deal on behalf of an institutional investor; and
• owning and asset-managing a portfolio of high street retail properties in Dublin, Ireland.