BTB REIT (BTB-UN-T) has acquired a four-storey, state-of-the-art office building along Ottawa’s Queensway (Hwy. 417) corridor for $21.75 million that includes land for an additional office or mixed-use development.
The office building located at 2611 Queensview Dr. has a total leasable area of 77,575 square feet and is fully leased.
Engineering consulting firm WSP is the lead tenant, with more than 40,000 square feet, while the rest of the building is leased to high-tech tenants. WSP has been in the building since it was built in 2012.
It was previously owned by the Windmill Development Group of Ottawa.
“It was an opportunity that we identified some time ago and we wanted to purchase it a few years ago,” said Michel Léonard, president and CEO of Montreal-based BTB, in an interview with RENX. “Unfortunately, the vendor was not ready to sell.”
After maintaining contact with the owner, “finally, we were able to reach an agreement.”
About 2611 Queensview
The building is well-located and across the street from a future Ottawa light rail station, scheduled to open in 2022 as part of the city’s Stage 2 LRT project, he said.
It is about 10 minutes outside of the downtown core and has easy access to Highway 417 and to thoroughfares such as Pinecrest Avenue and Woodroffe Avenue.
As part of the transaction, BTB has also acquired additional land that is zoned to accommodate an additional office building of 60,000 square feet.
“The fact that there was an ultimate development play in that sector was kind of sexy for us,” Léonard said. “It’s something that we want to go forward, especially with the demand in the City of Ottawa and its suburbs these days.”
BTB now has to decide whether it should build an office building or mixed-use development on the site. The lobby of the existing building has been constructed to accommodate an adjacent office building, he noted.
“If it’s an opportunity that is only office-related, then we would develop it ourselves,” Léonard said. “If it’s an opportunity that could turn into a mixed-use project, then we would seek partners for the development.”
A mixed-use project would require a zoning change that would make the development process take longer.
To help decide what to do, “our strategy is to get the pulse of the market. We’re going to probably give a mandate to a leasing agent in Ottawa in order to drum up some business.”
Léonard said “the easy route for us is to go office, but given the different opportunities that I saw in Ottawa, it seems to me that a mixed-use (residential and office) development would make sense at that location.”
BTB REIT’s investment strategy
The property has obtained LEED Silver certification and is more than 35 per cent more energy-efficient than the National Energy Code of Canada for buildings.
“It looks brand new. It was very, very well-taken care of,” he said, noting previous management “did a stellar job of maintaining the property.”
While BTB initially invested mainly in secondary markets, it is now investing in primary markets, with a focus on the Greater Montreal, Quebec City and Ottawa markets.
About 22 per cent of BTB’s portfolio is in Ottawa, with the remaining 78 per cent split about equally between Montreal and Quebec City.
Having a focus in those cities makes properties easier to manage, he said. Last year, BTB sold a property in the Chicoutimi area because it was the REIT’s only building in that market.
“Flying to Chicoutimi, you lose a whole day, whereas in the Ottawa market, I just get in my car, drive to Ottawa, come back to the office and finish my day. It’s a question of efficiency and it’s a question of quality of properties.”
Break into suburban Toronto market
Down the road, BTB would eventually like to invest in the suburban Toronto market.
“In the past, given our cost of capital, we weren’t able to secure transactions within (Toronto), but eventually we’ll get there,” Léonard said. “Those four markets will be the four markets that BTB is going to concentrate (on).”
BTB owns 66 retail, office and industrial properties for a total leasable area of approximately 5.5 million square feet and an approximate total asset value of $900 million.
Léonard says BTB is on track to reach its objective of having more than $1 billion in assets this year.
BTB’s share price closed at $5.38 on Feb. 4, compared with $4.63 one year ago, on Feb. 5, 2019.
“The return that we gave to our unitholders last year, makes holding our stock very favourable,” he said. “It was quite a year for BTB last year and we want to continue on that footing and I think that the future looks great for BTB.”