The CanFirst Industrial Realty Fund VII LP has acquired a 13-property, 710,389-square-foot portfolio in Vaughan, Ont. from IG Investment Management for $222.6 million.
“We're excited to be able to acquire assets in this node in Vaughan,” CanFirst Capital Management executive vice-president Mark Braun told RENX. “It's always been a challenge to find properties in the area, certainly at a price point that's competitive or allows us to transact.”
The portfolio encompasses 38.9 acres of land. The deal was brokered by CBRE and attracted interest from several potential purchasers.
The transaction, which closed Monday, represents a price of $313 per square foot.
All of the properties are located within about a kilometre of each other in Vaughan, and CanFirst is interested in acquiring more such locations in the city of approximately 340,000 people located directly north of Toronto.
Small and mid-bay properties
“It's a mix of small-bay and mid-bay industrial tenancies,” said Braun of the portfolio.
The smaller units are in the 1,000- to 5,000-square-foot range while the largest is just over 50,000 square feet. The portfolio is 99.8 per cent leased, with just one small vacancy, and has an average remaining lease term of 2.5 years.
Braun said existing rents are about 50 per cent of the market rate, so the deal provides a good opportunity for capital growth when leases expire. There’s also potential to convert some units to industrial condominiums and sell them, Braun added.
The properties have been well-maintained and are in good condition and won’t require any major capital expenditures, according to Braun, who said there are no intensification opportunities within the portfolio.
CanFirst has been an active industrial buyer in recent months.
In October it partnered with Colonnade BridgePort to acquire a 50-acre site in the southwest sector of Ottawa. The partners plan to construct up to 900,000 square feet of new space on the land starting in 2024.
That site was acquired on behalf of its CanFirst Industrial Development Fund.
The last major acquisition for the Industrial Realty Fund VII took place in 2021, when it purchased the so-called Dozyn Dezyn portfolio, comprising 11 buildings in the communities of Surrey and Abbotsford, B.C. The small-bay and mid-bay buildings are a combined 412,897 square feet and were fully leased.
The purchase price was $104.5 million.
CanFirst Capital Management
Toronto-headquartered CanFirst was founded in 2002. It co-invests with institutional and private high-net-worth investors in industrial and office properties that have added potential to exploit for growth in major and select secondary Canadian markets.
CanFirst has raised $1 billion in equity and completed more than 16 million square feet of real estate transactions.
CanFirst manages growth-oriented and income-oriented funds. The $250.5-million CanFirst Industrial Realty Fund VII LP closed in July 2020 and is now fully allocated after this latest transaction.