Crestpoint Real Estate Investments Ltd.’s aggressive approach to industrial acquisitions continued with the recent purchase of a four-property Ottawa portfolio from Huntington Properties for just over $50 million.
“We’ve been growing our industrial exposure in all sorts of different industrial buildings and this provided us with more exposure to the Ottawa market, which we like,” Crestpoint executive vice-president Elliott Altberg told RENX.
“Since March 2020, we’ve leased almost four million square feet of industrial space. Three-quarters of that was in ground-up, newly built industrial developments.
“We’ve also purchased an additional 350 acres of land across the GTA and have another 250 acres under contract in Montreal, the GTA and surrounding areas. We’ve purchased over $400 million in assets in the industrial space accounting for just over two million square feet.”
Ottawa portfolio’s components
Koble Commercial Real Estate Inc. and JLL brokered the off-market deal for the four fully leased single-tenant Ottawa properties, which combine to total 220,000 square feet.
Lloyd Douglas Solutions occupies 130 Iber Rd. and Induspac is at 140 Iber Rd. in Stittsville. Advanced Business Interiors is at 2355 St. Laurent Blvd. and Medical Pharmacies Group is located at 1100 Algoma Rd. in Ottawa. They have a weighted average lease term of just over five years and weighted average rents of just over $10.
“We have rent steps in several of them,” said Altberg. “The tenants are solid and have been around for some time and the market is very good with low vacancies, so we feel we’re going to have a very stable cash-flowing portfolio for quite some time.”
Altberg said there are opportunities to enlarge a couple of the buildings, but his firm’s acquisition strategy wasn’t predicated on potential expansion. Crestpoint will speak to the tenants about expanding their footprints, but the status quo will remain for now.
Ottawa market and off-market deals
Business fundamentals across Canada are good for the industrial sector and Ottawa is no exception. Altberg said risk-adjusted returns are more attractive in the nation’s capital than in some other major markets.
“Ottawa is a core market. It’s a strong growth market. It’s a strong cash-flow market. It has many of the same types of tenants as other major markets have and it’s experiencing many of the same phenomena in terms of e-commerce and industrial logistics that other markets are experiencing. It will benefit very similarly.”
Aside from the properties and their locations, making an off-market deal was also appealing to Crestpoint because it didn’t need to compete with other bidders at a time when industrial properties are a hot commodity.
“We have a bunch of feelers out for industrial buildings across the country and speak to industrial agents all the time,” said Altberg.
“Crestpoint has a very good reputation for closing transactions and acting very quickly to get transactions under contract and making sure that we follow through.”
Crestpoint’s industrial growth
Crestpoint has made two marquee industrial acquisitions over the past nine months as well as some smaller purchases.
The company acquired the fully leased four-building, 731,000-square-foot South Surrey Business Park in Surrey, B.C. in December.
Crestpoint purchased the five-building, 846,000-square-foot Northport Business Park in Edmonton in February. The property also includes 16.5 acres of outdoor storage yards and 42.8 acres of serviced excess land which could support an additional 700,000 square feet of density.
Crestpoint, Broccolini and Blackwood Partners broke ground last October on a 1.1-million-square-foot Amazon fulfillment centre on a 58-acre site at Crestpoint’s GTA East Industrial Park at Salem Road and Rossland Road East in Ajax, east of Toronto. It will open this fall.
Crestpoint also invests in the office, retail and multifamily residential sectors and has just over $6 billion of assets under management.
Connor, Clark & Lunn Financial Group Ltd. — a multi-boutique asset management firm whose affiliates collectively manage more than $96 billion in assets for individuals, advisors and institutional investors — owns 50 per cent of Crestpoint.
Crestpoint’s senior management owns the other half.