Crombie REIT wants to be a multi-family player

Crombie REIT (CRR.UN-T) is best known as a retail-focused landlord with 280 commercial properties comprising approximately 19 million square feet with an enterprise value of $4.8 billion. 

Donald Clow, Crombie REIT President and CEO.

Donald Clow, Crombie REIT President and CEO.

Crombie’s portfolio largely consists of grocery and drugstore-anchored shopping centres and freestanding stores located in urban and suburban markets across Canada. While that won’t change, president and chief executive officer Don Clow said at CIBC’s recent real estate conference that Crombie is looking to make better use of many of those properties and their air rights.

“As we go forward, a portion of our business will be in the mixed-use and multi-family space. We have an opportunity, primarily through the acquisition of the Safeway portfolio that we acquired in 2013, as well as some others that we’ve acquired, to develop up to 6,500 units, which represents about $3 billion in residential opportunity.

“These are grocery store sites with parking lots in the middle of big cities with towers all around them. It’s a great source of land.”

Crombie’s goal is long-term wealth creation

Crombie’s goal is long-term wealth creation. Clow said building a multi-billion-dollar, purpose-built rental apartment portfolio is more important than the short-term gains of building and selling a condominium.

“We’re going to build a project on Davie Street in Vancouver for $150 million to $170 million to a six per cent yield,” Clow cited as an example. “In that market, you could turn around if you wanted to sell it for a 2.5 per cent cap rate.”

While that’s a nice option, Crombie foresees three per cent annual rent growth in Vancouver apartments and compares that to the 1.5 per cent annual rent growth in the Sobeys (EMP.A-T) grocery stores that dominate the Halifax-based real estate investment trust’s portfolio.

“Increasing our cash flow growth is good,” said Clow.

Initial focus is on developing 19 sites

Crombie is initially focused on developing 19 sites across the country — including nine in Vancouver and smaller amounts in Calgary, Toronto and Halifax — where the underlying land value is worth more than what’s built on them.

It’s also looking outside of its internal pipeline at other grocery store-anchored sites to do the same thing.

“We see this as a future opportunity for us that we may be able to acquire from a current landlord and have that development occur sooner than what might happen under the existing ownership,” said Clow.

“We’re very excited about the opportunity and we’re looking forward to getting into this part of the business.” 


Steve is a veteran writer, reporter, editor and communications specialist whose work has appeared in a wide variety of print and online outlets. He’s the author of the book Hot…

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Steve is a veteran writer, reporter, editor and communications specialist whose work has appeared in a wide variety of print and online outlets. He’s the author of the book Hot…

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