Crown Realty buys 23 Ottawa flex office buildings

IMAGE: 1150 Morrison is one of 23 flex office buildings in Ottawa acquired by Crown Realty Partners. (Courtesy Crown Realty Partners)

1150 Morrison Dr. is one of 23 flex office buildings in Ottawa acquired by Crown Realty Partners. (Courtesy Crown Realty Partners)

Crown Realty Partners has acquired seven office properties comprising 23 buildings across the south and east suburbs of Ottawa from CanFirst Capital Management for $56.35 million.

The 415,000-square-foot portfolio of low-rise, flex office space is 90 per cent occupied by a diverse mix of 65 tenants across a number of industries, including government, engineering, finance and information technology. They offer branding opportunities, direct access to most suites and parking.

“The plan is to take advantage of the value proposition of flex office assets, with overall gross occupancy costs much lower than traditional office buildings,” Crown investments partner Emily Hanna told RENX.

“Through a combination of upgrades and model suite build-outs to accommodate tenants, the plan is to introduce a new and reinvigorated leasing strategy to the portfolio.

“What we liked about the assets is that relatively small, freestanding flex office buildings such as these are both in short supply and costly to develop.

“Depending on the amount of office space within the individual buildings, the estimated replacement cost for this product type is in excess of the purchase price.

“Ultimately, upon repositioning, we will consider exit from the assets individually.”

Crown’s new Ottawa office portfolio

Crown’s new Ottawa office portfolio is comprised of:

* 36-38 Antares Dr. was built in 1986 and renovated in 2016. It has 15 tenants and three available suites;

* Camelot Business Park was built in 1989 and renovated in 1992. It has 10 tenants and is fully leased;

* 2301-2327 St. Laurent was built in 1985. It has eight tenants and five available suites;

* 169 Colonnade Rd. was built in 1983. It has one tenant and is fully leased;

* 106 Colonnade Rd. was built in 1983. It has five tenants and four available suites;

* 1140-1150 Morrison Dr. was built in 1974 and renovated in 1989. It has 23 tenants and three available suites;

* 14 and 20 Colonnade Rd. was built in 1988. It has three tenants and one available suite.

Toronto-headquartered CanFirst was founded in 2002 and has since raised $550 million. It acquired a component of the Ottawa portfolio in October 2015.

The transaction went firm prior to the physical distancing measures being implemented for COVID-19. Crown committed to continuing with it in March with the pre-established closing date.

Colliers International brokered the deal.

Crown will act as asset manager for the portfolio and has engaged Colliers to oversee property management instead of handling it internally, as it does with many properties.

“Colliers is the current property manager and we ultimately decided that the best approach at this time was to reduce as much transition friction as possible and continue to work with the existing property manager, with Crown overseeing a new, reinvigorated asset and leasing strategy,” said Hanna.

Crown and the Ottawa office market

Crown’s first Ottawa acquisition was Carling Executive Park, which it purchased in August 2019 from QuadReal for $56.5 million. It’s comprised of three buildings erected between 1982 and 1985 that encompass 288,763 square feet.

The 4.16-acre site is on the border of the Carlingwood and Westboro Village neighbourhoods in West Ottawa.

IMAGE: Crown Realty Partners' senior management team, from left: Crown team featuring Gary Summers, Emily Hanna, Scott Watson, Les Miller, Jamie Christie and Mark Dimmell. (Courtesy Crown Realty Partners)

Crown Realty Partners’ senior management team, from left: Gary Summers, Emily Hanna, Scott Watson, Les Miller, Jamie Christie and Mark Dimmell. (Courtesy Crown Realty Partners)

“It is a market we have come to understand and one in which we have established strong relationships, in both the leasing and investment sides of the business,” Hanna said of Ottawa.

“We have long believed that the Ottawa market exhibits many of the fundamentals that afford successful value-add opportunities, including the backbone of stability due to the government, strength and growth of the tech sector, presence of knowledge workers and relative affordability of the city.”

Crown’s value-add acquisition strategy hasn’t changed due to the COVID-19 economic slowdown across Canada, according to Hanna.

“We are still looking to deploy capital on behalf of our funds but will continue to do so thoughtfully and, given the calibre of ownership across the industry, don’t necessarily anticipate any huge discount opportunities.

“That said, what we do expect is that there will be a number of assets which will, unfortunately, be in a much less stable position when we all come out of this. They will require thoughtful, hands-on management to re-tenant and reposition.

“We are positioned well to act on those opportunities, whether they involve a 100 per cent purchase or active partnerships where we oversee a repositioning plan. 5255 Yonge Street is a good example of an asset in which we used such a strategy, acquiring a 50 per cent interest from an existing owner.”

Crown Realty IV Limited Partnership

Crown was established in 2001 to acquire, lease, manage and redevelop commercial real estate assets across Canada.

The company’s partners co-invest in its assets alongside the corporations, institutions, pension funds and high-net-worth individuals which provide capital.

Crown has more than $3 billion of assets under management.

The Ottawa portfolio acquisition was made on behalf of Crown’s fourth value-add fund, Crown Realty IV Limited Partnership, which was established in 2017.

The fund has raised more than $234 million of capital and will actively seek Canadian commercial real estate investment opportunities that fit its value-add investment mandate to the end of the year.

Crown is preparing its fifth limited partnership fund, which Hanna said will have “a similar value-add focus and will allow us to maintain dry powder for opportunities going forward.”

The closed-ended fund has a target offering size of $300 million and a three-year investment period.



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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