Emergia Inc. has closed on a 31 per cent ownership position of six retail plazas in six Ontario cities for $40.69 million as it continues to adjust its asset allocation mix.
The Montreal-based real estate operating company (EMER-CN) specializes in developing, redeveloping, acquiring and managing properties. It owns approximately $140 million worth of assets, primarily in Quebec and Ontario.
“The main goal of the company is based on value-add and diversification,” president and chief executive officer Henri Petit told RENX.
Emergia’s business model is based on establishing a portfolio containing 60 per cent revenue-generating properties for long-term ownership, 30 per cent development properties, and 10 per cent existing revenue-generating properties being optimized to add value.
These latest acquisitions put the mix at approximately 36.5 per cent in revenue-generating properties and 63.5 per cent in development and optimization properties.
Petit hopes to achieve Emergia’s targets by the end of 2023 through acquisitions, development and selling properties not aligned with the business model.
“We like to be in secondary and tertiary markets,” said Petit. “In some cases we can also be in primary markets, but we see an interesting business in secondary markets.”
It terms of its asset class allocation targets, Emergia wants to build a portfolio comprised of 35 per cent multiresidential rental properties, 30 per cent retail, 25 per cent industrial and 10 per cent office.
New retail acquisitions
Petit said he couldn’t disclose the other private investor owners of Emergia’s latest acquisitions. The properties comprise a total of approximately 568,000 square feet and are located in:
– North Bay: 135,514 square feet and fully leased;
– Pembroke: 64,564 square feet and fully leased;
– Owen Sound: 110,900 square feet, fully leased, with the possibility of future development;
– Brantford: 91,802 square feet, fully leased, with the possibility of future development;
– Niagara Falls: 49,852 square feet, fully leased, with the possibility of future development;
– Cornwall: 115,910 square feet, with vacancies that are expected to be filled this year.
The combined intensification potential for the properties is 195,823 square feet.
“They have good tenants and are well-located in cities where we see long-term stability,” said Petit of the acquisitions. “There are no grocery stores at any of them as we speak.”
Emergia’s historical timeline
Petit is a lawyer who founded GHP Group in 1996 to acquire distressed commercial, industrial and multiresidential properties. Its Quebec portfolio grew to 500,000 square feet by 2006.
Delma Resorts & Hotels was created the next decade. It owned hospitality assets in Quebec, the United States and Greece.
A reverse takeover transaction involving Delma and DHG Group with Aydon Income Properties Inc. resulted in the creation of The Delma Group Inc. in 2018. It was listed on the Canadian Securities Exchange (CSE) in March of that year and Petit became CEO at year-end.
A divestiture of the hospitality assets and a change in strategy occurred in 2019. The company changed its name to Emergia, sold further assets not aligned with the new business plan and had the first closing of a private placement worth $7.3 million in 2020.
The second closing of the private placement initiated in 2020, for $10.3 million, took place last year.
Emergia continues to trade on the CSE and plans to raise more funds.
“We’re in a phase of capitalizing the company to ensure that all of our projects are realized,” said Petit.
Other Emergia development projects
Those projects encompass several sectors and are located in both Ontario and Quebec.
Emergia acquired approximately 100 acres of land at 6485 14th Line in Alliston, Ont., located north of Toronto, for $14.4 million last May. After achieving rezoning, it plans to sell about 70 acres to a single-family home developer.
It plans to build approximately 500 purpose-built rental units and a retail and services strip mall, encompassing 50,000 to 60,000 feet, on the remaining land. Petit expects to start construction in late 2022 or early 2023, subject to municipal approvals.
Emergia is hoping to receive all approvals by mid-April to quickly move forward with the development of a seven-storey, 96-unit purpose-built apartment with 9,000 square feet of retail space on the ground floor at 185 Dorval Ave. in Dorval, Que.
The site is adjacent to a six-storey office building partially owned by Emergia as part of a joint venture.
Emergia is redeveloping and may expand a 15,900-square-foot commercial building in a multi-tenant commercial complex at 472 Knowlton Rd. in Lac Brome, Que. It plans to sell approximately 100,000 square feet of the site’s remaining land for residential use.
In Blainville, Que., just north of Montreal, Emergia owns 231,699 square feet of land which was zoned for commercial development. The company is applying to rezone it with an aim of launching a six-storey multiresidential rental project with approximately 175 units along with accompanying parkland.
Emergia has plans for a large commercial, multiresidential rental, recreational and tourist-oriented mixed-use development in the Eastern Townships town of Bromont, Que. on land it acquired in 2009.
The site encompasses 17 million square feet, with 10 million square feet being developable.
While Petit said it’s too early to reveal specific details, he expects to launch the first phase of construction toward the end of the year.
“There are other projects on the way, but I can’t go into further details about them right now,” said Petit. “We expect very interesting growth in the coming years.”