Europro has acquired the Madison Centre office building at 4950 Yonge St. in Toronto from Northam Realty Advisors Limited for $118 million, making it a major property owner in the Yonge-Sheppard area of the city.
The off-market transaction came together through both companies having a relationship with Colliers Canada vice-president of investment sales Dominic Delapenha.
“It was a long deal to put together, because there are definitely significant vacancies in the building and we were underwriting a deal in the middle of a pandemic, which is always difficult,” Europro vice-president of asset management and investments Jesse Nathanson told RENX.
“But, it all came together and both parties ended up walking away happy.”
Madison Centre’s selling points
The 445,000-square-foot Madison Centre is comprised of office space with a ground-level and below-grade retail concourse. It was constructed in the 1980s and stands 23 storeys.
“We love the bones of the building and the fundamentals that it has,” said Nathanson. “We feel we can be aggressive from a leasing standpoint and draw attention to it and bring the building to where it needs to be and had been for many, many years prior.”
There are no major immediate capital expenditures planned for Madison Centre, but Nathanson said Europro is a long-term holder and will do whatever it can to attract and retain tenants for years to come.
Madison Centre includes a full-service GoodLife Fitness facility, food service, a dentist office, a hair and nail salon, a car wash operation and direct access to the Sheppard-Yonge Toronto Transit Commission subway station.
Other office towers, residential developments, retail, food and conveniences are nearby, and there’s easy access to Highway 401 from the site.
“It’s north of downtown but still on Yonge Street and not too far north,” said Nathanson.
Madison Centre is a strategic add-on to Europro’s existing presence in the North York corridor and is steps away from the 5001 Yonge St. office building it acquired in December 2019.
The two properties comprise more than 800,000 square feet and will make Europro one of the largest commercial landlords in the node, providing it with the ability to offer tenants multiple options and customized solutions within the immediate area.
“We believe in suburban office in general,” said Nathanson. “We think that as Toronto grows, that’s going to impact where people live and where they’re going to go. We’re big believers that office is going to return and people are going to want to work closer to home.”
Europro’s formation and evolution
Europro was founded in 2003 by investors Moshe Faust and Josef Jakubovic, who started by buying a small office building and a strip plaza with office and retail space in Whitby. Faust was more involved on the financial side while Jakubovic handled property management.
The Toronto-headquartered company grew slowly and made a major transition in 2014 when it acquired its biggest property to that point, Cedar Pointe Business Park near Highway 400 and Dunlop Street in Barrie.
Europro acquired: about a million square feet of space in Kitchener in late 2016; a three-property portfolio in Mississauga in 2017; Tecumseh Mall in Windsor in 2018; 5001 Yonge St. and the 550,000-square-foot London City Centre in London in 2019; and the 260,000-square-foot Walker Square retail centre in Windsor in 2020.
“We’re a young entrepreneurial company that wants to continue to grow and is very eager to grow,” said Nathanson. “We’re definitely looking at and engaged in other opportunities to be able to continue this rapid growth.”
Europro now has 31 properties encompassing 4.7 million square feet, with 550 tenants, in Barrie, Kitchener-Waterloo, London, Mississauga, North Bay, Sarnia, St. Marys, Stratford, Toronto, Whitby and Windsor. The portfolio is valued at about $750 million.
Nathanson said Europro prefers to have economies of scale with more than one asset in a community, but it also wants to make an impact and become involved with those communities.
Europro has 105 employees, with about one-quarter of them in the head office. It also has regional offices in Kitchener, Windsor, London, Barrie and Sarnia.
Europro has a mix of institutional and high-net-worth investors. It offers an array of services that encompass lease administration, accounting, property management, asset management, space planning, design and project management.
Moving into development
It will also move into development with five six-storey purpose-built rental residential buildings with 390 units on an unused corner of the 44-acre Tecumseh Mall property. Europro will be the development manager but a contracted construction team will do the building.
The goal is to break ground on the project in 2022 and build in two phases.
Office and retail comprise the majority of Europro’s portfolio, as Nathanson said industrial and multiresidential properties are difficult and expensive to buy, and rationalize returns for, at the moment.
“I would say ‘Never say never’ in terms of buying industrial and multifamily, but that’s not necessarily where the main focus is today,” said Nathanson.
“We’re trying to get into multifamily by building ourselves. That’s what we’re doing in Windsor and we have land in Kitchener and some other markets where we think we can eventually develop.”