Evton Capital Partners acquisition of commercial office condominiums in the Mississauga Airport Corporate Centre (ACC) earlier this year fits perfectly with their corporate strategy of acquiring value-add B-class buildings. The added value with this purchase is derived from the ownership structure as well as a boost Evton anticipates from significant investments being made by pension fund giant HOOPP (Healthcare of Ontario Pension Plan) in what is one of Canada’s landmark business parks.
Evton’s latest building purchase is part of the rapidly evolving Mississauga Airport Corporate Centre, a suburban office building node that Evton knows well because it has owned another B-Class property there for more than five years.
The four-building office complex located at 2540-2570 Matheson Boulevard was developed in early 1990s as a commercial condominium. The complex has an area of 125,650 square feet and is divided into 1,500 to 3,000 square foot units. “It was completed at the beginning of what was a bad time for real estate and the condo sales didn’t materialize,” explained D’arcy McGee, President of Evton Capital. “It may have been taken over by a bank.”
A new owner treated the development as a lease property however the separate titles from the condominium stayed in place. At some point a handful of condo sales were completed and then the balance of the units were sold to Morguard Investments on behalf of an institutional investor.
When Evton purchased the buildings earlier this year, it was 34% vacant, a situation that the company viewed as a familiar opportunity. In 2006, Evton acquired 2600 Skymark Avenue another 120,000 square foot office condominium building also located in the Mississauga Airport Corporate Centre. Over three to fours years, Evton sold off the condo units in what is described as “a lucrative condominium sales program” on the company website.
“We see considerable potential in this property through the execution of a condominium sales program, similar to the success we achieved at 2600 Skymark Avenue,” McGee said of the Matheson Avenue property. “We also see the opportunity for capital improvements which will make the property more attractive to tenants and investors alike.”
The Matheson Boulevard office condominium is in the same sub-market as Skymark where Evton now has a first-hand understanding of commercial condos. The company expects to sell the condominiums for $155 to $180 per square to small to mid-sized privately held companies such as contractors, engineering and architectural firms, software companies and a broad range of other types of businesses.
The Mississauga Airport Corporate Centre (ACC)
The Airport Corporate Centre is one of the largest suburban office nodes in the Greater Toronto Area (GTA) that boasts such major corporate tenants as Hewlett-Packard, Accenture, Bell Mobility, TD Bank and RIM. What is particularly significant for Evton, and likely other owners in the business park, is that Healthcare of Ontario Pension Plan (HOOPP) has made a major investment in the ACC and currently owns approximately 4.9 million square feet representing 13% of the development.
Most recently, in December 2011 HOOPP acquired 33 acres of land in the ACC which is slated to become a $330-million development. The pension fund is moving ahead with its master plan for the property which calls for the construction of up to 1.1 million square feet of office space in seven office buildings and more than 70,000 square feet of restaurant and service amenities on the property.
This acquisition built off the momentum created by another HOOPP property the 225,000-sf, LEED-Gold AeroCentre V office building. It was built on a speculative basis and completed in 2010 in the AeroCentre office park, another part of the Airport Corporate Centre, which HOOPP also owns. The building has been fully leased to Target Canada and PepsiCo.
In addition to these two significant office parks, HOOPP also owns another six office buildings in the ACC.
Evton’s Matheson Boulevard complex is located a few blocks from where HOOPP made its 2011 acquisition. It is surrounded by office, industrial, and retail uses, and is a short distance from the future interregional Bus Rapid Transit (BRT) corridor. The complex is located just minutes from highways 401, 403, 410 and 427 providing easy access for tenants.
Asked if HOOPP’s investment in the Mississauga Airport Corporate Centre influenced Evton’s decision to make the Matheson Boulevard purchase McGee replied, “Very much so.“ Healthcare of Ontario Pension Plan (HOOPP) has made a $1-billion investment and their plans call for the continued development of new buildings. The ACC will become increasingly attractive to business as commercial activity increases and a greater diversity of commercial real estate is added to the business park, he explained.
About Evton Capital Partners
Evton Capital Partners is a real estate investment and property management firm based in Toronto that has been in operation since 1995. The company specializes in Canadian commercial real estate, focusing on mid-size properties valued between $10 million and $50 million, located in southern Ontario.
It provides investment management and property management services to its own Evton Real Estate Fund LP, as well as third party property management services, primarily for B-class office, industrial and retail buildings.
Evton Capital Partners is led by partners Bill Evans and Michael Bunston hence the Evton name. The two met as roommates at Ridley College in St. Catharines at the age of 12 and both attended the University of Western with the intent of pursuing careers in real estate.
After graduating they went separate ways. Bill’s career saw him working at Campeau Corporation in both the U.S. and Canada, followed by Bramalea Inc. – two of Canada’s largest real estate development companies. Michael began his career working at Royal LePage Commercial, and then moved on to Bunston Private Equity – the real estate firm his grandfather started in 1922.
In October 2011, D’Arcy McGee joined Evton as President after a career in real estate investment and asset management that included a stint with Colliers in Santiago, Chile, JMA Ventures in California, and as Vice President of Global Principal Investment with Oxford Properties. Immediately prior to joining Evton, McGee was Founding Principal of MP Associates of Toronto, a real estate investment and asset management company.