Firm Capital Property Trust (FCD-UN-X) is buying a 50 per cent non-managing interest in six shopping centres in Eastern Ontario and Quebec for $133 million from First Capital Realty (FCR-T) and one of its affiliates.
The portfolio, which includes mainly grocery-anchored malls in Repentigny and Gatineau, Que., and Ottawa, is valued at $266 million ($260 per square foot). It contains just over a million square feet of gross leasable area.
Several of the sites contain what the two partners say is “significant” potential for future development and densification.
The properties are: Merivale Mall and Gloucester City Centre in Ottawa; Carrefour du Plateau in Gatineau; Galeries de Repentigny, Galeries Brien Est and Galeries Brien Ouest in Repentigny. Anchor tenants include Canadian Tire, IGA, Loblaws, Walmart and Shoppers Drug Mart, among others.
The acquisition will boost Firm Capital’s portfolio to 75 income-producing properties totalling 2,228,381 square feet (at the trust’s share) of GLA. The portfolio also includes 204 residential units.
The trust’s gross book value will increase to approximately $403 million.
Descriptions of the portfolio
Gloucester City Centre: Located in East Ottawa, Gloucester City Centre has 48 brand-name retailers, anchored by a 125,000-square-foot Loblaws, a 98,500-square-foot Walmart, an 11,700-square-foot LCBO and a 10,200-square-foot Pharma Plus. The 370,000-square-foot enclosed shopping centre is focused on day-to-day retail offerings, including groceries, prescription drugs, personal-care items, household supplies, banking and other personal services.
Over 119,200 people reside within a five-kilometre radius of Gloucester City Centre, with an average annual household income of more than $91,900. Gloucester City Centre will include a new O-Train LRT station scheduled for completion this year. The centre is 97 per cent occupied.
The site has the largest redevelopment potential in the portfolio, with plans to seek 930,000 square feet of additional commercial and residential density.
The adjacent Gloucester Silver City entertainment centre is already being redeveloped by RioCan Living and Killam Apartment REIT (KMP-UN-T) to contain two rental apartment towers. Ultimately, that site alone could hold up to four towers and 880 units.
Merivale Mall: Located in the southwest Ottawa neighbourhood of Nepean, Merivale Mall is in the prominent Merivale Retail Corridor regional node. It spans 3.2 kilometres along Merivale Road and offers over 2.5 million square feet of retail space.
The mall benefits from traffic counts of over 50,000 vehicles per day. It offers 1,010 parking stalls and approximately 220,000 square feet of retail shopping space, anchored by national tenants Farm Boy, Sport Chek, Planet Fitness, Marshalls and Shoppers Drug Mart. It is 92 per cent occupied.
Like the Gloucester site, First Capital and Firm have redevelopment in mind, with plans to seek 280,000 square feet of additional commercial and residential density.
Carrefour du Plateau: Anchored by Canadian Tire, IGA, Sports Experts and Jean-Coutu, the 241,772-square-foot centre in the Hull sector of Gatineau (just across the river from Ottawa) offers a wide mix of amenities and includes space for additional density.
This retail centre services highly populated, family-oriented neighbourhoods with over 94,000 residents within a five-km radius. In addition, it has exposure to the busy arterials of Des Allumettières and Des Grives Boulevards. It is 100 per cent occupied.
Galeries de Repentigny, Brien Est and Brien Ouest: These three centres are east of Montreal in the affluent community of Repentigny, on Boulevard Brien near Hwy. 40.
Major tenants include Super C, IGA, Dollarama and Uniprix. Due to their locations adjacent to one another, the three properties are linked as a singular retail offering. Together, they comprise about 192,000 square feet of GLA.
Firm Capital’s financing, share offering
The portfolio will be partially financed through a combination of new and assumed mortgages for a total amount of approximately $92.9 million at an interest rate of approximately 3.55 per cent.
In conjunction with the acquisition, Firm Capital is issuing two equity offerings, a marketed sale of $20 million in shares (to be sold at $6.40 per unit) as well as a $15-million private placement.
Subscribers of the private placement are expected to include an existing institutional unitholder and members of senior management and trustees of the trust.
The transaction remains subject to standard closing conditions, including successful closings of the offerings. It is expected to close in May.
Upon closing of the acquisition, Firm says 77 per cent of its NOI will be generated from primarily grocery-anchored retail properties, as well as 19 from industrial properties, three from apartments and one per cent from office.
By geography, 59 per cent of NOI will be generated from Ontario, 27 per cent from Quebec, seven per cent from Nova Scotia and the balance from British Columbia, Saskatchewan, Alberta and Manitoba.