Groupe Inspire has invested $46.5 million to purchase the 260-unit, eight-building La Renaissance portfolio in the Montreal borough of LaSalle and plans to acquire another 1,000 multifamily units in Greater Montreal in the next 12 months.

"It’s a value-add play," says president and CEO Sébastien Gariépy, noting that the portfolio “really needs love.”

The Terrebonne, Que.-based company plans to spend about $10 million on renovations on the buildings that are located on Vézina St., Stirling Ave. and Saint-Patrick St. 

"The first year will be a massive investment to bring It back to our standards," he says. “We think that there’s huge potential to revamp the buildings and make something great. It will require a lot of work but that’s what we do.”

Groupe Inspire acquired the 54-year-old portfolio in a bidding process led by broker Avison Young. La Renaissance’s previous owner was real estate firm Banvest. 

Rare find in Montreal

The transaction offers a critical mass that is increasingly difficult to find on the island of Montreal, Sébastien Gatti, executive vice-president at Avison Young, the brokerage that handled the sale, said in a LinkedIn post. "This acquisition provides an exciting platform for the new owner to reposition the asset, unlock its full potential, and breathe new life into this well-located community.”

Groupe Inspire plans to renovate the approximately 50 of the 260 units that are currently vacant as well as units that become available when tenants leave. Major work will also be done on roofs, bricks, asphalt, plumbing, electricity, landscaping and common areas.

The garden-style complex has an almost equal mix of one-, two- and three-bedroom units. Average rents are $1,100, about $500 below market rents. There is a “huge upside,” Gariépy says. The numbers make sense “and we see something great that we can do with it.”

Aside from La Renaissance, Groupe Inspire has bought 800 multifamily units in the last 12 months, including 100 townhouse-style units at 313 Hurteau St. in Dollard-des-Ormeaux, 121-units at 10,200 de Bois-de-Boulogne Ave. in the Ahunstic area of Montreal and 76 units on 31st Ave. in LaSalle.

Strong pipeline in multifamily

“We’ve been very active lately and will continue to be. We have a very strong pipeline but more than that we have a lot of ambition. We want to be growing for the upcoming years.”

Groupe Inspire now owns more that 1,400 multifamily units and Gariépy says the roughly decade-old company is on track to obtain another 1,000 multifamily units in the next 12 months.

It’s under contract for an apartment building with 250 units and is in negotiations for hundreds of others.

The company will also be acquiring Havre des Iles, a 400-unit, three-building development in Laval that it currently manages.

Inspire also owns an industrial portfolio that includes District Lupel a 360,000-square-foot industrial agri-food hub in Trois-Rivières, about 140 kilometres from Montreal. 

Aside from District Lupel, Inspire plans to sell some of its industrial properties that are in the outskirts of the GMA. The company recently sold the 17-year-old 1400 Innovation in Bromont after receiving “an offer we couldn’t refuse.”

“We’re always looking for industrial buildings too but for various reasons in the last 18 months we haven’t acquired anything,” Gariépy says. "If we find good (industrial) deals, we’ll definitely consider it, but we expect the expansion in the next 12 months will be for multifamily.”

Groupe Inspire now has more than 26 employees and manages its own properties. The company has a project manager to oversee the general contractors that do its renovations. 

Goal is to add value

Most of the company’s multifamily acquisitions have been value-add plays. “Our goal is to bring value to buildings. We really want to create value financially, but we also want to create value for our tenants."

Gariépy says the company likes to buy rundown buildings because amenities andservices can be added to improve tenants’ quality of life, not just their rents.

Groupe Inspire likes to buy multifamily in the Montreal area. “There’s less immigration, the rental market is harder, so we feel that the cap rates are more interesting than they were a few years ago,” Gariépy says.

While there are challenges in the current rental environment, “when the market gets better, we’ll be very happy to own these buildings.”