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Hazelview buys Kitchener apt. buildings from Starlight for $86M

Acquisitions add 219 apartments to its portfolio in 'a market that we like'

Hazelview Investments acquired two Kitchener properties from Starlight Investments, including the $40-million 49 Vanier Dr. (Courtesy Google Maps)

Hazelview Investments has purchased two Kitchener apartment buildings from Starlight Investments as it continues to see favourable conditions in population growth and economic trends in the region.

The nine-storey, 107-unit 49 Vanier Dr. and 12-storey, 112-unit 37 Vanier Dr. were purchased for $40 million and $46 million, respectively.

Michael Tsourounis, Hazelview’s managing partner and co-head of real estate, told RENX the deal fits well in the context of the Toronto-based real estate investor’s regional portfolio.

Tsourounis called Kitchener-Waterloo “a market that we like,” a sentiment that is increasingly echoed by other players in the industry. Its location is a key factor, sitting just west of the Greater Toronto Area.

The buildings had been acquired by Starlight in 2019 as part of a larger acquisition in Kitchener. Both are concrete construction.

37 Vanier sits on a 1.9-acre property and contains a mix of one-bedroom, two-bedroom and two-bedroom-plus-den suites. 49 Vanier is a 1.7-acre property comprised of one-bedroom and two-bedroom suites.

Both properties offer private balcony spaces, on-site laundry and surface parking. Located in the Rockway neighbourhood, nearby amenities include a community centre and a YMCA, retail options and restaurants.

The buildings also offer nearby access to schools and public transit including the GO train and Highway 8.

Good demographics and economy

The Kitchener-Waterloo region is buzzing with activity, from a “landmark” acquisition of the Conestoga Mall in Waterloo for $270 million to Europro converting a 12-storey office building in downtown Kitchener to a rental tower with 90 units.

Tsourounis said Hazelview has operated in the Kitchener-Waterloo market for over a decade and sought to add to its portfolio in the region “when the opportunity makes sense. It did with these.”

“We like the long-term demographics in that region. Pretty defensive economy in technology, financials, education. Also great proximity to the GTA and we think the long term is favourable (due to) demographic trends we see in those markets,” he said.

The Kitchener-Waterloo region is home to two universities and a college, providing local businesses with young talent in science, technology and business sectors.

The inaugural Southwestern Ontario Real Estate Forum in May also concentrated heavily on Kitchener-Waterloo, highlighting Waterloo’s ION light-rail system, rapid population growth and demand for GTA real estate as positive factors for its real estate market.

Repeating similar themes, Hazelview’s positive economic outlook for Kitchener-Waterloo and employment growth is compounded by favourable trends related to immigration and a growing population.

There is a need for long-term real estate and for housing, which the transaction will seek to fulfill.

“Much like the remainder of Canada, as we see favourable trends as it relates to immigration and population growth in Canada, that all leads to a long-term need for real estate and obviously for housing, and this region, much like most places across Canada has a situation where demand is outstripping supply for housing. . . .

"We feel it’s got a great long-term employment growth opportunity.”

Population growth in an uncertain economy

Even in an unsteady economy, Tsourounis said Hazelview continues to find opportunities to provide housing. The amount of supply must be improved across Canada, he said.

Interest rate hikes are not proving themselves a major impediment as the housing market and demand for real estate continues to be supported by long-term favourable trends from population growth.

At the Montreal Real Estate Forum in mid-June, Desjardins vice-president and chief economist Jimmy Jean forecast only a soft recession due to Canada's “explosive” population growth.

“When we have population growth, you need that physical bricks-and-mortar infrastructure,” Tsourounis said.

“How it is used may change, how it is programmed may change, but the need for real estate when we have a growing population at the rate Canada is expected to, we think that underpins a lot of the really good long-term fundamentals for the real estate industry.”

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