Toronto-based Crestpoint Real Estate Investments Ltd., in partnership with the Trinity Retail Fund, has expanded its Alberta portfolio in the past few months with the acquisitions of three retail properties.

The investments also expanded Crestpoint’s assets under management past the $10-billion mark.

The three properties are:

• Cornerstone Okotoks with nine buildings, stand-alone big box retail, 24 CRU bays and a gas station. It sold for $47 million with the vendor being Prairie Fire (Okotoks) GP Ltd.;
• Cornerstone Olds with nine buildings, stand-alone big box retail and 21 CRU bays. It sold for $32.25 million with the vendor being Canadian Property Holdings (Alberta) Inc.;
• and Town Centre in the Trinity Hills development in Calgary, which contains multiple parcels across the development.

Prior to Trinity Retail Fund’s partnership with Crestpoint on these three assets, the fund was an owner (along with its partner Montez) of the two retail components in the Trinity Hills development, known as Gateway and Town Centre. The Gateway retail component is not part of the transaction, and remains under the Trinity/Montez partnership.

The Town Centre retail component is now co-owned by Crestpoint and Trinity’s retail investment fund, and was acquired as part of the larger acquisitions of the three properties including Olds and Okotoks. Montez sold its stake in the Town Centre retail component.

No financial details for the transactions were released.

The three Alberta acquisitions

Crestpoint, on behalf of the Crestpoint Core Plus Real Estate Strategy (its open-end fund), holds a 75 per cent interest in Town Centre and the Cornerstone portfolio, with Trinity Retail Fund holding the remaining 25 per cent. 

Town Centre is a newly-constructed shopping centre spanning approximately 138,000 square feet in the Trinity Hills community near Canada Olympic Park. It is anchored by Save-on-Foods and includes national tenants Dollarama, PetSmart, Bulk Barn and Sleep Country among others.

Located near the Trans-Canada Highway and Sarcee Trail SW, the centre provides tenants with exposure to over 60,000 vehicles daily and is adjacent to a community projected to reach around 4,000 residential units.

The Cornerstone Retail Portfolio consists of  the two open-format, grocery-anchored retail properties in Olds and Okotoks, measuring approximately 113,000 square feet and 157,000 square feet respectively. Combined, the Olds and Okotoks portfolio covers 33 acres.

About 98 per cent of the space is leased to a "premium" roster of national tenants including Sobeys, Canadian Tire, Staples, Dollarama, Mark’s and several banks. Both locations also benefit from their proximity to nearby Walmart Superstores.

Crestpoint's focus on essential retail

Aubrey Greenberg, principal, vice-president – asset management and investments for Crestpoint, noted the firm owns retail properties across the country, focusing on primarily unenclosed retail that caters to consumers' daily needs.

“Traditionally we’ve focused in primary markets. We view Okotoks really as a bedroom community of Calgary, so that fits the profile," Greenberg told RENX. "Olds obviously is not a primary market in the country. But, given the makeup of the asset, the merchandising mix, the tenant base, etc., it checks most of the boxes, if not all, in terms of hitting that strategy of having retailers that can continue to thrive as Canada continues to grow."

Both properties have distinct advantages in their markets.

“Olds, this is the primary shopping centre in that market and it’s drawing from pretty far afield, way beyond the borders of Olds," Greenberg said. "Okotoks is a thriving, growing community. Walmart, shadow anchors, grocery anchored, Canadian Tire, it’s exactly the type of retail we love and this is the type of retail that has stood up and performed very well.” 

Trinity in acquisition mode

David Scorniaenchi, vice-president of leasing for Trinity, said these are the types of shopping centres Trinity has built in the past - featuring grocery-anchored tenants and other essential needs. 

“Now, in our current model of growth what we’re looking at is acquiring income-producing properties and it hits all the right mixes. Calgary we’re really bullish on right now for a lot of reasons - the demographic changes, the rent trajectory,” he said. “Looking at two properties (Olds and Okotoks) that have Canadian Tire, Walmart, grocery stores whether as the anchor or the shadow anchor, is a rare opportunity and exactly what we thrive in and the type of shopping centres we think are set for the future.”

Devon Howsam, principal, vice-president – investments for Crestpoint, called them stabilized, well-tenanted assets.

“We do see opportunities to sort of refine the asset, improve the mixes as we go. Our strategy is generally to optimize merchandising mix, look for new, unique, desirable tenants that complement what’s there already. For the most part these assets already are doing quite well.

"The vendors did a pretty good job and we’re going to continue along that path,” Scorniaenchi added.

Crestpoint is an advisor and asset manager with an open-ended fund investing in commercial properties across Canada - retail, office, industrial and multifamily. The open-ended fund with a long-term cash flow and long-term view targets eight to 11 per cent annual returns. 

Recently Crestpoint also launched an opportunistic fund seeking 15 per cent annual returns and an expiry at seven years.

It was founded in 2010 and holds over 300 properties and 35 million square feet under management.

"We'll be looking for more..."

Howsam said the acquisitions are very much part of the company’s retail allocation strategy.

“It’s exactly what we’re looking for whether it be in a primary or a secondary market. We’re very bullish on it and we think there’s still good growth in the rents, good cash flow and strong covenants. And absolutely we’ll be looking for more,” he said. “It’s the strength of the cash flow if you’ve got good, strong covenants from your anchors, and it’s necessity based.

"We saw through COVID that these centres still performed even in a down market. People need to eat, people need to go to the drug store.”

Greenberg said Crestpoint looks well designed, well-built and well-tenanted assets situated in locations likely to stand the test of time.

“These are locations that are highly convenient for customers and as a result they’re generally very much consistently in demand by tenants. The opportunity to build new competing centres is generally limited, so we think these are fairly entrenched for the long term.”

Howsam said Alberta presents good opportunities for retail.

“So we’re buying these at an attractive return and we believe in the growth profile of the population there, there’s good household income. Everything you need to sustain a centre like this you can find in Alberta at slightly better premiums,” he said.