Leyad has added to its growing mall portfolio after acquiring the 456,430-square-foot Intercity Shopping Centre in Thunder Bay, Ont. from the Healthcare of Ontario Pension Plan (HOOPP) for an undisclosed price.

Leyad president Henry Zavriyev told RENX that HOOPP considered the mall a non-core asset that it wanted to sell. The acquisition opportunity was taken to select investor groups by Avison Young.

That resulted in a bid process and, ultimately, Leyad making its second acquisition from the pension plan.

“It's the dominant retail centre in northwestern Ontario,” said Zavriyev of Intercity. “Thunder Bay has all the demographics that we look for, which is good population growth, good economic prospects and a pretty consistent community.”

Intercity was originally built as a strip mall at 1000 Fort William Rd. in 1982 but it was demolished to make way for the current shopping centre in the 1990s.

Intercity’s location and offerings

Intercity is surrounded by the Harbour Expressway to the north, Fort William Road to the east, Isabel Street to the south and Memorial Avenue to the west. It has more than 2,000 parking stalls. The main entrance is served by a number of Thunder Bay Transit buses and the location is a few blocks away from Lake Superior shipping terminals.

“It's an essential piece of retail infrastructure for the community in a very high traffic commercial node in Thunder Bay,” said Zavriyev. “We're very excited to reinvest in the mall and to continue its legacy as the core retailer for that market.”

Intercity has 88 tenants, with the largest including SportChek, Marshalls, Fit4Less, Dollarama, Sephora and Bath & Body Works.

Intercity also has commercial space on its second floor that’s occupied by dental and insurance company offices as well as other service providers.

“We like to have service offerings at our malls because we want to have an all-encompassing mall where you can do your shopping, have entertainment and get your needs met,” said Zavriyev. 

Leasing and expansion

A large box space formerly occupied by Sears Canada has largely been empty since the retailer ceased operations a decade ago. Marshalls occupies 26,000 square feet of the space and Leyad is actively finalizing agreements with several new national and international retailers to redevelop and backfill the rest.

Excluding this big box space, Intercity’s commercial retail unit occupancy rate is 94 per cent. The weighted average lease term is 5.6 years.

Leyad will also move forward with the construction of a new SportChek location at the property that’s expected to be completed by late summer. There’s already a SportChek at the mall, but Zavriyev said this newly built store will be larger and plans are in place for new tenants to take the chain’s former space once it’s vacated.

JD Sports will open soon and become another of Intercity’s largest tenants, according to Zavriyev.

Quick service restaurant pads will be developed on an adjacent lot that was part of the acquisition from HOOPP.

These redevelopment plans are expected to create new jobs and bring substantial new investment into Thunder Bay.

Leyad will take over from Morguard as Intercity’s property manager.

Leyad’s continuing expansion

Montreal-based Leyad is a privately owned real estate investment and development firm that has a major focus on retail but also owns a large portfolio of multi-residential properties, seven industrial properties and two hotel properties across Canada.

Leyad has been actively acquiring shopping centres across Canada over the past few years and this year has already seen it add to its retail portfolio by purchasing:

• a 387,000-square-foot portfolio of seven single-tenant grocery stores leased to Loblaw Companies Ltd. in British Columbia, Manitoba, New Brunswick, Nova Scotia, Saskatchewan and the Yukon Territory;
• Winnipeg’s more than 900,000-square-foot, 160-store St. Vital Centre;
• and the more than 200,000-square-foot, 37-store Lloyd Mall in Lloydminster, Alta.

The company is seeking more acquisitions similar to Intercity and expects to make another purchase announcement in a few weeks.

“We're continuing to buy necessity-based retail with defensive cash flows,” Zavriyev explained. “That's been our focus for the last three years.

“It wasn’t a very appealing asset class in 2023 but it has since become, I believe, the most desirable asset class that commercial real estate investors can buy. Necessity-based real estate has proven to be extremely resilient and extremely defensible despite economic headwinds and what’s going on in the world.”