MTRPL and Sailcap have acquired the 258,167-square-foot office component of downtown Montreal’s historic Les Cours Mont-Royal from a New York-based family which had owned it for decades.

MTRPL co-founder Bryan Spatzner declined to provide the purchase price for the iconic property at 1555 Peel St. and 1550 Metcalfe St. in an interview with RENX, but said it was acquired for less than $100 per square foot.

“In today's numbers, replacing that thing would probably cost $400 to $500 a square foot,” Spatzner added. 

“It was on market, but at a very different price point from where it finally transacted,” Spatzner said of the transaction, which was brokered by CBRE and closed on Sept. 19. 

“It's very hard to get financing today for distressed office. We had financing, and they disappeared three weeks before closing and we had to find alternative sources of capital from our partners and get it done.”

Spatzner credited Sailcap’s Greg Wise and J & H Realties Inc.’s Joe Neufeld, as well as smaller investment partners, with making the acquisition possible.

Building is about 40 per cent vacant

There’s approximately 100,000 square feet of vacant office space in Les Cours-Mont Royal, but Spatzner is confident it can be “relatively stabilized” in two years.

“It’s a unique building in a location that's desirable, and an amenity in and of itself, and that's going to help employers bring employees back to the office,” said Spatzner.

The building was originally the 1,036-room Mount Royal Hotel, which was the largest hotel in the British empire when it opened in 1922. The hotel closed in 1984 and underwent a $140-million conversion into a mixed-use complex with retail, entertainment, office and condominium components that opened four years later.

A few vestiges of the hotel remain, however, and Les Cours Mont-Royal office tenants have access to a private health club, a rooftop indoor swimming pool, a rooftop terrace, a squash court, steam rooms, a gym, lounges and other common areas.

The City of Montreal is the anchor tenant of Les Cours Mont-Royal and just renewed its lease for approximately 50,000 square feet. McGill University is also a large tenant, while others include pharmaceutical, private equity, technology and marketing companies. 

The building offers flexible floor plates and adaptable layouts and the spaces available range from 1,000 to 20,000 square feet.

“We're coming to market with what we believe is an aggressive price point because of our low cost basis,” Spatzner said. “We're marketing the spaces at around $35 a square foot with utilities and en suite cleaning included.

“So far the reception from the brokerage community has been very good because of that price point and with all the amenities that we have.”

Interior improvements will be made

The building’s structure and systems are good, according to Spatzner, but MTRPL will make interior improvements through painting, installing new carpets and lighting, and adding other finishing details to bring things up to modern aesthetic standards. 

Les Cours-Mont Royal is above the Peel Metro station as well as Montreal’s “Underground City” network that connects office towers, hotels, shopping centres, multifamily residences, convention halls, universities and performing arts venues in the central business district.

A bicycle path along Peel Street, which is full of restaurants and bars in the area around Saint-Catherine Street West, will soon be extended to connect the Lachine Canal to the south with Mount Royal to the north and pass directly by Les Cours-Mont Royal.

Wide range of tenants being sought

Montreal-based MTRPL was founded in 2016 and now owns more than 20 commercial, multiresidential and mixed-use properties in its hometown. 

“Across our portfolio of office, we’re 99.9 per cent occupied,” Spatzner said, though that figure doesn't include Les Cours Mont-Royal. 

“Office isn't just office anymore,” Spatzner continued. “As long as the locations are desirable, we're leasing spaces to all types of tenants, like fitness studios, video game companies, karate studios, yoga studios and hairdressers. 

“It's really about casting a wide net and having a product that's desirable for a wide range of of uses.”

MTRPL continues to seek acquisition opportunities, Spatzner said.