A major mixed-use project in Waterloo could bring up to 1,100 new apartments to the Southwestern Ontario city. Westmount Place will be the latest in a series of urban, downtown developments planned or under construction by Killam Apartment REIT (KMP-UN-T), says president and CEO Philip Fraser.
During a recent interview with RENX, Fraser noted several converging trends are bringing people back into the downtown areas of Canada’s cities. Couple that with a growing population due to record immigration levels and the atmosphere is ripe for more major multi-residential and mixed-use type projects.
“Every province has the same pressure, the urban centres are getting larger, the rural centres less,” he said, noting several demographics are fueling the demand. “The hospital services are better in the bigger centres, there are jobs, the kids are working there, the grandparents want to be close by, it just adds to the demand.
“So we see it in Charlottetown, we see it in Halifax, we see it in Moncton, we see it in all the centres we are in in Ontario: Kitchener-Waterloo, Toronto is exceptional, and Ottawa is very strong.
“It is the trend right across the country.”
The Westmount Place development
The proposal for Westmount Place includes five multi-residential towers each featuring a multi-storey podium which would contain ground-level commercial, a new four-storey parking structure, various amenities and public spaces, as well as some redesigning of the existing retail and commercial mix on the 7.2-hectare site.
The towers would range from 11 storeys closest to the existing low-rise housing, to 25 storeys at the portion of the property adjacent to existing mid- and high-rise towers.
The development site is roughly bordered by Westmount Road North, Erb Street West and Dietz Avenue. It is also bordered by a large regional shopping centre, with almost 300,000 square feet of retail space. It’s just a kilometre from the region’s new ION light rail transit system which links it to a regional GO Train station with direct access to downtown Toronto.
“Our site in Waterloo, it is so close to everything,” Fraser said. “The city knows our plans. We’ve gone in with close to 1,100 units and gotten positive feedback. Now we are just going through the process.”
Killam has been compiling land for the Westmount project for more than a year. It bought the largest chunk of the property in early 2018 from Sun Life for $77.8 million, including the mall and an existing low-rise office building which serves as a regional Sun Life office.
Urban core, transit-oriented strategies
Fraser said Westmount is reflective of Killam’s strategy to focus on urban cores and transit nodes where possible. There is also a not-so-subtle difference between medium-sized cities and the country’s largest centres such as Toronto, Vancouver or Montreal.
“You want to build in the urban centres,” he explained. “Urban centre is just as good as the transit-orientated, because everything else is that close to you.
“So we are building in downtown Halifax, we’ve got sites we are going to be building in downtown Charlottetown. We’ve got properties in downtown Moncton. If you can walk to the arena, if you can walk to your entertainment venues, if your work is close by in the office towers, that is just as good as walking out and hitting the subway to downtown.
“Some cities are designed and feel better with more of a vibe in the downtown, versus the transit nodes. But once you get into the big centres, by default the ones on the transit become that much more important.”
Another example in the Kitchener-Waterloo region is Killam’s Weber Scott Pearl apartment project, which is expected to begin construction this year. The 11-storey building in downtown Kitchener will bring 173 apartments to the core at what has been mainly a vacant lot for many years (two small heritage buildings will be retained on the site). It’s scheduled for occupancy in 2021.
Some other Killam projects
As Fraser noted, various iterations of the strategy are being rolled out in several centres where Halifax-based Killam is active.
In Ottawa, it is now occupying Phase I and building Phase II of Frontier, a multi-res partnership with RioCan REIT (REI-UN-T). The partners will build up to five towers and 840 apartments at the east Ottawa site. It is being constructed on excess land adjacent to an existing RioCan retail site, along the city’s soon-to-be-opened LRT system and its main east-west thoroughfare Hwy. 174/417.
Killam and RioCan will also partner on a similar project in Charlottetown. Killam just bought a 50 per cent stake in the Charlottetown Mall, a 62-unit, 355,318-square-foot shopping centre owned and managed by RioCan.
In addition to revamping the retail mix at the mall, which is currently anchored by an Atlantic SuperStore, Cineplex, Dollarama, Winners and SportChek, they plan to develop up to 300 units at the site. It sits on 13 hectares of land with ample room for intensification.
“Charlottetown Mall is an opportunity with RioCan, and we are just starting to figure out what we are going to do,” Fraser said. The first priority is to “improve the retail experience, that cash flow from the retail. But it’s big enough at 32 acres to look for the opportunities to do a bit of development.”
Develop and acquire
Fraser said in addition to its development pipeline, investors can expect to see the REIT continue to tinker with its portfolio. During Q1 2019, Killam announced $105 million in acquisitions, and disposed of two buildings in Ottawa, plus a parcel of land in Edmonton, for about $20 million.
He said the REIT is in a strong financial position to continue its development and expansion plans. Capital is abundantly available, and Killam completed an $86.3-million equity raise in Q1, lowering its debt ratio to 46.4 per cent of total asset value.
“So, when we can sort of mix and match, take out older product where we think we can reinvest that capital for greater returns, and (to acquire) new product we’ll do that,” Fraser said of the REIT’s plans moving forward. “We are doing a little bit of both in terms of our capital allocation, developing, buying new.
“At the same . . . the bigger you get. the more you have to do. It has to be a combination of acquisitions plus your own developments.”