SynerCapital had two complementary interests in the $33.2-million divestment of seven apartments buildings comprising 202 units in the Eastern Ontario city of Kingston.
The privately owned, Ottawa-based boutique firm has two divisions. One specializes in asset management and the other is a full-service brokerage focused on multiresidential and in-fill site sales across Ontario, according to broker of record Kwesi Bourne.
The asset management arm had acquired the Kingston portfolio five years ago. The brokerage arm was involved in selling it to a private syndication group which already owns other assets in Kingston, as well as in the Greater Toronto Area.
“They looked at what they had put into the properties and the market and felt it would be advantageous to put it out there and ended up getting something that worked for them,” Bourne said of the rationale for the sale.
Seven buildings in portfolio
The apartments are located at 276 and 286 Conacher Dr. and 44, 54, 66, 80 and 118 Virginia St. in Kingston.
The purchaser manages its own properties and thought the portfolio would add needed scale to its existing Kingston holdings, according to Bourne.
“They had bought a few smaller buildings in town and were looking to scale up. I believe this was the biggest purchase they had done to date all at one time, so the timing was right.”
Many units in the portfolio have been renovated during the past five years. Bourne said more renovations will be done, though nothing major is needed. Tenant turnover presents opportunities for the new owner to raise rents in the future.
“The portfolio has been well-managed and quite a bit of capital has gone into it, but there are still opportunities in the future for the buyer to get more profits out of the buildings.”
Bourne said the portfolio attracted multiple offers from individuals, syndication groups and family-owned companies from different parts of Ontario.
The Kingston market
Kingston is located on the shore of Lake Ontario, at the western terminus of the St. Lawrence River, and along Highway 401. It has a VIA Rail station offering service to Toronto, Montreal and Ottawa as well as a domestic airport serviced by Air Canada Express.
Kingston Transit operates 22 different bus routes throughout the city, serving a rapidly growing population of approximately 175,000 that includes students from three post-secondary institutions.
Students are big renters and while COVID-19 played a major role in the city’s vacancy rate rising from 1.9 per cent in 2019 to 3.2 per cent last year, that number should drop again this year with the return of in-person classes and more international students.
High demand, low supply and interest from people living in larger and more expensive urban centres who now have the ability to work remotely has resulted in a tight housing market in Kingston.
According to the “Re/Max Canada 2021 Fall Housing Market Report,” prices in the area for townhomes have risen 21.1 per cent, condominiums 23.5 per cent and detached houses 21.8 per cent.
Prices are forecast to increase another three to five per cent by the end of 2021, which means people looking to buy their first home may not be able to afford it and will have to keep renting.