The property is Leyad's second retail acquisition in Altantic Canada in the past six months.
Econo-Malls is involved in commercial real estate acquisition, development and management across Eastern Canada.
It launched a limited partnership program in 1998 and owns interests in more than 40 retail properties encompassing more than three million square feet and valued at approximately $500 million.
“Econo-Malls has owned this for over a decade now and it’s a partnership they've had in place for a long time,” Leyad chief executive officer Henry Zavriyev told RENX.
“They've been great stewards of the property for the last few decades, but it was the end of that ownership group.”
The shopping centre, on a 21.23-acre site at 116 King St. in the community of approximately 6,000 on the east side of Nova Scotia’s Cape Breton Island, was marketed by CBRE last fall.
North Sydney Mall faces the Emera Centre Northside arena and recreation facility and is in close proximity to the Marine Atlantic ferry terminal, where approximately 300,000 people travel between Newfoundland and Nova Scotia annually.
North Sydney Mall a regional retail centre
It’s more than 90 per cent leased and Zavriyev said it comprises nearly 40 per cent of North Sydney’s total retail space.
“Within our pipeline at the moment, we have a number of acquisitions that fit this profile,” Zavriyev said. “We're looking in multiple provinces in Canada.
“This is an asset that was built years ago that we're buying well below replacement cost and that already has triple-A covenants in place. That builds our base off which we can grow.”
Discussions are taking place with a couple of national retail chains to fill vacancies and Zavriyev is hopeful the North Sydney Mall will be fully occupied by the end of 2024.
Leyad is reconfiguring some tenant spaces within the mall and enhancing common areas. Zavriyev expects that work to be completed in the next six to eight months.
“We internally manage our real estate and are a value-add company,” Zavriyev explained. “We like to buy real estate that’s already good, but we can make it better.”
The site has 1,000 parking spaces and room for two or three additional pads to increase the mall’s current number of stores from 27.
Zavriyev doesn’t think North Sydney is large enough to support residential intensification on the site.
Attractive investment opportunity
“Tertiary markets are overlooked by institutional buyers and retail in general is not the flavour of the month,” Zavriyev observed.
“It’s not as easy to finance but I think for the right property, and where the fundamentals are there, it makes great sense.”
The presence of the Nova Scotia Health Authority makes North Sydney Mall an appealing location for clinics and medical offices, and Zavriyev said his firm is fielding such requests.
Enclosed malls make a lot of sense in small communities, according to Zavriyev, because they act as social hubs as well as places to shop.
Montreal-headquartered Leyad, which was founded by Zavriyev and started with the acquisition of a small apartment building in 2016, specializes in the design, construction and management of residential, commercial and mixed-use properties.
The company’s move into the Atlantic Canada retail market began last October with the $61.5-million acquisition of the 363,000-square-foot Wheeler Park Power Centre that sits on 1.5 million square feet of land in Moncton.
Two new national tenants recently signed leases at the mall and Zavriyev said it’s now close to being fully leased.
Aside from North Sydney Mall and Wheeler Park Power Centre, Leyad’s 13 other retail, industrial and office properties — as well as approximately 2,000 apartment units — are based in and around Montreal and Quebec City.
Leyad will be acquiring more properties outside of its home province in the coming weeks and months, according to Zavriyev, but he said it was too early to comment on those deals.