Henry Zavriyev has come a long way since launching Leyad by buying and renovating small Montreal apartment buildings six years ago.
The company has since purchased dozens of apartments of various sizes, added value through renovations and sold many of them to recycle capital for new purchases.
“In the beginning when we were growing, we were selling pretty much everything,” Zavriyev, Leyad’s principal, told RENX in an interview after closing on its most recent purchase, the Wheeler Park Power Centre in Moncton.
“It was a lot of buying, selling and reinvesting, but recently we’ve stabilized our portfolio, which is kind of a new thing for us.”
The largest apartment property in Leyad’s portfolio is a three-tower complex comprising 450 units.
Retail and industrial investments
Leyad has turned its attention to acquiring retail and industrial properties for long-term investments over the past two years and that’s where much of its current and future acquisition activity will be focused.
“I think there are fewer buyers for high-quality commercial assets,” Zavriyev said. “Public institutions and REITs are not able to buy at the moment and they need to sell for liquidity.
“So for private buyers that have good liquidity and are in the right position, I think it's an amazing time to acquire some really, really high-quality commercial assets that probably would have been unattainable two years ago.”
Leyad purchased two warehouses that it has since sold, but going forward it plans to hold and earn income from most of the commercial properties it acquires. Leyad internally manages all of the buildings it owns.
The company — which is nearing 50 employees in its Montreal headquarters, a secondary Montreal office and a Quebec City office — has been very active of late. It has continued to buy apartments, but has also made four major commercial property acquisitions.
Four recent commercial acquisitions
The most recent commercial property added to the portfolio, which now is comprised of approximately 2,000 apartment units and close to two million square feet of commercial space, is Wheeler Park. It was acquired from an institutional owner for $61.5 million.
The 360,000-square-foot mall sits on 40 acres of prime real estate in the city. It’s anchored by an Atlantic Superstore and features several other leading national brands, including The Brick, Old Navy and Staples.
While there are currently no plans to add residential projects to the site, it’s large enough to accommodate future development and Zavriyev is open to the idea down the road.
Leyad’s other recent commercial acquisitions were in its home province:
- a 261,000-square-foot distribution hub in Cowansville;
- a 39,500-square-foot shopping plaza with Jean Coutu as a prominent tenant in Chateauguay;
- and a 115,000-square-foot Louis Garneau distribution facility in Quebec City.
Due diligence on more acquisitions
Leyad is now doing due diligence on other similar commercial properties and Zavriyev hopes to close on those acquisitions by the end of this year or early in 2024.
“We have a reputation for closing and we do a lot of off-market stuff,” said Zavriyev. “We pay a fair price without the hassles of a bid process.”
The majority of Leyad’s holdings are in Montreal, which Zavriyev said has become saturated over the past couple of years and prompted it to look at investing in other cities and provinces.
Wheeler Park Power Centre is Leyad’s first acquisition outside of Quebec. The company has been reaching out to brokers to let them know of its interest in acquiring more larger-scale assets in the Maritimes as well as in Ontario and Western Canada.
Leyad provides equity and conventionally finances its purchases.
“It has been a difficult market to finance retail assets, but thankfully the thesis for this retail asset in Moncton made a lot of sense to the bank and they were happy to finance it because they recognized the value of the asset,” Zavriyev explained.
“It’s a high-yield, high-performing, high-quality asset in what last year was the fastest-growing city in Canada.”
Continuing to buy apartments
While increasing the size of its commercial property portfolio, Leyad will continue to be active in the multifamily sector since that’s where the business was built and it has extensive expertise.
Zavriyev said he was kicked out of university and did odd jobs for years before he got a janitorial position at an apartment building.
That led to an opportunity to manage the building, and then others, and he subsequently started a renovation and property management business that provided funds to buy his first apartment building in late 2017.
Leyad has been involved with more than 100 transactions since then, according to Zavriyev.
“We're constantly buying apartment buildings for value-add,” said Zavriyev. “Quebec is a province with very old housing stock that desperately needs cap-ex improvements.
“Most of the apartment buildings in Montreal are old, dilapidated buildings, so we're constantly buying buildings in which we conduct value-added programs to improve the buildings by investing millions of dollars into them.”
Leyad is also taking advantage of Canada Mortgage and Housing Corporation programs that incentivize developers to make apartment buildings more energy efficient and emit fewer greenhouse gases.
The most recent multifamily acquisitions have ranged from five to 30 units and Zavriyev said it’s easy for the company to buy small buildings in Montreal because of the proximity.
Outside of its base, the company will only consider larger acquisition opportunities to provide scale.
The company expects to close on the acquisition of another apartment building with about 100 units by mid-November.