In the three years since its inception, NexLiving Communities (NXLV-X) has been growing slowly and steadily. It is now taking a much larger leap, announcing an agreement to acquire 10 “active-living communities” comprising 370 apartments in Moncton and neighbouring Riverview for $72.6 million.
All the properties are of newer construction, with the 10 assets averaging four years old. One is currently in lease-up and another is under construction and expected to complete in March 2022 (NexLiving refers to these as the Mountain Road properties).
“We are proud to announce these transformative acquisitions that provide both operational and financial scale to the company,” said CEO Mike Anaka in the announcement. “Over the past three years, NexLiving has grown from one building and 31 units to 18 buildings and 549 units.
“The acquisitions allow us to nearly double the portfolio to 919 units while providing significant FFO accretion to shareholders.”
NexLiving unit offerings and the transaction
Dartmouth-based NexLiving is also making two unit issues designed to raise up to $27 million. It is issuing 100 million new shares at $0.20 per unit through a syndicate led by Echelon Capital Markets and CIBC Capital Markets. If the issue is fully sold, including a 15 per cent over allotment option, it would raise $23 million in new equity.
Additionally, NexLiving is issuing 20 million shares, also at $0.20 per unit, in a private placement to an unnamed investor.
Proceeds from both issues are earmarked to fund a portion of the portfolio acquisitions and potential future acquisitions, to pay down debt and/or for other company operations.
NexLiving has structured the acquisition in four separate transactions, allowing it to assume a CMHC mortgage (at a 1.76 per cent interest rate) on one of the buildings. It also allows for the Mountain Road properties to stabilize and meet the company’s lease-up and income thresholds prior to completing the purchase.
Upon full construction and lease-up of the Mountain Road properties (anticipated in Q2 2022), the acquired properties are expected to generate approximately $3.6 million of NOI. That implies a portfolio cap rate of approximately five per cent.
All four transactions are subject to due diligence, financing and, in the case of the Mountain Road properties, the lease-up performance conditions.
The acquisition properties
– 2251 Mountain Rd.: A 75-unit, five-storey building with two elevators, the property features spacious well-appointed luxury units with stone countertops, stainless steel appliances, balconies and two levels of heated underground parking, including charging stations for electric vehicles. Construction has just finished and the building is in lease-up. The agreement to acquire is subject to the property being occupied and 90 per cent leased to tenants meeting or exceeding certain contractual metrics.
– 2261 Mountain Rd.: This property, a replica of 2251, remains under construction with expected completion by Q1 2022. NexLiving has attached similar conditions to the purchase of this property as are in place for 2251 Mountain Rd.
– 1009 Cleveland Ave.: This 64-unit, four-storey building was completed in 2019 and is fully occupied. It has one level of heated underground parking and storage, and each unit has stone countertops, stainless steel appliances and a balcony. NexLiving will assume a 10-year CMHC mortgage on this property and expects to close late this year.
– Cleveland and Whitepine Properties: These properties are a complex of seven buildings for a total of 156 units. The units have in-floor heating, balconies and modern finishes. Built between 2011 to 2016, they are 99 per cent occupied. The properties are in close proximity to amenities such as grocery stores, pharmacies, restaurants, a fitness centre and public transit. This transaction is also expected to close in Q4 2021.
NexLiving’s strategy is to acquire recently built or refurbished, highly leased, multiresidential properties in bedroom communities across Canada.
When it was established, the company was known as ViveRE before rebranding to NexLiving earlier this year.
The company is aiming its properties at the emerging 55-plus resident, believing many are seeking “service, quality and convenience” as they transition into rental properties from home ownership.
It currently owns properties in New Brunswick and Ontario.