The portfolio includes six properties in Winnipeg and four in Saskatchewan (three in Regina, one in Saskatoon). The properties sit on approximately 55 acres of land and comprise a mix of single- and multi-tenant buildings.
“These acquisitions provide significant in-place cash flows, strong potential rental growth and the opportunity to expand into new key industrial markets that we have identified as very stable with excellent upside,” said Parkit CEO Iqbal Khan in the announcement.
Chris Macsymic, principal and senior vice-president at Cushman & Wakefield-Stevenson in Winnipeg, which brokered the transaction along with RBC Capital Markets Real Estate Group, said the portfolio was attractive to buyers looking for scale in the region.
Marketed as the Gateway portfolio, it represents the largest purely industrial transaction in the region in several years.
"Rare" opportunity to acquire large portfolio
“It’s just rare to see something of scale, where you could pick up a cluster of assets that allows for efficient management,” Macsymic told RENX.
The Winnipeg and Saskatchewan markets are “incredibly tightly held. A lot of the local groups are able to pick up assets on a one-off basis, and off-market basis, whereas this has actually afforded groups outside of Winnipeg to come in and take a swing and try to get the portfolio.”
As a result, he said there was considerable interest in the portfolio from both local and national investors.
Part of the reason for that is a very stable market, particularly in Winnipeg where the bulk of the assets (620,000 square feet of the portfolio) are situated.
“I would say where this portfolio was attractive is Winnipeg being a super stable market here, and Winnipeg and Saskatchewan, we don’t overbuild in these markets, they are tight to get into, very hard to get into,” he explained.
“Montreal, Toronto and Vancouver have seen explosive rental rate growth, whereas we’ve seen slow, steady growth and we are still seeing that growth right now.
“Markets here are very, very tight, both markets here are under two per cent so you are really starting to see that drive rental rates.”
The Gateway portfolio
The properties are of varying age, have clear heights ranging from 14 to 32 feet, and are:
- 2 Ramm Ave., Regina: 63,996 sq. ft., single tenant, 100 per cent occupied;
- 144 Henderson Dr., Regina: 66,446 sq. ft., single tenant, 100 per cent occupied;
- 195 Henderson Dr., Regina: 30,984 sq. ft., single tenant, 100 per cent occupied;
- 859 57th St., E., Saskatoon: 17,920 sq. ft., single tenant, 100 per cent occupied;
- 310 De Baets St., Winnipeg: 74,196 sq. ft., single tenant, 100 per cent occupied;
- 90-120 Paramount Rd., Winnipeg: 32,660 sq. ft., multi-tenant, 86 per cent occupied;
- 1725 Inkster Blvd., Winnipeg: 268,732 sq. ft., multi-tenant, 91 per cent occupied;
- 1345 Redwood Ave., Winnipeg: 112,132 sq. ft., single tenant, 100 per cent occupied;
- 2030 Notre Dame Ave., Winnipeg: 107,757 sq. ft., multi-tenant, 100 per cent occupied;
- 555 Camiel Sys St., Winnipeg: 24,665 sq. ft., single tenant, 100 per cent occupied.
Overall, the portfolio is 96 per cent occupied and had a weighted average remaining lease term of 4.8 years.
Building site coverage is 35.5 per cent, according to statistics provided by RBC Capital Markets Group, meaning there is room for expansion or intensification at some of the sites.
Parkit funded the acquisition with first mortgage financing and funds on hand.
Originally known as an owner and operator of parking facilities in North America, Parkit began pivoting into the industrial sector during the pandemic and has been continually expanding its holdings in the sector.
This is its first industrial foray into the Prairies.
“I think the purchasers, when they were looking at it, thought ‘OK, this is a stable market, it’s a good market and there looks to be some good long-term leasing prospects,’ ” Macsymic said.
Industrial outlook for Winnipeg
At about 80 million square feet, Winnipeg is the largest industrial market between the Greater Toronto Area and Calgary.
“A lot of the ownership is predominantly private owners here, it is less institutionally owned,” Macsymic said.
“Owners generally speaking have just enjoyed very good performance so they are less inclined to sell it. They don’t have the same drags and pulls from the market that institutional might.”
While there is available land and some construction ongoing at a couple of Winnipeg industrial parks, Macsymic said demand is likely to keep the vacancy rate low for the foreseeable future.
“There’s a good amount (of construction) but the expectation is that as it gets onboarded it is going to get eaten up pretty quickly,” he said.
“It’s probably not enough to satisfy the demand that’s there right now. We are starting to see larger tenants come to our market and we are also seeing tenant flight to quality, too.”