PROREIT (PRV.UN-X) is purchasing a two-building, commercial mixed-use complex in Montreal and intends to “exploit fully” the development potential for excess space on the 332,206-square-foot site.

 The $8.65-million purchase price represents a going-in capitalization rate of 6.3 per cent. PROREIT believes there is potential for further increases once the property is fully leased and further developed. It is currently 67.5 per cent leased.

“The property purchases we are announcing today are excellent examples of PROREIT’s strategy to acquire high-quality commercial real estate in a proven market that yields both strong current returns and significant development potential,” said James W. Beckerleg, president and chief executive officer, in a release announcing the sale.

It’s the REIT’s second purchase in recent weeks, on the heels of a retail property in Halifax (PROREIT buys Halifax retail property) – which it has just closed on.

Property details

The 8150-8210 Trans-Canada Highway complex is comprised of two buildings containing 125,554 square feet of gross leasable area and a 400-stall, 205,512-square-foot parking lot which offers future development potential.

The complex enjoys high visibility from the Trans-Canada Highway and is near Pierre Elliott Trudeau International Airport.

It was built in 1969 and renovated in 1994 and 2015.

The purchase price, approximately $70 per square foot, reflects the occupancy level of the properties. The closing of the acquisition is expected later in October.

“We are at a transformational stage of our growth,” Beckerleg said. “As our asset base grows, we expect to see more and larger opportunities to acquire quality commercial real estate, including properties with upside development potential. We intend to pursue these opportunities vigorously as part of our long-term strategy.”

8150 Trans-Canada Highway is the larger of the two buildings at 84,731 square feet – 78,000 square feet of office space and about 7,000 square feet of warehouse space. It features 20-foot clearance and two loading docks.

The building is fully leased to two tenants, with weighted average remaining lease terms of nine years.

8120 Trans-Canada Highway contains 40,823 square feet of office and warehouse space with four loading docks and 21 feet of clearance. It is currently vacant.

The acquisition will be financed by a $5.6 million, five-year first mortgage at an anticipated rate of approximately 3.6 per cent. It includes an option for an additional $1 million in financing subject to further occupancy. The equity portion will be settled from PROREIT’s cash on hand.

Closed sale of Halifax property

“We continue to work diligently on the opportunities in our pipeline, and we believe strongly that we will announce and close further quality transactions before the end of the calendar year,” Beckerleg said.

Earlier this year, Beckerleg told RENX in an interview (Liquidity, active pipeline growth drive for PROREIT) the trust was in its most liquid position since it was launched in 2013.

PROREIT also announced it closed the previously announced $8.2-million acquisition of 165 Chain Lake Drive in Halifax. The 44,720-square-foot retail building sits on an elevated pad in the Bayers Lake retail power centre.

It has a single tenant, Value Village, on a long-term lease.

PROREIT was established in 2013 to create a portfolio of diversified commercial real estate properties in Canada, with a focus on primary and secondary markets in Québec, Atlantic Canada and Ontario and “selective expansion” into Western Canada.

The portfolio currently contains 43 properties with approximately 2.3 million square feet in Québec, New Brunswick, Nova Scotia, Prince Edward Island, Ontario and Alberta.