Shelborne Capital got off to a somewhat impetuous start five years ago, but that initial investment paid off and the growing firm has just acquired a 21-property industrial portfolio in Barrie for $90 million.
Shelborne Capital’s founder, president and chief executive officer Nathan Bierbrier had previously worked in property management and as a real estate broker. Bierbrier found an off-market acquisition opportunity he thought offered value and jumped on it to launch the company in November 2016.
“I tied up three multifamily properties with 155 units and went firm in my offer without a clue where I was going to get the capital from,” Bierbrier told RENX.
The money was eventually secured with the help of investors, the deal closed, and one of the properties that was acquired for $10 million was sold for $19 million seven months later, Bierbrier said.
Shelborne Capital soon bought a 142-unit apartment building and then another one with 87 units. Now, the firm has branched out into the commercial industrial market.
“As Shelborne started growing, the apartment sector became overly expensive so I started looking for other opportunities to continue to create value,” said Bierbrier. “In 2019, we purchased our first commercial industrial property.
“Since then we’ve been mainly focused on commercial industrial properties since I think the opportunity to reposition and create value is there. To date, I’ve acquired over two million square feet of commercial properties valued at more than $750 million since 2019.”
Barrie industrial portfolio acquisition
The latest acquisition is a Barrie industrial portfolio that was built, owned and operated by a private family. It includes properties on Commerce Park Drive and Bryne Drive in the quickly growing city about 70 kilometres north of Toronto.
“They owned it for many years and I’m sure they realized the value,” said Bierbrier. “I was happy to be the buyer because of the portfolio’s size, location and value-add opportunities.
“The portfolio consists of 20 buildings totalling 549,962 square feet on 52.5 acres of land, with the average net rent well below market. The properties were exceptionally well-maintained and the purchase price was well below replacement cost.”
None of the buildings will require capital expenditures for renovations or improvements. They range in age from 12 to 24 years old and in size from 29,178 to 73,923 square feet. All of the properties have surface parking lots and all of the buildings are fully leased to a total of 135 tenants.
There’s also a vacant 2.85-acre plot of income-producing land which is under a long-term lease to one of the tenants of an adjacent property.
“Barrie is growing and there have been a lot of land sales to developers,” said Bierbrier. “I’m sure we’re going to see big growth within Barrie over the next few years.”
The properties are also just a few minutes from Highway 400, a major north-south route which offers easy access to the Greater Toronto Area.
Acquisition and growth strategy
Shelborne Capital’s investors are comprised of individuals and private groups, and the Toronto-headquartered company takes a stake in each acquisition alongside its investors. The firm has also done one joint venture purchase with a partner Bierbrier said does not want to be named.
“I personally tour every single property myself and if I like it, I go for it,” he said. “The strategy is to be nimble and only pursue things where there are opportunities to create value.”
The goal is to maximize value and aim for long-term cash flow. Most of Shelborne Capital’s acquisitions to this point have been off-market deals, but Bierbrier is open to all opportunities.
“To date we haven’t done any development projects,” he said. “However, I have acquired a few income-producing properties where part of the rationale was for the future development value.”
Mark Koenig is the chief operating officer of Shelborne Capital and oversees a growing team at Shelborne Capital Management, a third-party company that manages all of the properties and deals with day-to-day operations.
Shelborne Capital will close on a 70,000-square-foot, $8-million industrial building in Whitby, Ont., on Nov. 30. That’s another market Bierbrier believes is growing and where the company already owns two properties.
“The rents are below market and we see this as another value-add opportunity,” he said of the upcoming addition.
Shelborne Capital is looking at other properties, but there are no other impending deals.
The existing portfolio
Prior to the recent Barrie acquisitions, Shelborne Capital’s 16 commercial buildings were in Toronto, the surrounding municipalities of Mississauga, Brampton, Whitby and York Region.
Shelborne Capital’s current residential portfolio is comprised of three apartment buildings on Eglinton Avenue West and two more on Lawrence Avenue West in Toronto.
“We’ve achieved exceptional results for our partners and we’re excited about the future and look forward to continuing to grow,” Bierbrier said.