Skyline doubles Chatham footprint with $24.2-million deal

Skyline Apartment REIT has more than doubled its presence in the Chatham, Ont., market with a four-property, 348-unit acquisition in the Windsor-area city.
The $24.2-million purchase gives the REIT a total of eight properties and 551 units, and “makes Skyline one of the pre-eminent landlords in the Chatham area,” said Mike Bonneveld, director of acquisitions for Skyline Asset Management Inc.
The portfolio was purchased from the Bradley family, a long-standing property manager in the city, best-known for establishing the Wheels Inn Resort in 1972 as a means to draw tourists to Chatham.
The buildings, which range from a three-storey walkup to 10-storey high-rise towers, were all built in the 1960s and 1970s, making them the same vintage as the rest of the REIT’s portfolio in the city.
“You can still eke out efficiencies and economies of scale when you get bigger,” said Jason Castellan, the company’s CEO and co-founder. “It gives us a really good opportunity to market and promote the whole Skyline brand.
“It really puts the onus on us to do the job right because doing it wrong in one building could paint a bad picture for the rest of them.”

Chatham Tower Apartments, 805 Grand Avenue West (left) and 455 Sandys Street Apartments (right), Chatham, Ontario
Quiet no longer
Skyline Apartment has been quiet on the acquisition front in recent months, but that period looks to have ended. This week the REIT has agreed to sell a 155-unit property in Mississauga, Ont. and will redeploy those assets into acquisition of 255-units of property in Hanover, Welland and Brantford for $18 million.
The deals are part of Skyline Apartment’s planned geographic repositioning of its portfolio to less travelled, more lucrative markets.
“It allowed us to get away from the GTA to sell 155 suites, and for less money and more income we bought 255 suites in those markets,” explained Castellan. “It is more our style and the value proposition we give to our investors.”
The REIT currently operates in 44 communities, three outside of the province, but all of its multi-residential holdings are in Ontario.
Skyline Apartment is investigating the purchase of multi-res properties in Atlantic Canada, the REIT’s CEO revealed.
“It is really hard to take that leap outside the province of Ontario,” he said. “There are still multiple opportunities in here; I think people often overlook their own backyard sometimes despite the fact that there are great opportunities right in front of your nose.”
2013 still busy
Skyline REIT expects it will end the year with approximately 10,000 units in its portfolio.
“Just the way the acquisitions are lining up, we will probably pass 10,000 units and $1 billion in real estate,” Castellan said.
The total internally appraised IFRS value of the Guelph, Ont.-based REIT is approximately $915.2 million. Skyline operates another private REIT, the much smaller – at least in terms of assets – Skyline Commercial REIT.
Post-acquisition, Skyline Apartment REIT comprises approximately 9,468 apartment units in 120 properties in four provinces, and approximately 700,000 square feet of commercial space owned by the Commercial REIT.
This means that there will be an increase in the number of acquisition announcements by Skyline’s REITs over the balance of the year.
“You are going to hear of a few (more) deals. Some of them are fairly early so they could fall off the charts but we do have a couple that are happening,” said the CEO.
Higher rates, no worry
“We are definitely anticipating” higher interest rates, said Castellan. “They have been at such historically crazy lows for too long now so we are budgeting in for rates to be higher.”
The current low state of interest rates have translated into a cash flow boon to the REIT as existing properties with mortgage renewals are seeing five and 10-year mortgages drop from the five and six per cent range to the “high threes and low fours” depending on the term.
Being a private REIT has also helped Skyline Apartment in the rising rate environment.
“The slowdown I think has affected some of the public entities and the ways that they can raise capital, which I am just fine with because it means less guys at the table to fight over an asset,” said Castellan.



Paul is a writer, editor and media trainer based in Toronto with over 25 years of experience as a business reporter. He has written for Canada’s major news services on…

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Paul is a writer, editor and media trainer based in Toronto with over 25 years of experience as a business reporter. He has written for Canada’s major news services on…

Read more




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