Soneil Investments is continuing to grow its commercial real estate portfolio by significant leaps and bounds. The Brampton-based company has acquired two more industrial assets in the Greater Toronto Area for $120 million.
The acquisitions, which comprise three buildings and over 665,000 square feet, bring Soneil’s total portfolio to over $900 million in value and over three million square feet of leasable space. Soneil has acquired well over $300 million in new assets in 2021.
“We’re especially proud to be able to complete two transactions of this scale,” Soneil president and CEO Neil Jain told RENX, noting both acquisitions are the result of off-market deals.
The vendors have not been disclosed.
“They are completely separate transactions from two individual parties, but a big part of being in industrial right now is being able to get your hands on product. I think that’s probably what a lot of people in the industry are finding it difficult to do.
“There aren’t as many sellers as there are buyers. Basic supply and demand – prices are increasing as a result, as are market rents, and vacancies are going the opposite direction.”
Major growth for Soneil in 2021
Finding assets to acquire, however, has not been an issue for Soneil during 2021.
In May, the family-owned company bought a six-building portfolio in Pickering, which like the two most recent acquisitions is in the eastern GTA. The 370,000 square feet of buildings clustered around Orangebrook Court were acquired for $73 million.
Also this year, Soneil purchased two Markham office buildings (in the northeastern GTA) for $115 million.
The two latest acquisitions, which closed last week, are:
– 1160-1170 Birchmount Rd. in Toronto. It comprises 360,000 square feet of space in two buildings on 14.5 acres of property and is 96 per cent occupied;
– 202 South Blair St. in Whitby, which features a rectangular building of about 305,000 square feet and land for a potential future expansion of the site. It is fully occupied.
Potential future expansion
“One of the nice components of the Whitby asset is that it sits on about 25.5 acres of land, there is quite a bit of excess land,” Jain explained. It is currently being used for storage purposes and trailer parking. “I think it’s a good opportunity for us if we want to perhaps add an additional building in the future, but there are no immediate plans for that. In the meantime, we are getting good holding income from it.”
The Birchmount Road buildings were built in the 1980s and the early 2000s. The older building has clear heights of about 15 to 18 feet, while the newer building has a 28-foot clear height.
The Whitby building has an 18-foot clear height.
Both properties have a mix of tenant sizes, ranging from a few thousand to about 100,000 square feet. Jain said rents are 25 to 30 per cent below market.
“They are both multi-tenant buildings, which is nice because we are never too dependent on any individual tenant, although we do have a mix of smaller tenants who have as small as say 5,000 square feet, or one tenant who I think has 100,000 square feet,” he explained. “It’s a nice mix of having diversified tenants.”
Eastern GTA industrial suddenly in demand
Both Neil Jain and his father, Sach, who founded Soneil and remains its chairman, say they are bullish on the Eastern Toronto industrial market, which has been long neglected but as vacancy rates plummet across the GTA, has been getting much more attention.
“We’ve been acquiring industrial assets in GTA East since the early 2000s,” Sach Jain said in the purchase announcement. “The area has long been undervalued from an industrial perspective until the recent rise of rents over the last few years, so we look forward to the growth that these markets will continue to have.”
Soneil takes care of its property management and leasing in-house, and Neil Jain said it is getting closer to a time when it will also be adding investment partners to its strategy. So far, the firm has used only its own capital, along with financing, for its acquisitions.
The Bank of Montreal (South Blair) and Scotiabank (Birchmount) provided financing for these acquisitions.
“Everything up until now has been through our existing structure, our own capital, our own flexibility and doing things completely ourselves,” Neil Jain said. “But, there is always going to be a critical mass.
“What we are trying to do now is plan for it, even though perhaps we won’t reach that critical mass for another year or two, because it takes that amount of time to figure out exactly what we want to do, approach investors, things like that.”