Soneil Investments has closed on four Greater Toronto Area transactions in the past few weeks, acquiring industrial, flex and office properties comprising over 700,000 square feet of space for approximately $200 million.
The final acquisitions in this sequence, which were sourced in four separate transactions, involves a portfolio of 13 industrial buildings at Dixie Road and Crestlawn Drive in Mississauga. That deal closed late Tuesday.
“The fascinating aspect of these acquisitions is that they all fit a different strategic profile,” Neil Jain, president and CEO of Soneil Investments, said in announcing the deals. “Whether it be upside on in-place industrial rents, deliberate location adjacent to our existing properties, or high yields with future development potential along transit, we saw something unique in each asset.
“Our structure allows us to view assets from a variety of lenses and target anything we see value in.”
The other three properties acquired by Soneil are:
- three flex buildings at 60, 75, 80 Courtneypark Dr. W. in Mississauga;
- two industrial buildings at 750-760 Birchmount Rd. in Toronto; and
- an office building at 125 Commerce Valley Dr. W. in Markham.
Financing arrangements were made mainly through Royal Bank of Canada, the company said.
Dixie-Crestlawn adjacent to another Soneil asset
The Dixie Road and Crestlawn Drive property is adjacent to an existing Soneil property at Dixie and Eglinton.
Sourced off market, this acquisition gives Soneil 22.6 acres along that stretch of Dixie Road (13.9 acres from the new properties, 8.7 from its existing holdings).
“Together they form a very large parcel, in excess of 20 acres,” Jain told RENX in an interview. “Those types of advantages of being beside each other, because we don’t sell our assets, one day there will be a much higher and better use for those buildings.
“But the best part about it is that, even used on the existing income and potential in today’s industrial market, we know how strong the rents can be in this new Dixie and Crestlawn building and our adjacent building is a perfect example of that.
“We just have to follow the same model and we know exactly what we can achieve there.”
The Dixie-Crestlawn property is also comprised mainly of smaller- to medium-sized buildings with one tenant apiece. Together the buildings comprise about 220,000 square feet of space.
“The unique part about that property is there are multiple smaller buildings as opposed to one large building that’s more multi-tenanted,” Jain noted. “We’ve found that tenants are willing to pay even more of a premium for getting their own building, and a building like this where you can get your own building of 10,000 or 15,000 square feet, the demand in itself is quite large.”
He said most of the buildings front onto the streets, suitable for retail fronts to the businesses with more extensive storage or distribution space at the back.
Markham office acquisition
The Commerce Valley Drive office acquisition also creates a cluster for Soneil, which owns two adjacent buildings along Commerce Valley Drive.
The new acquisition is a 189,000-square-foot suburban office building constructed circa 2001 which shares facilities such as parking with Soneil’s current buildings.
“There’s a lot of synergies in terms of management there,” Jain explained. “We know the leasing market very well and I think there’s also a lot of opportunity for us to take advantage of providing space that doesn’t exist in any of our existing buildings for tenants who are looking to expand, perhaps, or tenants who say ‘I need a certain size of unit’ but perhaps we don’t have anything in those two buildings.”
Jain said both its existing office buildings at the site are fully leased, but there is space in the newly acquired building.
“We’ve had very good success in leasing up those buildings, which is what gave us confidence to be able to buy this one, even in an office market such as today.”
Soneil's other acquisitions, portfolio update
Jain said the Courtneypark acquisition offers a slightly different type of industrial asset.
“Courtneypark is probably what people would consider flex industrial,” he said. “The unit sizes on those are probably larger than the majority of our buildings, 20,000 to 25,000 square foot on average size, but it’s fully occupied and it has a high yield going in so the returns are very strong.
"One of the things we really liked about it is, it’s fronting on Hurontario (Street) where the new LRT is coming.”
The two Birchmount buildings are “your classic small-bay, older type of industrial which has dramatic rising of rents,” Jain said.
With these acquisitions complete, Jain said Soneil’s attention turns to more potential expansion of its portfolio, which has now topped five million square feet and $1.2 billion in value after a couple of years of rapid growth.
“The fundamentals of the market haven’t necessarily changed,” Jain said. “In office, there is a bit of uncertainty even in the suburbs, especially downtown but even in the suburbs, where things are going.”
He said Soneil is being “cautious" in this sector.
“Industrial, the fundamentals of that are very strong, the demand continues to be very strong. We have zero per cent vacancy in our portfolio. It really comes down to if you have enough lender confidence to be able to execute on the deals.
“That we find (has) very key to being able to acquire as much as we’ve been able to.”