Dorsay Development Corporation’s disposition of its commercial properties is now complete after selling three Richmond Hill, Ont. office buildings to Soneil Investments for $84.6 million.

“We decided that we want to focus all of our attention on the development and land side of the equation,” Dorsay senior vice-president of commercial Ayres Gonsalves told RENX.  

“We started disposing of our commercial office buildings as far back as three years ago, and we've just slowly been disposing of them. The Beaver Creek portfolio is the last of our commercial holdings.”

That portfolio includes 30 and 38 Leek Cres. and 95 Mural St. in Richmond Hill, which is just north of Toronto.

Gonsalves said Soneil was “the right buyer for this portfolio, and I think they're going to do quite well.” The deal was brokered by CBRE and there were two rounds of competitive bids placed by private investors, he added.

About the sold properties

The two four-storey, class-A Leek Crescent buildings sit on nine acres of land in a business park near highways 404 and 407. They combine for 198,915 square feet of leasable area and have more than 700 parking spaces. 

The buildings were constructed in 2001 and acquired by Dorsay in 2015. They’re 94 per cent leased with a weighted average lease term of 5.8 years.

Software company OpenText is the sole tenant at 38 Leek while there are multiple tenants at 30 Leek.

The six-storey, class-A Mural Street building sits on 3.4 acres of land in a business park near highways 404 and 407. It has 108,569 square feet of leasable area and 323 parking spaces. 

The building was constructed in 1988 and acquired by Dorsay in 2015. It’s 100 per cent leased with a weighted average lease term of 3.8 years.

Soneil’s plans for the portfolio

“The buildings are high-quality, in a great location, very well-leased, and form a very diverse portfolio,” Soneil president and chief executive officer Neil Jain told RENX in a separate interview.

“The average tenant size is roughly 5,000 square feet, which is very well-suited for our skill set of managing and adding value to assets with low concentration risk,” Jain continued in reference to 30 Leek and 95 Mural.

All three buildings are a five-minute drive from the three-office building portfolio already owned by Soneil at 55, 105 and 125 Commerce Valley Dr. W. in Markham that Jain said combine for approximately 550,000 square feet and are performing well.

“There's immense synergy between these assets and the newly acquired ones,” said Jain.

“These are good office buildings with good tenants so, our immediate focus is to continue operating them extremely well, not unlike Dorsay was already doing, and investing appropriately in the assets from a capital perspective. 

“A lot of it is about retaining the existing tenants. Leasing there is about five or six per cent vacancy, so we want to lease up the limited vacancy that's remaining.

“And because we already own three substantial assets nearby, we can integrate those buildings into our existing leasing and property management platform to create advantages.”

Future Soneil acquisitions

Brampton, Ont.-based Soneil will continue to selectively look at high-quality assets in specific locations that it feels confident about, rather than being broadly bullish about all asset classes across all markets, according to Jain.

“We’re active investors so we’re looking to buy right now,” Jain explained. “But we want transactions where we believe the risk-adjusted return makes sense and we have conviction in those locations, those asset classes and the long-term potential for adding value. 

“I think today's market is clearly showing a strong sentiment for selling, and there's a lot of new assets coming out in the market right now, so there's a lot of opportunity to acquire assets that we feel strongly about. 

“But we're also looking from the lens of a long-term perspective. If we're not confident about holding an asset for generations, we generally aren't aggressive on it because we’re long-term holders.”

Dorsay’s development projects

Dorsay’s current primary focus is 1 Marlborough, a 13-storey, 58-unit luxury condominium being developed in partnership with Devron that will rise above the 1930s-era former Pierce Arrow building in Toronto’s upscale Rosedale neighbourhood. The Audax-designed building’s suites will range from 1,800 to 6,000 square feet once construction starts.

“That’s doing quite well, especially given this market, so we're very pleased with that,” said Gonsalves.

Dorsay owns 10 separate land parcels totalling more than 900 acres in northeast Pickering, Ont. where it’s proposing a master-planned, mixed-use development called Veraine that received secondary plan approval in June. It’s hoped that more than 100,000 people will live and work there daily in the future.

Toronto-headquartered Dorsay acquired a portfolio of seven properties at 848-872 and 974 Lakeshore Rd. E., 885, 983 and 1025 Rangeview Rd. and 925 and 930 Lakefront Promenade in Mississauga, Ont. in 2019. It includes six multi-tenant industrial buildings constructed from 1962 to 1969 that combine for 151,059 square feet of leasable space.

What Dorsay calls Rangeview District is undergoing master planning for a mixed-use community that will complement Lakeview Village to the south.

Dorsay owns three contiguous parcels of land totalling 197.3 acres, of which 128.2 are estimated to be developable, within the emerging Hewitt Creek Community in southeast Barrie, Ont. The current concept plan is to develop more than 1,000 condo and freehold townhomes, single-family and semi-detached homes along with a 6.5-acre park.