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Soneil tops $1B in AUM with 2 GTA industrial acquisitions

It took 15 years for Brampton-based Soneil Investments to acquire $100 million in commercial real...

8301 Keele St., in Vaughan, in the northern GTA. (Google Maps)

It took 15 years for Brampton-based Soneil Investments to acquire $100 million in commercial real estate. It has topped $1 billion in assets under management in just five years since, hitting the milestone with two Greater Toronto Area industrial acquisitions in recent days.

Soneil has acquired the 260,000-square-foot 8301 Keele St., in Vaughan, and a 205,000-square-foot building at 1055 Clark Blvd., in Brampton. They were purchased via separate off-market transactions for a total of $105 million.

“At its core our company is a family business, so we are immensely proud of this achievement, especially since we have never raised external capital,” Soneil president and CEO Neil Jain said in an interview with RENX. “One of the advantages we have in not raising external capital is we can be aggressive in targeting anything we see value in.

“And, we can pivot quickly and aggressively.”

Neil’s father Sach Jain created Soneil as a spinoff from his original business Soneil Electronics. Sach Jain remains the chairman of Soneil Group of Companies.

Soneil targets $2 billion in assets

“$1 billion in assets was always my biggest goal and I’m beyond proud to have reached it,” Sach Jain said in a prepared statement. “The next step is to continue this momentum towards $2 billion and beyond, and I have no doubt we will make it happen.”

Neil Jain agreed, noting he’s now looking ahead to that next goal.

“It’s almost something that you don’t imagine you’ll ever be able to reach,” Neil Jain said, “but when you get there, you tend to focus on the next step.”

Soneil’s portfolio comprises over 3.5 million square feet of industrial, office and retail properties.

Neil Jain said he’d like to see Soneil double its holdings again over the next three years. It will pursue that goal through opportunistic acquisitions.

For now, industrial is a major focus because of the demand and growth in the sector, but he said the firm isn’t married to any one sector or geographic location although it does plan to stay within the confines of the GTA.

“We typically don’t get pigeon-holed into specific locations, or frankly specific asset classes,” he explained. “Our strategy in terms of investment is we invest where we see opportunity.

“It just happens that the last five transactions we’ve done have been industrial. Prior to that we purchased four large office assets in a row.”

They are also open to acquisitions anywhere across the GTA, but want to stay within those boundaries to maximize their property management and leasing capabilities, which are handled in-house.

“We are very strict in staying within the GTA,” he said.

The Keele and Clark acquisitions

The Keele and Clark acquisitions fit well into Soneil’s strategy of acquiring assets in which it can unlock new value.

8301 Keele is located on an 11-acre property in the area of Langstaff Road and has clear heights of between 20 and 28 feet. Jain said it is in “great condition” and has a diverse roster of tenants both in terms of their economic activity and their size.

“There might be four or five main tenants and two or three smaller tenants, but it is diverse enough that there is not so much concentration of risk associated with one single tenant,” he explained. “The rents are the main driver behind where we see the value.

“They are probably at least 50 per cent below market rent compared to where things are in Vaughan. That’s really where we see the short- to mid-term value of that asset.”

1055 Clark has clear heights between 18 and 36 feet because the building was constructed in different stages and sits on 8.5 acres.

“In-place rents on that are a little bit closer to market,” he noted, “maybe 15 to 20 per cent below market rent.

“The short-term plan for us on this asset or any industrial asset we look at is always about bringing rents up to market, doing some capital improvements on the property to show tenants we are invested in the building, things like that.”

Future acquisitions

Jain said Soneil continues to actively pursue other potential acquisitions.

“As industrial continues to get more expensive, it’s a bit of a double-edged sword for us; the stuff we own appreciates immensely in value, but it becomes increasingly difficult to get your hands on more,” he said.

The firm continues to like the industrial sector, but “it doesn’t preclude us from looking at suburban office – which a lot of people are unsure about – or even retail if it’s grocery-anchored or convenience-store anchored, things like that.”

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