True North Commercial REIT (TNT-UN-T) says it has an agreement to acquire the 209,400-square-foot ATB Westwinds office campus in Calgary and a state-of-the-art TOBY Award-winning office complex just north of Toronto for a total of $190.5 million.
The REIT had announced it was in due diligence for the buildings several months ago, but at that time it did not identify the properties involved. The GTA property is located at 101 McNabb St. in Markham, while the ATB campus is located at 3699 63rd Ave, NE, Calgary.
True North says the properties are 100 per cent occupied by government and credit-rated clients. After the closings, True North says its gross revenue from government and credit-rated tenants is expected to increase from 79 to 82 per cent and the weighted average remaining lease term will increase from four to 4.6 years.
The purchase price represents a cap rate of approximately 6.7 per cent.
Latest acquisition for True North
The purchases continue a steady parade of acquisitions for True North. It purchased a 107,000-square-foot downtown Ottawa property in February after divesting its final two industrial properties. That left True North as a “pure-play office” REIT, CFO Tracy Sherren told RENX at the time.
The latest acquisitions also add to True North’s portfolio in both regions, where it bought two office buildings in the fall of 2018. The GTA purchase was a 122,000-square-foot building in Richmond Hill, the neighbouring municipality to Markham. Both are just north of Toronto.
In Calgary, it purchased a 148,000-square-foot building in the Deerfoot North business Centre. Like the ATB purchase, it is a suburban property close to the airport.
True North says it will pay for the latest acquisitions via a combination of: proceeds from the REIT’s $70-million September public unit offering; first mortgage financing of $128.3 million; and a $15-million issue of units to the vendor of the GTA property.
Closing of the Calgary acquisition is expected by Nov. 4, while the GTA property is expected to close by Nov. 15.
Markham site a TOBY winner
The Markham property is comprised of two connected three-storey class-A office buildings. They have achieved LEED Gold and BOMA Best Platinum certifications and were honoured with the 2019 TOBY Award for The Outstanding Building of the Year in the Renovated Building category.
The complex was previously owned by OP Trust Office Incorporated and managed by Crown Property Management Inc.
The site has approximately 315,400 rentable square feet and a market-leading parking ratio of 5.1 stalls per 1,000 square feet – a total of 1,609 parking stalls.
Situated on 29.1 acres, the campus sits between Highway 407 and Steeles Avenue and offers excellent access via Highways 7, 404 and 407 as well as direct bus access to the GO train and subway systems.
It is surrounded by numerous retail amenities, including restaurants, grocery stores and shopping malls. Amenities in the campus include a full-service kitchen, fitness centre and an outdoor lounge area.
With a weighted average remaining lease term of seven years, the buildings are occupied by The Toronto-Dominion Bank and General Motors of Canada Company.
Calgary ATB Westwinds Campus
The ATB Westwinds Campus is a three-storey class-A office building with a central atrium and wide array of tenant amenities. It has approximately 209,400 rentable square feet with 329 underground parking stalls and 314 surface parking stalls.
Situated on 11.13 acres, the site is at the southwest corner of Metis Trail NE and 64th Avenue NE, close to the Calgary International Airport. It benefits from a pedestrian walkway and footbridge spanning Metis Trail NE, providing direct access to the McKnight-Westwinds LRT Station.
With a remaining lease term of 9.2 years, the building is occupied by ATB Financial, a financial institution and crown corporation owned by the Province of Alberta.
It underwent $9.85 million worth of construction and renovation about five years ago as ATB consolidated about 1,300 staff from a half dozen locations to the campus.
About True North REIT
True North REIT, based in Toronto, owns and operates a portfolio of 45 properties consisting of approximately 3.7 million square feet in urban and select secondary markets across Canada (not including these most recent acquisitions).
The REIT is focused on growing its portfolio principally through acquisitions across Canada.
* True North plans 3 office acquisitions in Toronto, Calgary
* True North adds to downtown Ottawa office portfolio
* True North buys Calgary, GTA office buildings
* True North eyes seven office buildings, issues $50M in shares