Waterloo Co-operative Residence Incorporated (WCRI), North America’s largest student housing co-operative, sold one property and then acquired seven other buildings in the southwestern Ontario city of Waterloo in transactions valued at close to $60 million.

WCRI was founded by university students in Waterloo in the 1960s. It had provided housing for more than 800 resident members and grown through development, as opposed to acquisitions, before these recent transactions.

“They've got a ton of equity and have other great properties,” Colliers vice-president Dayma Itamunoala, who represented WCRI in the two deals, told RENX.

WCRI offers furnished dormitory and apartment residences, through contracts ranging from four months to a year, within a five-minute walk of the University of Waterloo and Wilfrid Laurier University.

The co-op accommodations are self-governed and earnings from the properties are returned to the student community.

Sale of 139 University Ave.

Itamunoala said WCRI had been leasing an 88-unit former student residence at 139 University Ave. to The Regional Municipality of Waterloo for use as temporary emergency accommodations for those experiencing homelessness since the early stages of the COVID-19 pandemic.

While the sale had been firm for an extended period of time, WCRI closed on the $11.25-million transaction to the municipality on Aug. 25.

“Waterloo badly needs supportive housing and WCRI recognized that it could be a win-win,” Itamunoala said of the decision to sell, then use the proceeds for other acquisitions.

Seven-property portfolio acquisition

Just a week later, WCRI closed on the $49.7-million acquisition of seven student housing properties — at 26, 35, 41, 61, 69 and 75 Columbia St. W. and 347 Spruce St. — from Schembri Property Management.

The buildings have a combined total of 86 units and 403 beds.

"(WCRI) saw an opportunity for growth here and jumped at it," Itamunoala noted. "I think a lot of not-for-profits are stagnant and they don't grow.

"I think WCRI recognizes that if they're not growing while the market is expanding, then proportionately they have less of an impact. That goes against their mission to provide community-driven affordable accommodation for students."

Schembri Property Management is part of Waterloo-based Schembri Group of Companies, which has been developing residential and commercial buildings in southwestern Ontario for more than 20 years.

Its built projects are valued at approximately $1 billion and it has properties with a completed value of around $6 billion under development.

The seven properties weren’t on the market. However, Itamunoala, who also has a business relationship with company president Gordon Schembri, approached him on behalf of WCRI to see if he’d be interested in selling.

“He's a smart developer and he's got a great portfolio,” Itamunoala said. “So if the opportunity’s right, I think he would take a disposition and the opportunity was right for him.

“He's got a lot of exciting property projects on the go right now so he could just turn around and recycle the capital.” 

Canada needs more student housing

At 57 per cent, Waterloo has the highest percentage of off-campus purpose-built student accommodations of any city in Canada, according to the Why Canada’s PBSA sector is a great opportunity for investors report released by BONARD earlier this year.

There’s room for a lot more, however.

“Waterloo may be ahead of the curve relative to other Canadian cities, but we’re still drastically behind the curve relative to American and European cities,” Itamunoala said of the need for more student housing across the country. “Alongside the student housing crisis, there’s a housing crisis. So no matter what you build, somebody's going to live in it.”

Itamunoala was also involved with the 2020 deal that saw Chicago-based Blue Vista LLC acquire the 12-storey, 188-unit Campus Common (now known as Avant) residence at 50 Gerrard St., adjacent to Toronto Metropolitan University.

Blue Vista acquired the building for $82.8 million from developer Horizon Legacy.

Optimism that transaction activity will pick up

Itamunoala leads Colliers’ multifamily team in Toronto and is also part of the company’s national investment team.

He said Colliers has had a strong year in a slow market and has been involved in many of the largest private multifamily deals across the province while completing close to $250 million in sales.

“I think Q4 is going to show more activity, just by the nature of how the year typically cycles,” Itamunoala said. “A lot of folks have their year-end and they have to show some production and spend the money that they've been allocated.”

Itamunoala believes 2024 will see more transactions than 2023, but will still be slower than the three previous years. He’s hopeful interest rates might begin to lower in the second half of 2024.

“It's not the height of interest rates that’s slowing down the market in terms of activity, it’s the volatility,” Itamunoala said. “So once that's kind of slowed and there's more certainty, I think people will act.”