CAPREIT (CRT-UN-T) has completed a series of five transactions during the final quarter of 2023, acquiring two British Columbia apartment buildings for $90.5 million and closing on the individual sales of properties in three cities for $64.2 million.
The two acquisitions involved newly constructed properties in Esquimalt and Vancouver as the REIT continues its strategy to modernize its portfolio and divest many of its older holdings. The properties comprise a total of 162 apartments.
“These transactions bring our total capital reallocation activity in 2023 to above $700 million worth of Canadian properties, and we’re thrilled to close out the calendar year on this exciting note,” CAPREIT president and CEO Mark Kenney said in the announcement. “In keeping with our strategic plan and progress to date, this latest phase of portfolio rejuvenation has further enhanced the average age, geographic exposure and quality of our overall investment portfolio, and we’re looking forward to maintaining this momentum as we head into the new year.”
The two apartment acquisitions
The most recent acquisition is a new 12-storey, concrete, purpose-built rental building containing 114 apartments and over 5,000 square feet of retail space at grade.
The building is known as Hub Place and is situated in Vancouver just steps from the Commercial-Broadway SkyTrain station which is serviced by both the Expo and Millennium lines. Construction was completed this year and it was purchased, following lease-up, for $68 million.
After adjusting for the retail component, the purchase price represents approximately $550,000 per suite.
It was funded by cash from previously announced dispositions. CAPREIT plans to arrange an estimated $50 million in mortgage financing in the near-term under the CMHC MLI Select program.
In November, CAPREIT closed on a new 48-suite residential property with ocean views in Esquimalt, in the metropolitan Victoria area.
The building, known as The Lancaster, was constructed in 2022 and was purchased for $22.5 million using cash from net disposition proceeds. CAPREIT intends to arrange an estimated $13 million in mortgage financing on the property.
CAPREIT’s three dispositions
CAPREIT also closed on three dispositions in November, including a previously announced $53.9 million sale of an unencumbered 263-suite Calgary property, which had been built in 1978.
It also sold another unencumbered property containing 21 residential units, built in 1978, in Charlottetown for $1.7 million; and a 78-suite property built in 1966 in Québec City for $8.6 million.
“We reached our annual target in 2023 and disposed of over $400 million in non-core buildings, while concurrently reinvesting approximately $300 million into purpose-built rental properties recently constructed in Canada’s most attractive and fastest-growing regions,” Julian Schonfeldt, CAPREIT’s CIO, said in the announcement.
“We’re especially pleased with our latest two premium acquisitions, strategically located in highly coveted B.C. communities where we also own other new-build assets, allowing for operational synergies.
“In particular, we’re proud to have just purchased a brand-new concrete building, located beside one of the most important transit hubs in Vancouver, at a capitalization rate in excess of four per cent.
“Acquiring this prime new property at a discount to what it would cost to build today, without incurring the development or lease-up risk, illustrates the essence of the CAPREIT 2.0 strategy.”
About CAPREIT
CAPREIT is Canada’s largest publicly traded provider of rental housing.
As at Sept. 30, CAPREIT owned approximately 64,500 residential apartment suites, townhomes and manufactured home community sites across Canada and the Netherlands, with approximately $16.5 billion of investment properties in Canada and Europe.
