Globe Capital Management is taking advantage of something of a lull in acquisitions by many major public and institutional multiresidential owners to grow its own portfolio in several major markets.
The Winnipeg-based firm is also actively developing properties, looking for more potential building sites and consolidating the ownership of buildings which it already holds.
“We’re very much in growth mode and an acquisition phase in which we are looking to acquire apartment buildings but also trying to enhance our development pipeline as well,” president and CEO Richard Morantz told RENX.
“Our biggest advantage is that we are completely private and we’re using our own money. It allows us to act rapidly when we see something we like.”
Globe’s origins date back to the 1920s when Morantz’s grandfather emigrated from Russia to Winnipeg and began buying real estate.
His father took over the business in the 1950s, Morantz joined the company in the 1980s and he bought out his family to take sole ownership in the mid-1990s, when it had a 20 to 30 per cent ownership stake in more than 2,000 apartment units.
Globe has continued to buy apartment buildings while buying out partners in properties it had a partial stake in, so that it now wholly owns more than 80 per cent of the nearly 8,000 units in its portfolio. The properties have a market value of more than $2 billion.
The other ownership stakes are part of legacy syndications remaining from before Morantz took sole control of the company.
Seeking acquisitions, development opportunities
While more than 5,200 of those apartment units are in Winnipeg, Globe also owns 1,747 in Montreal, 253 in Edmonton, 294 in Calgary, 147 in Saskatoon, 94 in Regina and 117 in Ottawa.
It has aspirations to expand into other Canadian cities, including Toronto and Vancouver.
Globe has also moved into development with a half-dozen apartment projects in its hometown. The latest, The Bolt, is scheduled to open on Sept. 1.
TD is Globe’s principal lender and Morantz said it also has excellent relationships with Manitoba credit unions and Canada Mortgage and Housing Corporation lenders.
“When we go in on an acquisition, we will try to keep the debt level below 70 per cent,” Morantz said. “On our existing properties, if we’re refinancing we will go as high as 60 or 65 per cent, but our overall debt level is somewhere in the 50s.”
Recent acquisitions
Globe has made three significant acquisitions in the past nine months. Morantz said real estate investment trusts and pension funds it previously competed with for assets have been on the sidelines, which has created opportunities.
The company purchased a 1977-built, six-storey, 90-unit apartment building at 2705 Rue Modugno in the Montreal borough of Saint-Laurent for $17.5 million in August.
Globe acquired the three-building, 220-unit L’Estérel complex, construct in 2002, in the Montreal borough of Pointe-Claire for $65.5 million in December. It was the company’s 13th acquisition in Montreal.
The most recent acquisition occurred in March when Globe acquired the 179-unit Chelsea Estates and an adjacent 10,000-square-foot piece of vacant land at 1310 14 Ave. SW in Calgary’s Beltline district from Unitii Corp. for $48.25 million.
“We definitely have intentions of building there,” Morantz said. “The Beltline district is just a dynamite area of town with lots of action and lots of apartments and I think it’s just a prime candidate for development.”
The only apartments Globe would consider selling are smaller, frame-built walk-ups of 24 to 36 units in Winnipeg, Morantz said.
Property management
The affiliated Globe Property Management is the property manager for the entire Winnipeg portfolio and has its own Winnipeg-based maintenance division called Broadway Construction to perform maintenance and repairs.
“We don’t manage to vacancy, we manage to net revenue,” Morantz explained, noting Globe can tolerate vacant units if it can add value through energy-saving measures or other improvements to enhance NOI.
Globe uses Immomarketing as a third-party property manager in Montreal due to language differences. The company used to manage its properties in some other cities as well until the COVID-19 pandemic.
“We realized that not having boots on the ground in these other markets really affected our performance post-COVID,” Morantz said. “So we’ve gradually gone with third-party managers in each of the provinces.
“Unitii, who we bought Chelsea Estates from, manages all of our six properties in Alberta. In Saskatchewan, Colliers manages for us. And in Ottawa, we have a local company called District Realty that manages for us.”
The Bolt
The Bolt is an eight-storey, 181-unit, Nejmark Architect-designed apartment building under development at 2735 Pembina Hwy. in Winnipeg. It’s three kilometres from the University of Manitoba and close to Victoria Hospital, main roads, bus routes and a variety of shops and services.
“The Pembina Highway strip is a very high-growth area of Winnipeg,” Morantz said. “There’s an area to the west of us where I think around 10,000 houses have been built over the past 20 years.
“There’s also been many multifamily properties built on Pembina or in the neighbourhood of Pembina Highway and the market has just absorbed them.”
Globe owned a small adjacent property and acquired the primary The Bolt site about 20 years ago. It built a small office building on the site, but the tenant left when its lease came up a few years ago.
“We figured what we had built there 20 years ago was not the highest and best use so we ended up razing the building (to make room for The Bolt),” Morantz said.
The Bolt will offer 11 unit layouts. It will have eight three-bedroom suites with the remainder split pretty evenly between one- and two-bedroom units. Units will range in size from 615 to 1,284 square feet.
A display suite will open on June 1. Amenities will include a social room, an exercise room, covered parking, storage lockers, an outdoor seating area with barbecue pits and public art.
Globe’s pipeline
Globe has established relationships with several brokers and Morantz would be happy to hear from others as the company seeks to expand its portfolio.
It is already in negotiations to acquire a parcel of land in Winnipeg Morantz said could accommodate a 300-unit apartment building.
Morantz recently looked at an apartment building in Vancouver but decided not to pursue it. He’ll visit Montreal in early May to look at more potential acquisitions.
Globe also owns more than 165,000 square feet of commercial space in strip centres and suburban offices in Winnipeg. While Morantz wouldn’t say no to acquiring more if the right opportunity came up, it’s not something he’s actively pursuing.
“I’ve been in the business of buying apartment buildings for 40 years now, so it’s just what I know and what I’m comfortable with,” said Morantz.