Groupe Heafey has increased its presence in Gatineau, Que. by partnering with Boless on the $18.5-million acquisition of a property at 200 Blvd. Sacre-Coeur.
The 15-storey, 201,979-square-foot office building, which is fully leased to the federal government until December 2026, was acquired from Montreal-headquartered and privately held real estate development and management company CanPro Investments Ltd.
There was interest in the property from other privately owned purchasers and one of them had a deal in place last October that didn’t end up closing. That opened the door for Groupe Heafey and Boless to acquire the asset in a transaction executed by CBRE.
“It’s a good asset, it’s a good candidate for conversion and it’s very well-located in a nice neighbourhood,” Groupe Heafey vice-president of legal affairs Steve Heafey told RENX of the building located across the Ottawa River from Canada’s capital city.
Planned conversion from office to apartment
Heafey said the building was assessed at over $40 million, is already zoned for residential use, and his company has had good absorption with other apartment buildings it owns in the mostly residential area, which were three of the factors he liked.
The federal government has an option to renew its lease for an additional year at the end of the current term, which Heafey expects will happen since many occupants are coming from other government buildings that are being renovated — and construction delays are common.
He’s fine with that, since the government is a good tenant that Groupe Heafey can rely on to pay its rent every month until his company can move on to its building conversion plans.
“It’s a good candidate for conversion because of its rectangular shape,” Heafey said, noting 200 Sacre-Coeur could accommodate close to 200 residential units. “There are a lot of windows and the core of the building is centrally located with nice elevators.
“So if we’re able to convert it, the residential units would not be bowling alleys. They would be a good size.”
Groupe Heafey and Boless
Gatineau-based Groupe Heafey was founded in the late 1980s by Pierre Heafey and has built a portfolio valued at more than $1 billion through acquisitions and development.
Gatineau-headquartered Boless was founded in 1971 and is a general contractor specializing in building and renovating commercial, institutional, industrial and multifamily housing projects in Canada’s National Capital Region and Quebec.
Groupe Heafey and Boless have teamed up on previous development projects and are 50-50 partners on 200 Sacre-Coeur.
The two companies are developing a highrise multifamily building across the street from 200 Sacre-Coeur and partnered on a 100,000-square-foot office building in downtown Gatineau before the pandemic.
“We had a government tenant in there with excess space, but then COVID hit,” said Heafey. “We’re on track to rent that even though the office market is difficult.
“This is a class-A building and it’s a new build. There’s still demand for that.”
Development and growth strategy
Groupe Heafey’s portfolio includes office, industrial, retail and hotel properties and it started developing purpose-built rental apartments in Gatineau in 2014. While it developed condominiums in the past, apartments are the company’s primary focus at the moment and Heafey said it’s much easier to obtain financing for the asset class now than it was 10 years ago.
“In 2014 they thought we were crazy that we wanted purpose-built rental and we had to go see an alternative lender to get the construction financing,” Heafey explained. “After that the takeout was easy because it was all rented and we were successful.”
Groupe Heafey recently started construction of a 29-storey, 300-unit apartment building in downtown Gatineau that’s the third-and-final phase of a larger development. It has leased about 75 per cent of the combined 550 units in the first two buildings that were completed last year.
“We’re able to get some clients that are willing to cross the river, which is nice because our rents are cheaper in Gatineau than in Ottawa,” Heafey said. “But we’re close enough so people don’t feel that they’re too far from Ottawa.”
Heafey said his company has an apartment development pipeline in Ottawa and Gatineau that will last several years.
“Nobody’s buying condos, houses or townhouses,” Heafey said. “We have projects for townhouses in Ottawa and we’re going to get them approved soon, but we have to decide if we’re going to sell them or rent them.”
Florida properties
Groupe Heafey also owns eight Florida hotel, apartment and commercial properties in Fort Lauderdale, Jacksonville, Miami and Orlando. There are no current expansion plans for the Sunshine State.
“Florida is different,” Heafey observed. “The financing is different and the banks are more difficult to deal with, especially when you’re Canadian, and the Canadian banks don’t always want to follow us in Florida.
“But I would say our plate is pretty full right now in Canada and the assets in Florida, with the economy being what it is, are doing very well.”