15 Jan

Ericsson sells Vaudreuil data centre to GI Partners

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Posted by: James Moysey

GI Partners, a private investment firm, which owns and operates a network of data centres, said on Tuesday it has purchased the facility from Ericsson

Ericsson’s $1.3-billion data centre in Vaudreuil-Dorion, which opened in December 2016 and was scheduled to close this year, has been acquired.

GI Partners, a private investment firm that owns and operates a network of data centres, said on Tuesday that it has purchased the facility from Ericsson.

Ericsson had planned to close the facility, an announcement made less than a year after it opened, as a cost-cutting measure. The company, which has reported four consecutive quarters of losses, expected to save $46 million a year by consolidation of operations at two other data centres.


11 Jan

Condo and rental apartment starts hit highest level in 30 years: CMHC

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Posted by: James Moysey

Housing starts for apartments — both condominiums and purpose-built rental — in the Montreal region rose to their highest level since the late 1980s in 2017, according to the Canadian Mortgage and Housing Corporation.

In total, there were 24,756 housing starts in the Montreal census metropolitan area in 2017, the highest level since 2005 and an increase of almost 40 per cent from the previous year, according to the CMHC.

Of that, 19,400 were rental apartments or condos, up from 15,335 in 2016.

“It’s a sign that housing demand is pretty strong in the CMA right now, and part of the reason why it’s so strong is the strong job market,” said Genevieve Lapointe, the CMHC’s Montreal market analyst.

Unemployment in the Montreal region is at the lowest level on record.

The strong job market is increasing incomes in the region, Lapointe said.

That has people buying properties. The number of unoccupied new condos and the number of resale condos on the market are both down.

Both of those factors are encouraging developers to build new condominiums, Lapointe said.

The CMHC data comes one day after the Greater Montreal Real Estate Board reported the highest number of December condo sales on record.

“We already have seen an increase in housing starts in 2017 for condos in the Montreal area,” said Paul Cardinal, the manager of market analysis for the Quebec Federation of Real Estate Boards. “Developers are quite responsive to market signals. They saw that there was more demand for condominiums.”

Of the new apartment construction, about one-third were condos, while the rest were purpose-built rental apartments, according to the CMHC.

That’s unusual, Lapointe said.

“The last time we’ve seen more rental contraction than condominiums was at the beginning of the 1990s,” she said.

The new construction comes at the same time as the rental vacancy rate has declined.

“It was at 3.9 (per cent) in 2016 and it’s now at 2.8,” Lapointe said. “It’s quite significant because the vacancy rate decreased in a context where a lot of new units were added to the rental market, so that means that rental demand increased at a faster pace than supply.”

Lapointe said it appears the growing demand for rentals is related to an increase in international migration to Quebec, particularly the arrival of more non-permanent residents.

As well, Lapointe said, the 2016 census showed that young people are increasingly renting.

Between 2001 and 2011, there was increase in home ownership among Montreal-area residents age 15 to 24. That’s now reversed.

Lapointe said it’s not yet clear why this is happening, though it may have to do with the increase in newly-built rental units, which has given renters more options, and rising property prices.


9 Jan

Montreal’s real estate market sizzled in 2017 with sales hitting 10-year high


Posted by: James Moysey

‘It’s on fire,’ says market analysis manager for Quebec Federation of Real Estate Boards

By Ross Marowits, The Canadian Press Posted: Jan 08, 2018 9:38 AM ET Last Updated: Jan 08, 2018 9:38 AM ET


Montreal was one of Canada’s hottest real estate markets last year as low unemployment and economic growth translated into the area’s best sales growth in a decade.

Total sales in the Greater Montreal Area increased eight per cent to 44,448 on the strength of condominium sales and good overall activity on the island of Montreal.

Sales on the island of Montreal increased 15 per cent, outpaced by Laval at 20 per cent and on par with the South Shore.

Sales growth exceeded 20 per cent in five of the city’s most popular boroughs.

That compared with sales decreases of 18 per cent in the Greater Toronto Area and 10 per cent in Greater Vancouver.

Unlike Toronto and Vancouver, Montreal doesn’t have a foreign buyers tax.

More than 14,000 condos changed hands across the island of Montreal and nearby communities during the year, marking a 17 per cent increase from 2016.

‘It’s on fire’

“It’s on fire,” said Paul Cardinal, manager market analysis for the Quebec Federation of Real Estate Boards.

The overall sales growth far exceeded his expectations. He said the last time growth in Montreal sales outpaced Toronto and Vancouver was in 1998.

Cardinal thought new mortgage rules implemented in the fall of 2016 would impair the number of first-time buyers and reduce the total number of transactions.

But Quebec’s best consumer confidence in 15 years and a high number of permanent residences stimulated demand and compensated for the new rules and higher mortgage rates during the summer.

Transactions of single-family homes rose three per cent to 25,601 while sales of buildings with two to five units increased six per cent to 4,336.

Strong demand for luxury homes

Demand was particularly strong for luxury accommodation. Sales of homes exceeding $1 million rose 20 per cent in Greater Montreal and condos priced above $500,000 were up 42 per cent.

The total value of sales grew 13 per cent to $16.2 billion, about half of which was on the island of Montreal.

Montreal Home Sales 20171106

The average price of homes in the Greater Montreal Area increased nearly six per cent to $364,510, the largest increase since 2010. (Graham Hughes/The Canadian Press)

The average price of homes in the Greater Montreal Area increased nearly six per cent to $364,510. That was the largest increase since 2010, with single-family homes sustaining the greater price increases.

Prices rose 6.1 per cent to $467,496 on the island of Montreal, which includes Canada’s second-largest city and suburbs.

Number of foreign buyers remains marginal

Cardinal said the number of foreign buyers, particularly from China, has grown but remained marginal overall. They were mostly concentrated in wealthier neighbourhoods and the downtown core.

He said Montreal is attractive for foreign buyers because the city provides a high quality of life, affordable housing, low pollution and a university system that contributed to it being named last year as the best city in the world for students.

Direct flights to two major Chinese cities have also made it easier for family visits.

Cardinal is forecasting another strong year in 2018 with the number of sales transactions increasing five per cent.

“That would lead us to a new record so we would beat the 2007 mark,” he said.

Average prices are also expected to increase almost five per cent.

Montreal capped a strong year with total sales across Greater Montreal increasing 10 per cent to 2,781 in December.

That included a 35 per cent increase in condo sales. Total active listings fell nine per cent from a year ago.

3 Jan

Cominar to sell non-core market assets to Slate for $1.14B

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Posted by: James Moysey

Cominar Real Estate Investment Trust (CUF.UN-T) will sell its entire non-core market portfolio, 97 properties valued at $1.14 billion, to Slate Asset Management in one of the largest commercial real estate transactions announced in Canada in 2017.

Cominar REIT is selling $1.14B in non-core market assets to Slate Asset Management. It also intends to sell up to $1.5B in core market properties in 2018.

Cominar REIT is selling $1.14B in non-core market assets to Slate Asset Management. It also intends to sell up to $1.5B in core market properties in 2018.

Citing a strong Canadian real estate market, and what a company release calls “meaningful interest for a number of properties”, the trust also announced it intends to review and sell up to $1.5 billion in assets from its core market holdings.

Cominar expects to finalize this core property review by mid Q1 2018 and to sell the properties by the end of 2018.

“This value-enhancing initiative will allow us to capitalize on our leadership position in our core markets. With this greater focused portfolio, Cominar will be better positioned to maximize the value of its assets,” said Sylvain Cossette, who is currently president and chief operating officer of Cominar, but will become CEO on January 1.

Cossette will be taking over the position from current CEO and chairman of the board Michel Dalliare, who announced his intention to step aside as CEO in November.

Cominar had announced on Aug. 22 its plan to divest all non-core market assets as part of a debt reduction plan, as well as its intention to focus on its core markets in the Province of Quebec and in neighbouring Ottawa.

* Background: Cominar REIT to sell all non-core real estate

The Monday morning release calls the transaction with Slate a “definitive agreement.” Closing of the transaction, however, remains subject to customary closing conditions including regulatory approvals, and is expected by the end of March 2018.

The portfolio is being purchased by Slate’s Canadian Real Estate Opportunity Fund I. The fund acquires “commercial real estate through complex portfolio acquisitions, cyclical investing and/or asset repositioning opportunities,” according to Slate.

The non-core market portfolio is composed of 97 properties totalling 6.2 million square feet located in the Greater Toronto Area, the Atlantic provinces and in Western Canada.

The portfolio includes 24 properties in the Greater Toronto area, comprising almost 2.5 million square feet. In the Atlantic Provinces, there are 59 properties covering 2.6 million square feet and in the Western Canada portfolio there are 14 properties of 1.1 million square feet.

The office portion of the portfolio is almost three million square feet spread over 37 properties. There are also 37 industrial / mixed use properties totalling 1.7 million square feet and 23 retail sites of 1.5 million square feet.

Individual properties in the portfolios included the Scotia Centre office tower and retail podium (606,000 square feet) in Calgary, a cluster of 12 industrial buildings (495,000 square feet) in Mississauga, Ont., and the Dixie Outlet Mall (406,000 square feet) also in Mississauga.

The sale portfolio is comprised of both income-producing properties (approximately 90 per cent of the assets), with the remainder being land and properties under development.

* More insight: Are there buyers for Cominar REIT portfolio?

The overall capitalization rate of the income-producing properties to be sold is estimated at 6.2 per cent, including 5.3 per cent for the Greater Toronto Area.

Following the transaction, Cominar will not own any properties in Western Canada, the Greater Toronto Area or the Atlantic Provinces.

Reduce Cominar’s debt by $875M

The majority of the proceeds from the sale will be used to reduce Cominar’s indebtedness by approximately $875 million — the entire amount currently outstanding on its credit facility.

The aggregate gross sales price of the Greater Toronto Area and the Atlantic provinces’ income-producing properties is in line with their aggregate book value. Cominar says in the release that, given the continued challenges in the Calgary market, it is writing down the Western Canadian assets by $275 million.

“We are very pleased with the successful execution of the disposition plan and the sale of our entire non-core market portfolio in one transaction. This transaction will enable Cominar to capitalize on its core markets while also strengthening its balance sheet,” said Michel Dallaire, chairman of the board of trustees and chief executive officer of Cominar, in the release.

Slate will assume approximately $107.1 million of mortgage debt and Cominar will repay $164.5 million of mortgage debt.

About Cominar, Slate

Cominar is the third largest diversified REIT in Canada and (as of Dec. 18) remains the largest commercial property owner in the Province of Quebec. The REIT owns 524 properties in three different market segments; office, retail, and industrial and mixed-use. Cominar’s portfolio totals 44.1 million square feet across Quebec, Ontario, the Atlantic Provinces and Western Canada. Cominar’s objectives are to pay growing cash distributions to unitholders and to maximize unitholder value through proactive management.

Slate has more than $4.5 billion in assets under management. Slate was formed in 2005 and has since expanded from Canada across North America and Europe with exposures in multiple asset classes. It currently employs more than 60 professionals, and works with multiple capital sources from institutional and pension fund investment partners, to private equity, family offices and public markets.


STAY TUNED: RENX will update this breaking story with more information as details become available.