Minto Apartment Real Estate Investment Trust today announced that it has waived its conditions under a definitive agreement to purchase two urban multi-residential rental buildings — dubbed ‘The Quarters’ — in Calgary, Alberta for total consideration of approximately $63.8 million. In addition, by leveraging the REIT’s strategic relationship with the Minto Group, the REIT has agreed to advance to Minto Properties Inc. up to $30.0 million in financing for the redevelopment of a commercial property strategically located at Fifth Avenue and Bank Street in Ottawa, Ontario to a mixed use multi-residential and retail property, with the REIT having an exclusive option to purchase the property upon stabilization for 95% of fair market value at that time.
The REIT has agreed to acquire The Quarters, a two-building multi-residential rental property comprising a total of 199 suites, located at 370 & 380 Quarry Way SE in Calgary, Alberta and constructed in 2018 and 2017 respectively. Situated in Quarry Park, a true live, work and play community within a 20-minute drive of the downtown core, the property is currently 98% occupied with an average monthly rent of $1,506 per suite. Quarry Park is home to thriving retail amenities and numerous corporate campuses and headquarters, across 1.7 million sq. ft. of office space, including Imperial Oil, Stantec, Jacobs Engineering, AECOM and Lafarge. Surrounded by a 50-acre nature reserve and kilometers of pathways and trails, Quarry Park is serviced by three bus routes, including one Bus Rapid Transit route, and is a short walk from the proposed Quarry Park LRT Station. The Quarters is in close proximity to another REIT property, The Laurier, which will provide the REIT with an opportunity to generate operating efficiencies. With this transaction, the REIT will become the sole purpose-built multi-residential landlord in the Quarry Park corporate campus.
The purchase price for The Quarters is approximately $63.8 million (approximately $321,000 per suite), representing a 4.1% cap rate (based on in-place net operating income) and 6.25% discount to the property’s appraised value. The purchase price will be satisfied with a newly arranged term mortgage and from the REIT’s existing credit facility. The transaction is currently expected to close in January 2019.
The Financing demonstrates the REIT’s effective leveraging of its strategic relationship with the Minto Group, providing the REIT potential access to a well-located redeveloped property at a discount to fair market value as well as to Minto’s development capabilities.
The REIT has also agreed to advance up to $30.0 million of financing in support of MPI’s planned redevelopment of a commercial property located at 99 Fifth Avenue in Ottawa, Ontario into a mixed-use multi-residential rental and retail property. The property is located in the heart of Glebe, one of Ottawa’s most desirable neighbourhoods, with the city’s lowest multi-residential vacancy rate of 0.2% according to CMHC. It is surrounded by diverse amenities and a strong retail presence, and features a Walk Score of 96. Zoning for this intensification project has already been secured. Construction of the approximately 160 suite multi-residential rental component is scheduled to start in 2019, with occupancy expected to begin in the first half of 2021.