A 130,000-square-foot light industrial building on 7.5 acres at 55 Milne Ave. in Scarborough is one of three properties acquired by a new LaSalle Canada, TAS joint venture. (Courtesy LaSalle Canada Property Fund)
The acquisitions represent the first phase of the 50/50 partnership that’s initially targeting the deployment of $120 million focused on adaptive re-use, lease-up and stabilization of properties in up-and-coming neighbourhoods throughout Toronto.
“These are assets that are largely under-leased or vacant older industrial buildings that are in great gentrifying areas with good demographics and good transit fundamentals,” LaSalle Canada chief executive officer John McKinlay told RENX.
The investment thesis for the joint venture is underpinned by environmental and social best practices, he said, while still delivering attractive overall investment returns.
The goals are to:
– improve the acquired properties’ energy efficiency and reduce carbon footprints through adaptive re-use instead of demolition and new construction;
– and promote social initiatives anchored by the transformation of former industrial buildings into lively community hubs in partnership with small businesses and charitable and not-for-profit organizations, some of which will pay below-market rents.
“It’s core real estate with a soul,” said McKinlay.
Genesis of the LaSalle, TAS joint venture
While McKinlay and TAS president and CEO Mazyar Mortazavi were previously acquainted with each other, in an interview with RENX both men named LaSalle Canada senior vice-president of acquisitions Mike Cornelissen and TAS chief investment officer Khan Tran as the driving forces behind creating the partnership.
“We can see gentrification as an opportunity to leverage the character and quality of a neighbourhood and ensure that, as things change, the community is respected and empowered,” said Mortazavi.
“Through this partnership, we are pursuing and identifying opportunities in neighbourhoods for commercial properties that can have a dual role of creating value from an investment strategy but, more importantly, leveraging the assets to drive impact within the neighbourhoods and communities that live in them.
“This is core to TAS’ philosophy of being an impact company first and using real estate to drive social impact.
“It’s that alignment between ourselves and LaSalle that has catalyzed this partnership to identify neighbourhood-based assets to reposition and repurpose and create value through both capital and purpose to drive impact for the partnership.”
The first three properties
A two-storey, 19,000-square-foot light industrial property at 142 Vine Ave. in Toronto’s Junction area will be repositioned to an energy-efficient, in-fill flex office asset for commercial, community and arts uses.
Mortazavi said artists and technology startups are already in the building, which offers an opportunity to add density as part of its repositioning. TAS has been active in the Junction for 15 years and is a fan of the neighbourhood.
A 130,000-square-foot light industrial building on 7.5 acres at 55 Milne Ave. in Scarborough that was previously a single-tenant manufacturing facility will be repositioned into an energy-efficient, community-serving property.
“While the easiest thing would have been to find a single large tenant and do a distribution hub, we’re re-imagining this as a multi-tenanted, multi-use building and positioning it to be one of the greenest industrial buildings in the country,” said Mortazavi.
He believes the diversity of uses will add to the socio-economic diversity of tenants while making a sustainable environmental impact that will help reanimate the surrounding neighbourhood through its programming.
This 84,000-square-foot property at 772 Warden Ave. in Scarborough has also been acquired as part of the LCPF, TAS partnership. (Courtesy LaSalle Canada Property Fund)
An 84,000-square-foot property at 772 Warden Ave. in Scarborough’s Golden Mile neighbourhood, with access to public transit, will retain its light industrial character and include community-serving uses through a range of programs with a food focus.
“Scarborough has been up-and-coming for a very long time and we now see it at the precipice where it’s about to turn the corner,” said Mortazavi. “The socio-economic diversity of Scarborough is something that we’re both excited about and cognizant of.”
Attributes of the three properties
All three buildings are already zoned for the uses LaSalle and TAS are planning. They can also still be occupied and generate rental cash flow while being repurposed.
“The great thing with these assets is that they have short-, medium- and long-term optionality around them,” said Mortazavi. “We’re already in discussions with tenants and we’ve already started advancing the strategy on them.
“We’re looking at the assets having a 12- to 18-month turnaround to stabilization and being fully repositioned, but they’re already live and active projects.”
“Each project is kind of nimble and has a number of value levers over the time horizon we’ve identified,” McKinlay added.
Both partners are confident they can generate healthy financial returns while creating social value capital and community impact.
Good fit for the LCPF
McKinlay said these initial acquisitions embody the application of LaSalle’s key environmental, social and governance (ESG) initiatives while simultaneously positioning the LCPF for attractive value-add investment returns based on underwriting.
“We’re happy to leverage off the expertise there (TAS) since they’ve been in this space for a while and it’s a great initiative for our fund and reinforces our own active ESG investing program.”
The acquisitions increases the LCPF’s value-add allocation to 5.5 per cent, which is within its 20 per cent value-add cap. They’ll increase its portfolio on a pro-forma basis to approximately $1.8 billion.
McKinlay credits TAS with identifying appropriate assets for the joint venture and said they’re looking at other properties to add to the portfolio. He said they could surpass the initial $120 million target if things continue to go well and the right assets and opportunities present themselves.
LaSalle and TAS
LaSalle Investment Management managed approximately $73 billion US worth of assets in private and public real estate property and debt investments at the end of 2020. Its clients include public and private pension funds, insurance companies, governments, corporations, endowments and private individuals from around the world.
LaSalle Canada has executed more than $7 billion in real estate transactions since 2000. The LCPF launched in 2017 as an open-ended fund targeting commitments from Canadian and global institutional investors to acquire core properties in major Canadian markets.
TAS is an industry leader in impact development with an active pipeline and a portfolio totalling six million square feet across 18 properties throughout the Greater Toronto and Hamilton Area.
It partners with investors to focus on tackling climate change, expanding affordability and equity, and building social capital to create neighbourhoods and cities where people can thrive and belong.
TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.
The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.
The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.
“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.
“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”
The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.
New listings last month totalled 15,328, up 4.3 per cent from a year earlier.
In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.
The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.
“I thought they’d be up for sure, but not necessarily that much,” said Forbes.
“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”
He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.
“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.
“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”
All property types saw more sales in October compared with a year ago throughout the GTA.
Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.
“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.
“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”
This report by The Canadian Press was first published Nov. 6, 2024.
HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.
Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.
Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.
The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.
Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.
They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.
The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.
This report by The Canadian Press was first published Oct. 24, 2024.
Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.
Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.
Average residential home price in B.C.: $938,500
Average price in greater Vancouver (2024 year to date): $1,304,438
Average price in greater Victoria (2024 year to date): $979,103
Average price in the Okanagan (2024 year to date): $748,015
Average two-bedroom purpose-built rental in Vancouver: $2,181
Average two-bedroom purpose-built rental in Victoria: $1,839
Average two-bedroom purpose-built rental in Canada: $1,359
Rental vacancy rate in Vancouver: 0.9 per cent
How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent
This report by The Canadian Press was first published Oct. 17, 2024.
