The Luma multiresidential development at Ottawa’s Elmvale Acres shopping centre. (Courtesy RioCan)
RioCan REIT (REI-UN-T) has continued its trend of bringing in partners on major developments, selling 50 per cent interests in two of its residential-based projects to Maplelands Development Inc. (Dufferin Plaza in Toronto) and Killam Apartment REIT (Luma at Elmvale Acres in Ottawa).
The transactions total about $32.6 million, with Dufferin Plaza comprising $28.8 million of the total and Luma $3.8 million.
“These two transactions are a continuation of RioCan’s strategy to monetize the value that is inherent in our development pipeline as well as to reduce the amount of capital required to build out our urban mixed-use developments that are an important part of RioCan’s evolution,” said Edward Sonshine, chief executive officer of RioCan, in a release Tuesday.
Maplelands is a new development partner for RioCan. The company is newly established in Canada, and is a subsidiary of ASGC Construction of the United Arab Emirates.
Over the last three decades, ASGC has delivered projects in the residential, commercial, retail, industrial and hospitality sectors. Maplelands chose the Dufferin Plaza project as its first entry into the Canadian market due to “its superior quality and attractive attributes, combined with RioCan’s development expertise,” the release states.
Dufferin Plaza in Toronto
Dufferin Plaza is an open-air centre on four acres at Dufferin Street and Apex Road, near the Lawrence West subway station, Yorkdale Shopping Centre, Allen Expressway and Highway 401.
RioCan and Maplelands will redevelop a mixed-use property with approximately 608 units, or a 417,000-square-foot condominium tower and 32,000 square feet of retail space. The project has received Official Plan approval.
RioCan will be the development and retail property manager, and will develop the site in conjunction with its recently acquired 50 per cent interest at adjacent 3180 Dufferin St.
3180 Dufferin is the third project RioCan is developing in partnership with Woodbourne Capital Management. This project is a mixed-use development with up to 440,000 square feet of gross floor area intended as residential rental and ground-floor commercial.
The two projects will result in a mixed-use development of nearly one million square feet.
The Dufferin Plaza transaction closed on Aug. 10. It represents approximately $115 per square foot of future density, of which $11.3 million will be paid as pre-construction development phases are achieved over the next 18 to 24 months.
A cap rate of 2.62 per cent is based on in-place net operating income, but is more relevant to the density created by RioCan through the zoning process commenced several years ago.
This is $11.6 million above carrying value, of which approximately $10.5 million will be recognized as inventory gains in Q3 2020.
Luma at Elmvale Acres in Ottawa
Elmvale Acres Shopping Centre is an open-air, grocery-anchored property in the Elmvale Acres neighbourhood. It has immediate access to major arterial roads and transit arteries with an adjacent bus rapid transit station.
RioCan acquired the shopping centre in 2004 and in July 2017 received zoning approval for a mixed-use development.
The first phase of the project, Luma, is already under construction with initial residential occupancy targeted to commence in the third quarter of 2022.
This price was based on approximately $45 per square foot of zoned future density.
Luma, the first phase of the development, is being constructed on a 1.45-acre portion of the centre that had no existing income. It will consist of 168 rental units and approximately 9,500 square feet of at grade retail net leasable area.
RioCan is the development manager and Killam will be the property manager upon completion.
Luma is RioCan’s third partnership with Killam (KMP-UN-T), which owns, manages and develops apartments and manufactured home communities in Atlantic Canada, Ontario, Alberta and British Columbia.
The sale closed on July 30
RioCan’s existing partnerships with Killam include a mixed-use development project in East Ottawa zoned for four residential towers with up to 840 units. Frontier, the first phase, has been completed and achieved stabilization in Q1 2020.
Construction of Phase 1, Latitude, is well underway.
RioCan and Killam also have a 50/50 joint venture for the mixed-use development of Charlottetown Mall in Prince Edward Island, which has the potential for residential density.
“These partnerships, attractive deal pricing and the ongoing momentum of our residential projects during the current global pandemic, reflect the demand for well-located, high-quality residential assets and the significant value creation opportunities that RioCan’s pipeline offers,” Sonshine said in the release.
“We remain committed to our robust development strategy to drive sustainable and diversified income and to continue to expand the net asset value of our portfolio.”
RioCan Living update: Pivot and Latitude
Pivot, at Yonge and Sheppard in Toronto, and Latitude in Ottawa are both under construction on previously underutilized parcels of existing RioCan properties.
Pivot is a 36-storey, 361-unit residential rental building at one of Toronto’s busiest intersections, with access to the Yonge and Sheppard subway lines and located near Highway 401.
Initial occupancy at Pivot is on track for Q4 2020 and interest in leasing at Pivot has achieved over 800 registrants.
Latitude is a 20-storey, 209-unit residential rental building near the Blair LRT station. Adjacent to RioCan’s Silver City Gloucester open-air centre in Ottawa, Latitude is just steps away from a grocery store and other essential services.
Leasing at Latitude is targeted to commence in Q4 2021.
About RioCan
RioCan owns, manages and develops retail-focused, increasingly mixed-use properties in high-density, transit-oriented areas. The trust is focused on Canada’s six largest urban markets.
As of June 30, 2020, its portfolio was comprised of 221 properties with an aggregate net leasable area of approximately 38.6 million square feet (at RioCan’s interest) including office, residential rental and 15 development properties.
RioCan’s development pipeline as of June 30 was estimated at 42.7 million square feet, of which 14.8 million square feet is already zoned primarily for mixed-use developments.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
