Canada's commercial real estate investment market is expected to pick up in 2010.
Avison Young's 2010 Forecast says investment transaction volume dropped 55% to $5.4 billion in the first nine months of last year. Simply put, owners were reluctant to sell their assets at de-valued rates, so they held on to them instead.
Although 2010 is not expected to set any investment records, investors may face more pressure to make moves this year as the economy improves and REITs re-enter the market. Vancouver, Calgary and Montreal are among the cities expected to experience increases.
But Toronto will be a notable exception. Brokers there believe that rents still have to complete an adjustment, and in some cases decline further.
Still, at least two REITS, ARTIS out of Winnipeg and Toronto-based Dundee, have been extremely active in late 2009 and early 2010.
Showing posts with label Toronto commercial real estate. Show all posts
Showing posts with label Toronto commercial real estate. Show all posts
Wednesday, January 13, 2010
Monday, November 2, 2009
Data centre deal second largest in Canada this year
Canada's recovering commercial real estate market has planted another signpost along its road to redemption.
Allied Properties REIT closed its $192-million acquisition of a data centre at 151 Front Street West in Toronto on Monday. The sale of the class A office property was the second largest in Canada this year behind German institutional investor Deka Bank's unsolicited $297-million purchase of the Bentall V office building in the spring.
According to a Wall Street Journal article published last week, the deal says more about the strength of data centres than the market itself. Data-centre property values have displayed resilience during the downturn, due to the rapidly-increasing popularity of streaming video and other Internet-based services that require considerable bandwidth.
But the deal also continues REITs' recent trend of raising money on the capital markets for acquisitions.
Allied partially funded the purchase of the 325,000-square-foot property from Northam Realty Advisors Ltd., by issuing about C$125 million in new units. Allied will use about $96 million from that offering to finance part of the deal, while the British Columbia Investment Management Corp., an institutional investment manager whose clients include public pension funds, provides $96 million on a 10-year mortgage at 7.5%.
"Happily, and to my surprise, the equity capital markets came roaring back faster than we thought they would," Michael Emory, Allied's CEO, was quoted in the Wall Street Journal story. "It was a big change in the Canadian environment."
After struggling to find credit through most of 2008, other REIT CEOs and investors have been making similar comments lately. The question now is how long it will take them to close more large deals.
Allied Properties REIT closed its $192-million acquisition of a data centre at 151 Front Street West in Toronto on Monday. The sale of the class A office property was the second largest in Canada this year behind German institutional investor Deka Bank's unsolicited $297-million purchase of the Bentall V office building in the spring.
According to a Wall Street Journal article published last week, the deal says more about the strength of data centres than the market itself. Data-centre property values have displayed resilience during the downturn, due to the rapidly-increasing popularity of streaming video and other Internet-based services that require considerable bandwidth.
But the deal also continues REITs' recent trend of raising money on the capital markets for acquisitions.
Allied partially funded the purchase of the 325,000-square-foot property from Northam Realty Advisors Ltd., by issuing about C$125 million in new units. Allied will use about $96 million from that offering to finance part of the deal, while the British Columbia Investment Management Corp., an institutional investment manager whose clients include public pension funds, provides $96 million on a 10-year mortgage at 7.5%.
"Happily, and to my surprise, the equity capital markets came roaring back faster than we thought they would," Michael Emory, Allied's CEO, was quoted in the Wall Street Journal story. "It was a big change in the Canadian environment."
After struggling to find credit through most of 2008, other REIT CEOs and investors have been making similar comments lately. The question now is how long it will take them to close more large deals.
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