Behind The Deal: 3T Equity Buys 951 Denison St
3T Equity Partners just acquired 951 Denison St in Markham for $9M, the Toronto firm’s first non-multifamily deal. Principal David Goldstein tells us the value-add vision is to convert the property to industrial condos.
The fully tenanted 66k SF industrial-office complex at Warden and Steeles is in a node of Markham with low vacancy, “and rents continue to be pushed up,” says David, who launched 3T Equity—formerly GoldRich Living—in 2010 with Jordan Rich; real estate lawyer/investor Lawrence Moskovic joined the fold in 2014. The value-add opportunity lies in transforming 951 Denison to industrial-condos, with units for sale. Strata industrial properties in Markham are “few and far between,” David says. “It’s new territory for the city,” and 3T’s conversion plan is a work in progress. “We expect the market to get excited about it.”
This is 3T’s maiden Markham deal. The firm owns property in Hamilton; its first-ever acquisition was 385 Concession St, above. In Oshawa, it converted a 53-unit townhouse complex (560-570 Waverly St) into condos and got a 45% return when it sold a year later. “Our first value-add play,” says David. 3T also owns 35 student housing beds in the Waterloo area and multifamily units in Toronto. It's in the US, too. In 2014 it acquired Aventura Oaks, a 203-unit multifamily project in Miami Beach, for $17.7M. After renos and the addition of two units, the property was recently appraised at $30M. “We’ve gotten nice rent lifts from that."
3T Equity is in Georgia, as well, where it owns Ivy Ridge Residences, a 207-unit property in Marietta also undergoing upgrades in a bid to lure higher-paying tenants. Amid a dropping loonie, David says his team has been seeking more multifamily value-add deals closer to home. But there are far fewer of them in Ontario, which is why 3T is eyeing other asset classes, hence its acquisition of 951 Denison. “We see good potential in smaller-unit multi-industrial projects,” says David, noting his group is working on a similar deal in Mississauga. “If it’s a potential condo-conversion play, that’s especially interesting to us.”