B.C.’s Biggest One-Time Multifamily Deal: CAPREIT Buys 22 Buildings
Canadian Apartment Properties REIT just acquired 22 apartment buildings in seven Vancouver-area municipalities for $170M in what CBRE’s Lance Coulson tells us is B.C.’s largest-ever one-time multifamily portfolio trade.
“I’ve been in this business close to 17 years and there’s never been a multifamily offering like this in terms of size and dollar volume,” says Lance, with CBRE's National Apartment Group, who, along with fellow brokers Tony Quattrin and Jim Szabo, repped the seller, a private equity firm, in a bid process that saw significant interest from private and institutional investors. Lance also brokered the 2014 sale of Boardwalk REIT’s 633-unit Western Canadian portfolio, B.C.’s largest-ever apartment transaction to that point. CAPREIT's portfolio comprises 19 properties with 919 suites in mostly mid-tier buildings across the Lower Mainland, including 2010 St. Johns St in Port Moody (below).
CAPREIT CEO Thomas Schwartz notes the deal brings the total number of apartment suites acquired by his firm this year to 1,528, “achieving our goal of purchasing between 1,500 and 2,000 suites annually.” Many of the acquired units in 2015 have been in B.C. buildings—including Yorkson Grove (below), a 58-suite property in Langley (also brokered by Lance), and a 32-suite building in Victoria—in a bid by CAPREIT, one of Canada's largest residential landlords, with nearly 43,000 residential units, to build critical mass in a province with a super-tight acquisition market.
Most of the newly acquired properties, like Hyland Manor in Coquitlam (below), are well-located and close to transit, and many have undergone recent renovations. “The owner had done a lot of the heavy lifting,” Lance explains: replacing roofs and boilers, upgrading elevators, updating lobbies and landscaping. “There was a good platform in place that CAPREIT could pick up on, put in their own management, and start to take advantage of their own operating efficiencies.” About half of the units in the portfolio are still awaiting upgrades, “so there are upside opportunities.”
B.C. has been a notoriously difficult place for multifamily investors through the years, notes Lance. Whether it’s private buyers or institutions, they’re looking for scale—in B.C. that typically amounts to buildings with 50-plus units, “and maybe you get one or two of those sold in a year.” Which makes what CAPREIT’s just pulled off—snapping up 22 properties with an average unit count of about 50—all the more remarkable. Lance says B.C. simply doesn’t have the same supply of buildings as eastern centres like Toronto or Montreal, “so when something like this transpires, it’s historic.”