Canadian Commercial Portfolio Snapped Up for $80M

Toronto-based Whiterock Real Estate Investment Trust is on the verge of adding 341,000 square feet of office, industrial and retail space to its portfolio now that it has entered into an agreement with an unidentified seller to acquire eight commercial assets in Alberta. Located in Calgary and Edmonton, approximately 54 percent of the portfolio consists of office space, while 30 percent consists of industrial space, with the remaining 16 percent encompassing retail space. On average, the properties have a remaining lease term of 5.7 years and a 99 percent occupancy rate, with in-place market rents at 20 percent below current market rates. The commercial real estate markets in both Calgary and Edmonton are robust across the board, according to a report by real estate services firm Avison Young. Investors continue to look at Calgary’s office market as a solid location for buying given the desirable fundamentals. “The vacancy rate is quite tight in the office market right now,” Avison Young research manager Susan Thompson told CPN today. “Looking at the city as a whole, it’s under 3 percent, and looking at Downtown it’s even lower.” Economic growth is behind much of the need for additional space. “A lot of the demand is spurred by expansion,” Thompson said. “A lot of companies had pent-up demand for expansion and now that some of the new product has been competed, it’s given them a lot of space to move around in.” And in Edmonton, the industrial market is particularly desirable, due in no small part to strong demand that has led to a 1.1 percent vacancy rate. Market experts anticipate that if current trends persist, the city’s space industrial space will be depleted in 2010. Whiterock will finance the acquisition through a $22.8 million private placement of new units and convertible unsecured subordinated debentures to the seller, the assumption of existing mortgages on the property and funds from the company’s $40 million revolving credit facility that it entered into with The Toronto-Dominion Bank just last week. The transaction, which will mark Whiterock’s entrée into the Alberta market, is on target to close in July. Upon the deal’s completion, the REIT will have a portfolio encompassing 41 properties across Canada with an aggregate 3.1 million square feet.Blog Story and Comments