Cominar Acquires $1.2B CRE Portfolio from Ivanhoé Cambridge

Cominar Real Estate Investment Trust has acquired a real estate portfolio of 14 properties in Québec and Ontario from Ivanhoé Cambridge Inc. for $1.2 billion.

COMINARCominar Real Estate Investment Trust has acquired a real estate portfolio of 14 properties in Québec and Ontario from Ivanhoé Cambridge Inc. for $1.24 billion.

The deal calls for Ivanhoé Cambridge to become owner of 8.4 percent of Cominar’s trust units, an investment of $250 million, making the company Cominar’s largest unit holder. All 104 Ivanhoé Cambridge employees dedicated to the properties acquired were also transferred to Cominar.

The portfolio consists of 10 retail properties, 3 office properties and 1 industrial and mixed-use property with an occupancy rate of 96.7 percent. In total, the portfolio comprises approximately 5.7 million square feet of gross leasable area

“This acquisition represents an opportunity for Cominar to acquire a unique portfolio of landmark retail properties from Ivanhoé Cambridge, which is a natural and highly complementary fit with our own retail platform, and marks another important milestone in our development and further enhancing our growth strategy,” Michel Dallaire, Cominar’s president & CEO, said in a company statement. “This acquisition will also allow us to strengthen our competitive position as Québec’s leading provider of retail space while enhancing the diversification of our asset base with pro forma NOI contribution from our retail properties increasing from 24 percent to 38 percent.”

Originally, a Rockland retail property in Town of Mount-Royal, Quebec, was supposed to be a 15th part of the portfolio deal, but was subject to a right of first refusal in favor of a third party.

“This transaction is a key element in the implementation of our business plan which calls for the strategic refocusing of our investments,” Daniel Fournier, Ivanhoé Cambridge’s chairman & CEO, said in a company statement. “The capital generated by this transaction can be recycled to invest in our properties in Quebec and across Canada, and our investment in Cominar allows us to support a leading Quebec company that has the necessary expertise to ensure the success of these properties.”

In a recent call with investors, Dallaire explained the REIT’s strategy going forward was based on the success it’s seen this year.

“For the second quarter of 2014, our results show solid growth, which reflects the contribution of recent acquisitions combined with operating performance of the quarter which, overall, has increased our recurring funds from operations by 10.1 percent and 9.3 percent per unit on a fully diluted basis compared to the same quarter of 2013,” he said on the call. “Our acquisitions combined with our leasing teams’ efforts on promoting organic growth in each of our markets resulted in an improved payout ratio, which fell below our target set to 90 percent of distributable income, thereby justifying an increase of monthly distributions from $0.12 to $0.1225 per unit as of Sept. 15, 2014.”

The Ivanhoé Cambridge acquisition increases Cominar’s asset base by approximately 21 percent to more than $7.8 billion with more than 44 million square feet of leasable area.