Gazit Globe JV to Buy Toronto’s York Mills Centre for $190M

The Tel Aviv-based company and Gazit TripLLLe Canada will acquire a majority stake in the 570,000-square-foot mixed-use office complex.
York Mills Centre. Image courtesy of Gazit Globe

Gazit Globe will soon add York Mills Centre, a mixed-use office complex in Toronto, to its portfolio. In a joint venture with Dori Segal-led Gazit TripLLLe Canada, the Tel Aviv-based company will acquire a 66.7 percent interest in the 570,000-square-foot asset from Manulife Real Estate for C$250 million, or approximately $190 million. A Toronto-based real estate investment firm will purchase the remaining 33.3 percent of the Class A property.

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Sited on 6.7 acres above a subway and bus transit station in midtown Toronto’s North Yonge corridor, York Mills consists of four low-rise buildings—built between 1985 and 1992—featuring a total of 535,000 leasable square feet of office space and 35,000 square feet of retail offerings. York Mills last changed hands in 2011, when Manulife purchased the campus from Ivanhoé Cambridge in a C$161 million transaction. Manulife proceeded to relaunch the asset, investing C$10 million in the effort between 2013 and 2015. Manulife completed the revitalization in 2016 with additional capital investments.

Today, York Mills is 94 percent leased and boasts creditworthy tenants Royal Bank of Canada and Minto as anchors. The property is also home to more than 10 medical offices. Gazit Globe plans to leverage the asset with a 10-year secured mortgage. The acquisition is on schedule to reach completion before the close of 2019.

A landlord’s dream market

It’s a good time to be an office owner in Toronto, where the vacancy rate was just 4.6 percent in the third quarter of 2019, according to a report by Cresa. Strong competition for space amid a supply shortage—the city saw no major deliveries in the third quarter, and most projects won’t come online until 2020—have pushed rental rates up to record levels.

Additional investment in Toronto is in the forecast for Gazit Globe and Gazit TripLLLe Canada. According to a Reuters article, Gazit Globe and Segal, former CEO of Gazit Globe, formed a joint venture in November to acquire and manage mixed-use properties in Canada, with a focus on Toronto. The partnership plans to invest C$1 billion, or roughly $760 million, in Canadian real estate over the next five years. Gazit Globe also remains active south of the Canadian border, having launched a U.S. investment subsidiary in 2017.