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Atlantic Canada’s largest-ever apartment transaction, and the second-largest commercial real estate investment transaction in the region overall, is on the books, a record-setting portfolio sale facilitated by CBRE Canada’s David Montressor, Bob Mussett and the National Apartment Group.
CapREIT (Canadian Apartment Properties Real Estate Investment Trust) has doubled its Halifax apartment footprint by acquiring a 1,503-apartment unit portfolio from the British Columbia Investment Management Corporation (BCIMC), to the tune of $391 million.
Breaking Down the Numbers
The eight-property portfolio, operated by Vancouver-based QuadReal, has an occupancy rate of 99.9%. BCIMC listed it for sale earlier in the fall, amid record-low Halifax apartment vacancy, currently at 1.6% and expected to drop further as the market continues to benefit from increased population growth through strong immigration and interprovincial migration.
The portfolio garnered significant interest across the full spectrum of private and institutional capital, facilitated by the CBRE National Apartment Group’s local, national and global reach.
This historic Atlantic Canada transaction comes on the heels of CapREIT’s $182 million acquisition of 23 trailer park communities across Alberta, Ontario and the Maritimes earlier this year.
Pending regulatory approvals, the latest Atlantic Canada portfolio deal is expected to close early in the new year. The company currently has 1,500 units in Halifax and will double its portfolio with the completion of this transaction in January.
Canadian Multifamily Continues to Heat Up
The acquisition is just one more example of Canada’s robust multifamily market, with record-low vacancy across the country due to strong population growth and flexible affordable rental housing choices compared to expensive restrictive ownership options.
The national average multifamily vacancy rate fell to just 2.4% at the end of 2018, below the 10-year average of 2.6%, according to CBRE’s Canadian Multifamily Mid-Year Update. Average rents, in turn, have grown by a respectable 4.4% annually.
Meanwhile, multifamily investment volumes reached an all-time high of $8.3 billion in 2018 and we anticipate 2019 investment volume to match or exceed 2018 once the final numbers have been tallied.
Continued positive cashflow stability combined with a strong preference by many to rent rather than own, are generating investor interest in the multifamily segment, with measured year-over-year increased returns for owners of apartment buildings.
"The multifamily segment’s ability to generate consistent cash flows with low levels of volatility has always made apartment buildings an enticing option for prudent investors, however with the continued strength of tenant demand, rental stability, and high cost of ownership, investor interest is increasing to unprecedented levels," says CBRE Canada Vice Chairman Paul Morassutti.