TSX:REI.UN - Post by User
Post by
CANCDNon Nov 05, 2020 1:16pm
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Post# 31842945
The Well
The WellAs I described yesterday, we sort of got an insight into the expected lease rates for the The Well (about 52$ sqft retail/office blended). This was based off of Allied REIT disclosing the expect NOI from thier 767k NLA of the Project (40M$ per year).
With this information, and using the information from RioCan report about building cost, we know that RioCans portion of the project is 888million. They have disclosed that about 433k NLA will be air rights sale from the 1200 NLA at RioCan interest (leaving the 767k NLA of ongoing income). The 433 air rights sale should net about 200sqft netting RioCan 84milion (air right sales are hard to prive, but used a recent article about Toronto buying air rights). So net Project cost is about 800 million.
at an expected $52sq ft rate of 767k NLA blended between Office and Retail bringing in 40million NOI, at a 4% cap rate first year (cap rates always start low and head up as leasing values increase over years) equal NEW VALUE creation of 200 MILLION DOLLARS at RioCan interest!
BUT that is not all! RioCan also own 196NLA of residential rental space at the same property at a total cost of 143million. This results in about 9.4million NOI and at a cap rate of 3.5% (consistent with recent sales of apartment rentals) give NEW VALUE creation of 107 million.
The Well in downtown Toronto a NET value creation of 307 million! Thats a 30% return on intial investment on DAY 1