One of the buildings Allied sold at low single digit cap rate.
Montreal’s MTRPL has bought a Saint-Laurent Blvd., mixed-use office and retail building in a prime location in its hometown from Allied Properties REIT.
The nine-storey building at 4446 Saint-Laurent Blvd., at the corner of Mount Royal Ave., was built in 1915 and renovated in 1989. It has 72,817 square feet of gross leasable office area as well as 7,251 square feet of gross leasable retail area and 50 interior and exterior parking spots.
Financial details of the transaction, which closed Thursday afternoon, were not disclosed.
While the property may have been a relatively minor part of Allied’s portfolio, it fits well with the smaller MTRPL’s growth strategy.
“I think there's been quite a lot of action in the office space over the last six months with private (investors) purchasing properties from REITs that are pruning their portfolios,” MTRPL co-founder Bryan Spatzner told RENX.
The 4446 Saint-Laurent acquisition was an off-market deal that Spatzner said came about through word of mouth.
Building fits with MTRPL’s business model
“We’ve always identified sites on primary commercial arteries,” Spatzner explained. “We like the foot traffic, the exposure and generally the population density that goes hand in hand with those types of sites.”
MTRPL has had success with buildings with retail at grade and residential or commercial uses above that, and 4446 Saint-Laurent fits that bill.
Spatzner said service-oriented businesses — including hairdressers, nail salons and tattoo parlours — are destinations that don’t need to be at ground level where rents are much higher. These operations can thrive in buildings similar to 4446 Saint-Laurent along with more traditional office users.
Many small and medium-sized companies want their employees back in the office more, and one of the main ways of enticing them to do that is by being in a neighbourhood with lots of nearby amenities. This new acquisition also checks that box, according to Spatzner.
“I’d be a little bit more bearish talking about office or commercial properties in central business districts, but in neighbourhoods that embody a live, work and play environment, I think there's demand for that,” he said.
“We've seen that demand. Over the last 12 to 24 months, we bought quite a bit of boutique office and all the buildings that we bought with vacancy are now full.”
Current tenants and filling vacancies
An interior space and view from 4446 Saint-Laurent Blvd. in Montreal. (Courtesy MTRPL)
The ground-floor retail space at 4446 Saint-Laurent is occupied by two chains: an EQ3 furniture and home goods store; and an Allo mon Coco restaurant.
Spatzner said the upper floors are occupied by a mix of advertising agencies, media publishers and technology companies.
According to Allied’s web page for 4446 Saint-Laurent prior to the closing of this transaction, the building had 10,627 square feet of vacant office space on three different floors.
“There’s some vacancy in the building, but that's where the value creation is and that's our job,” Spatzner noted.
MTRPL plans to spruce up the common areas and market the property on all fronts to try and fill the vacancies. It’s willing to divide space into smaller units if that’s what it will take to lease it.
Looking for more acquisitions
MTRPL doesn’t have any buildings under construction at the moment but it’s looking to acquire and redevelop more properties in the Montreal area.
“We’re opportunistic so we've touched a lot of the different asset classes,” Spatzner said. “We're looking for yield and, at the moment, that seems to be in the office space. But it's not traditional office.”
MTRPL’s first deal was the 2016 acquisition of an empty 15,000-square-foot retail building at 3939 Wellington St. in Verdun, now called Biggy Lofts. It has since been sold along with 10 other properties.
This latest acquisition of 4446 Saint-Laurent gives the company 20 residential, retail, commercial, office and mixed-use properties in its current portfolio.