Smart Investment Ltd. has acquired the Woodbine Corporate Centre in Markham, Ont. from Slate Office REIT and an unnamed minority partner for $52 million.
The 359,563-square-foot complex is spread across 12 acres just north of Steeles Avenue East and is comprised of:
- three office buildings at 7030, 7050 and 7100 Woodbine Ave.;
- a flex office building at 55 Idema Rd.;
- and an industrial building at 85 Idema Rd.
The Woodbine Corporate Centre was built in 1984 and renovated in 2011. It provides easy access to public transit and Highway 404 and is close to amenities along Woodbine Avenue.
Slate Office REIT’s web page for the property listed 12 immediately available spaces totalling 63,019 square feet at the three Woodbine Avenue office buildings.
New owner and Slate’s sale proceeds
Smart Investment is a Markham-based real estate investment and management company owned by Tim Gu, who is involved in a number of ventures. Gu is also the chairman of service uniform provider Unisync Group Limited, the co-owner of hat and apparel company Tilley, the owner of WillowWood School, and president of apparel and hosiery company E.Star International Inc.
Woodbine Corporate Centre has become the second-largest property in Smart Investment’s commercial real estate portfolio, which includes eight industrial properties, three office properties and five retail properties. All except Winnipeg’s 371,425-square-foot Garden City Shopping Centre are based in Ontario.
Slate Office REIT owned a 75 per cent share of Woodbine Corporate Centre and received $39 million for the property, according to information released with its Q3 financial results on Nov. 7.
A $45.3 million mortgage on the Woodbine Corporate Centre had been refinanced with a two-year, $50-million mortgage in August 2023.
CFO Capital facilitated financing for acquisition
Markham-based CFO Capital facilitated the financing for Smart Investment’s acquisition of Woodbine Corporate Centre.
The company has expertise in debt structuring, underwriting and sourcing financing for commercial real estate. Its lender pool includes banks and other funds from Canada, the United States and Europe.
CFO president Mark Kay told RENX he had a nondisclosure agreement and couldn’t provide details on Woodbine Corporate Centre’s financing arrangements. He was able to say there are challenges with the debt sector when it comes to office, but Smart Investment was pleased with the way it worked out.
“There’s been a moratorium on office lending,” Kay noted, discussing the financing sector in a more general sense. “Most institutional lenders are shy of lending against office because there's no clear direction on when that market is going to come back.”
Institutional lenders being on the sidelines for office transactions has created opportunities for CFO.
“We've been working with all the banks and credit unions for assets that are not performing or meeting their financial covenant,” Kay explained. “We can look at providing some alternative financing or restructuring their debt.”
Slate Office REIT’s portfolio realignment continues
Slate Office REIT owns interests in and operates a portfolio of workplace assets in North America and Europe.
In addition to its sale of Woodbine Corporate Centre, the REIT also revealed in its Q3 report that it received $14.3 million for its share of selling a property at 114 Garry St. in Winnipeg.
Slate Office REIT has completed nearly $103 million in dispositions (at its share) for the year up until Nov. 7 after announcing in 2023 it was realigning its portfolio and looking to sell certain assets to raise liquidity and reduce debt.
The REIT continues to have discussions with lenders to resolve current defaults and refinance its debt to more favourable terms, according to Slate's third-quarter disclosure.
Kay said CFO isn't a lender to Slate Office REIT.
Lending and trading in other asset classes
CFO is involved with providing financing solutions for every commercial real estate category, and they’re not all struggling like some aspects of the office sector.
Kay called purpose-built rental apartments the “golden child right now across Canada with the help of the CMHC (Canada Mortgage and Housing Corporation).”
Hotels are right behind apartments in terms of activity, according to Kay, who called them a hedge to inflation.
“Hospitality is super strong right now,” Kay said. “We’re doing a lot of construction right across Canada and acquisitions are taking place.”
Kay said the industrial and retail asset classes are still healthy but there haven’t been a lot of transactions. He expects to see more once people get a better handle on where five-year capitalization rates will settle.