(…and we have many clients looking to buy big Kitchener Waterloo apartment buildings - contact us today if you have one!)
Two Waterloo Region Apartment Buildings Sell For $45+ million…
…$46,710,000 to be exact
Killam Properties has announced the purchase of 225 recently built residential units in Cambridge, in two river front apartment buildings. This is one of the largest recent Multi-Family transactions in the Kitchener Waterloo area.
“Killam has acquired 100 and 200 Eagle Street North in Cambridge, Ontario, in the Kitchener-Waterloo Region. The luxury apartment buildings are of newer concrete construction and include spacious units ranging from 1,000 to 1,400 square feet, modern features and five appliances. The buildings’ amenities include a fitness centre, guest suite, air conditioning and underground parking.
100 Eagle Street, constructed in 2008, has 119 units with 9-foot ceilings, including 3 one-bedroom units, 59 two-bedroom units and 57 two-bedroom units with a den. The average rent is $1,523 per month. 200 Eagle Street, constructed in 2004 and located directly beside 100 Eagle Street, has 106 units, including 25 one-bedroom units and 81 two-bedroom units. The average rent is $1,351 per month.
The purchase price for the two river-front properties of $46.7 million ($207,600 per suite) was satisfied with a combination of the assumption of a 20-year mortgage for $10.1 million at 5.15%, a new mortgage for $16.0 million at 4.5%, and the balance in cash.
“We are pleased to report progress on our apartment acquisition program in Ontario” noted Philip Fraser, Killam’s President and CEO. “Closing these two Cambridge assets increases Killam’s apartment ownership in Ontario to 362 luxury apartment units. We have continued our acquisition focus on newer, high quality assets. These two assets meet this standard and are among the highest quality assets in Cambridge. The cap rate on the acquisition is approximately 5.7%, reflecting the buildings’ age, location and quality of construction.”
Both the cap rate and the price per suite are rich for the region, reflecting the quality of the asset, as well as the cheap financing that REITs and other institutional investors have access to right now. (CMHC is happy to loan on Multi Family properties, as it is a secure asset class. Rents continue to come in, in both good and bad economic times.)
We have many qualified real estate investors looking to buy apartment buildings now – if you own one, contact us to arrange for a quick sale. You’ll likely be pleased with what buyers are willing to pay for a quality building!
The Globe Advisor expands on the lack of available supply of apartment buildings in Canada:
Apartment buildings - there are about 100,000 of them across Canada, with the majority of them clustered along the Windsor-Quebec City corridor – may not return as much to their investors as shopping centres or office buildings, but they offer a lower-risk way to own income-generating properties.
They held their value through the recession for one main reason – there were no distress sales because owners could refinance their debt inexpensively through Canada Mortgage and Housing Corp. This ensured them access to credit at a time when other property owners found debt markets completely closed.
And with mortgage rates almost certain to move higher in coming months, buyers are scrambling to make purchases while rates sit near all-time lows. RealNet Canada, which tracks sales, shows first-quarter sales volumes actually decreased in most of the country at a time when other commercial sectors were showing sharp signs of recovery.
It has nothing to do with a lack of confidence in the sector, but rather illustrates how reluctant sellers are to part with their income-generating properties.
“What’s happening is people who own them are quite happy and those who want to buy really have to spend a bit more than they may like,” said RealNet president George Carras. “The most dominant owner profile in the sector is the private investors, and they tend not to want to trade.”
…
“You can get money at ridiculously low rates and the big challenge is just finding quality product,” Mr. Greer said. “There is no low-balling, and when something comes around, you see a ton of interest.”
Halifax-based Killam Properties started the year with a goal to spend up to $150-million on Ontario apartment buildings, and passed the $100-million threshold with the Cambridge deal earlier this week.
Chief executive officer Philip Fraser said it has become increasingly difficult to find relatively new buildings that met the company’s criteria, and indeed there were never any “for sale” signs planted on the front lawn in Cambridge.
If you have a building, and you have thought of selling in the next ten years, I strongly reccomend we talk today; with interest rates as low as they are (but heading up fast!) you will likely get more for it today then when rates are higher.
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