Investment Insights Montréal Q3-2014
Multi-residential The multi-residential market saw a considerable increase in sales volume in comparison to last quarter, with approximately $344 million in sales for the third quarter of 2014. Although the number of transactions stayed relatively stable, the increase in sales volume can be attributed to larger assets and building portfolios being traded this quarter. The ELAD Group was by far the most active vendor this quarter, accounting for 40 per cent of the sales volume in the multi-residential market. Most Notably, ELAD sold 84 units in the iconic Westmount Square tower to the Leclerc family; a private investor who paid approximately $70 million dollars for the portfolio, representing $833,333 per unit. Cogir Management Corporation also got in on the action, acquiring a three property portfolio from the ELAD Group totaling 950 units for approximately $68 million, representing close to $72,000 per unit. Another notable transaction was the 186 unit property located in Lévis, Quebec which traded hands for $13.1 million, representing approximately $70,500 per unit. Vacancy rates on the primary rental market remained relatively steady in the Greater Montreal Area (GMA) at 2.8 percent while average rents increased by 1.7 percent. Despite the increase of units on the secondary rental market, vacancy rates also remained steady at about 2.7 percent. The Villeray Saint Michel Parc Extension borough currently has the lowest average rental rate in the GMA ($621) for a 2-bedroom apartment while the downtown area of Ville-Marie has the highest ($1,399). Top Quality Q3 2013: 4.50%-4.75% Q3 2014: 4.50%-4.75% Other Apartment Q3 2013: 5.50%-5.75% Q3 2014: 5.50%-5.75% Q3 2013: $151 M Q3 2014: $344 M Q3 2013: 61 Q3 2014: 56 Portfolio sale (3 properties), GMA Vendor: ELAD Group Purchaser: Cogir Sale Price: $68,200,000 Number of Doors: 950 Price per Door: $72,000 44 Châteaubriand Street, Lévis Vendor: André Trudel Purchaser: Christian Rouleau Sale Price: $13,100,000 Number of Doors: 186 Price per Door: $70,430 Portfolio sale (3 properties), Lachine Vendor: 9178-6707 Québec Inc. Purchaser: 9307-6925 Québec Inc. Sale Price: $12,940,270 Number of Doors: 153 Price per Doors: $84,575 The ELAD Group sold 84 units in the iconic Westmount Square tower to a private investor for approximately $70 million. Investment Insight Q3-2014 Page 2
Office The office investment market experienced a substantial increase in the third quarter of 2014, mainly attributable to the closing of the Liberty Sites portfolio. The 1.7 million square foot transaction includes 26 office buildings and 1 industrial building located in the Saint-Laurent Technoparc and was sold by Liberty Sites Ltd to the joint venture partnership between HOOPP, Forgestone Capital and Canderel for approximately $285 million dollars. The Redbourne Group acquired a 3 property portfolio from Iscanco located in Longueuil totaling 309,803 square feet for approximately $54.2 million, representing $175 per square foot. A total of 4.2 million square feet of office space was traded in the third quarter representing a total sales volume of approximately $427 million, of which 67 percent was attributable to the Liberty Sites portfolio. The average weighted price per square foot stayed relatively stable quarter to quarter and currently sits at $164.40 in the GMA. Downtown Class A Q3 2013: 5.75% Q3 2014: 5.75% Downtown Class B Q3 2013: 6.50% Q3 2014: 6.50% Q3 2013: $113 M Q3 2014: $427 M Q3 2013: 7 Q3 2014: 13 Liberty Sites portfolio (27 properties), Saint- Laurent Vendor: Liberty Sites Limited (Sandra Levy) Purchaser: Joint venture (HOOPP, Canderel, Foregestone Capital) Sale Price: $285,000,000 501-507 Côte de la Place d Armes, Montréal Vendor: 9213-4568 Québec Inc. Purchaser: Holand Leasing Limited Sale Price: $23,500,000 Portfolio sale (3 properties) GMA Vendor: Iscanco Purchaser: Redbourne Sale Price: $54,175,897 The 27 property Liberty Sites portfolio closed this quarter and was purchased by a joint venture for an approximate $285 million. Investment Insight Q3-2014 Page 3
Industrial After last quarter s sub-par performance in the sector, the industrial market saw a significant increase in investment activity. Total sales volume for the third quarter totaled approximately $189 million in comparison to just $65.5 million last quarter. This also represents a 12 percent increase as compared to the same period last year. 46 industrial properties traded over $1 million in Q3-2014 (including user and vacant sales). The most notable industrial transaction was the 106,263 square foot FedEx Ground building with additional land in Dorval sold as part of an 11 property portfolio to Pure Industrial REIT. The building has a net lease to FedEx expiring in 2024 and sold for approximately $20.4 million, representing $192 per square foot and a 7.2% cap rate (allocated). Another significant investment transaction was that of a 60,786 square foot industrial property located at 6810 Boulevard des Prairies in Saint Leonard. The single tenant building is currently 100 percent occupied by Alasko foods with a lease expiry in 2022. The property was acquired by Nobel REIT for a purchase price of $9.7 million.the weighted average square foot for industrial properties currently sits at $64.40 per square foot in the GMA, which includes investment transactions as well as user and vacant sales. Single-Tenant Q3 2013: 7.00% Q3 2014: 7.00% Multi-Tenant Q3 2013: 8.0% Q3 2014: 8.0% Q3 2013: $168 M Q3 2014: $189 M Q3 2013: 37 Q3 2014: 46 2000 Saint-François Street, Saint-Laurent Vendor: Scannell Properties Purchaser: Pure Industrial REIT Sale Price: $20,444,735 6810 des Grandes Prairies Boulevard, Saint-Léonard Vendor: Mounir El-Mashtoub Purchaser: Nobel REIT Sale Price: $9,700,000 2995-2999 Le Corbusier Boulevard, Laval Vendor: KingSett Capital Purchaser: Dream REIT Sale Price: $8,400,000 Following a slow second quarter, the industrial market has seen a substantial increase in investment activity in Q3. Investment Insight Q3-2014 Page 4
Retail The retail investment market also experienced significant growth in both total sales volume and the number of square feet traded in comparison to the same time last year. Although the number of transactions stayed relatively stable, several large transactions were attributable to the upsurge in activity. A total of 1.5 million square feet of retail space was traded this quarter representing a total sales volume of approximately $349 millionand a weighted average price per square foot of $176.51. The most notable transaction this quarter was the 236,000 square foot acquisition of newly developed mix-use, retail and office assets in the heart of Montreal s Griffintown neighbourhood. The acquisition by First capital Realty from Montreal developer Devimco, includes 157,000 square feet of retail space along with 79,000 of office space and 255 parking underground parking spaces, for an aggregate purchase price of $102.2 million, representing $433 per square foot. The retail portion will include strong covenant tenants including Winners, SAQ and will be grocery anchored with a Metro supermarket. Another notable transaction this quarter was the sale of the Lachenaie SmartCentre located in Terrebonne. A joint venture comprised of Calloway REIT and Investors Group acquired the 442,800 square foot shopping centre from SmartCentres Group for approximately 55.9 million, representing $126 per square foot. Regional Shopping Centre Q3 2013: 5.00% Q3 2014: 5.00% Sub-regional Shopping Centre Q3 2013: 6.5% Q3 2014: 6.50% Q3 2013: $97 M Q3 2014: $349 M Q3 2013: 49 Q3 2014: 46 Peel and Wellington Streets, Montréal Vendor: Devimco Purchaser: First Capital Realty Sale Price: $102,200,000 1001 des Migrateurs Street, Terrebonne Vendor: Smart Centres Purchaser: Joint venture (Calloway REIT and Investors Group) Sale Price: $55,991,878 3100 de la Concorde Boulevard East, Laval Vendor: Pyxis Purchaser: Group Mach Sale Price: $17,500,000 First Capital Realty has purchased the commercial portion of the District-sur- Peel, a condo project to delivered in 2016. Investment Insight Q3-2014 Page 5
Land Total sales volume for land transactions totaled approximately $167 million in the third quarter of 2014, an increase of 7 percent from the same time last year. This increase was mainly attributable to the 36 million square foot acquisition by the Monit Group of 131 lots located near Highway 25 East in Laval. Another notable transaction was a 21,000 square foot residentially zoned vacant lot acquired by local developer Canvar located on Rene-Levesque Boulevard. The purchase price was $11.75 million, representing $562.25 per square foot. Q3 2013: $156 M Q3 2014: $167 M Q3 2013: 31 Q3 2014: 34 Marcel-Villeneuve Avenue, Laval Vendor: 9039-2630 Québec Inc. Purchaser: Monit Sale Price: $26,200,000 René-Lévesque Boulevard West, Montréal Vendor: Smart 92384 Canada Limited Purchaser: Canvar Sale Price: $11,750,000 Jean-Talon Street East, Saint-Léonard Vendor: Ace Holdings Limited Purchaser: Résidence Le 22 Inc. Sale Price: $8,052,500 The Monit Group acquired 36 million square feet of land from a private investor near Highway 25 East in Laval. Investment Insight Q3-2014 Page 6
For more information, please contact: Prepared by: Mark Sinnett Executive Vice President Real Estate Broker +1 514 667 5696 mark.sinnett@am.jll.com Robert A. MacDougall Senior Vice President Chartered Real Estate Broker +1 514 667 5654 robert.macdougall@am.jll.com Scott Speirs Vice President Real Estate Broker +1 514 667 5663 scott.speirs@am.jll.com Sebastien Gatti Associate Commercial Real Estate Broker +1 514 664 5682 sebastien.gatti@am.jll.com Joseph von Maltzahn Associate Vice President Real Estate Broker +1 514 667 5699 joseph.vonmaltzahn@am.jll.com Armen Markarian Associate Commercial Real Estate Broker +1 514 667 5695 armen.markarian@am.jll.com Jones Lang LaSalle Real Estate Services Inc. Real Estate Agency 1 Place Ville Marie, Suite 2121 Montréal, Québec, H3B 2C6 Tel. +1 514 849 8849 For further infomation, please visit our website: www.jll.ca About JLL JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4 billion, JLL has more than 200 corporate offices and operates in 75 countries worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3 billion square feet and completed $99 billion in sales, acquisitions and finance transactions in 2013. Its investment management business, LaSalle Investment Management, has $48.0 billion of real estate assets under management. JLL is the brand name of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com. About JLL Research JLL s research team delivers intelligence, analysis and insight through market-leading reports and services that illuminate today s commercial real estate dynamics and identify tomorrow s challenges and opportunities. Our more than 400 global research professionals track and analyze economic and property trends and forecast future conditions in over 60 countries, producing unrivalled local and global perspectives. Our research and expertise, fueled by real-time information and innovative thinking around the world, creates a competitive advantage for our clients and drives successful strategies and optimal real estate decisions. This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without prior written consent of Jones Lang LaSalle IP, Inc. COPYRIGHT JONES LANG LASALLE IP, INC. 2014