Soneil Investments has acquired a six-property commercial real estate portfolio across the Greater Toronto Area (GTA) for more than $180 million from family-owned Humbold Properties. 

The portfolio comprises approximately 650,000 square feet of industrial, retail and mixed-commercial space in Markham, North York, Vaughan and Mississauga and is home to more than 100 tenants. It has a weighted-average lease term of just over three years.

“What really attracted us to it was the combination of scale, quality and diversification,” Soneil president and chief executive officer Neil Jain told RENX.

“We were trying to underwrite each property individually and see if each asset was something that we genuinely liked because, through the offering process, there was an option to bid on them individually or bid on all the assets.”

"This was definitely the most competitive acquisition process that we were ever involved in," Jain added, noting the assets appealed to a variety of investors. He believes that, aside from offering a compelling price, Soneil’s desire to acquire six properties, and reduce the number of potential transactions for Humbold to deal with, also weighed in its favour.

Soneil didn’t bid on two small retail properties, totalling 5,143 square feet at 125 and 127 Spadina Ave. in downtown Toronto that were also available.

The industrial properties

The industrial properties Soneil acquired are: 

• 5781-5789 Steeles Ave. W. in North York, a 5.2-acre site with 129,542 square feet of net leasable area that’s fully occupied by three tenants and has long-term infill redevelopment potential. There’s a small office component in addition to the industrial space, which has truck-level and drive-in doors and a clearance height of 20 feet.
• 80-85 Citizen Ct. in Markham, a 7.4-acre business park with 106,753 square feet of space in two multi-tenant buildings with 18-foot clearance heights that had 11,559 square feet of light industrial space available in two units, according to Humbold’s website (before the deal closed).
• 4118 14th Ave. in Markham, a 4.7-acre property with 68,489 square feet of space in a 24-foot-clearance-height, multi-tenant building with 10 truck-level doors, that’s fully leased.

“We have a lot of experience with small and mid-sized industrial tenants, where you can create a lot of diversification while minimizing concentration risk,” said Jain. 

“They're good, functional properties in really great locations with strong existing income, but you can also add value to the properties over time by bringing the rents to market values.”

Retail properties

The retail properties Soneil acquired are:

• 3700-3900 Rutherford Rd. and 9311-9333 Weston Rd. in Vaughan, a 6.6-acre retail plaza, known as Vellore Corners, that’s home to 64,534 square feet of space. It’s 100 per cent leased and its tenants include No Frills, Rexall, West Vaughan Medical Centre, ZiZi Trattoria and a Scotiabank branch. The site has future intensification potential.
• The 37,754-square-foot Dixie Aimco Plaza at 1510-1530 Aimco Blvd. in Mississauga is fully leased to Boston Pizza, Staples, Wendy’s and Tim Hortons. This site also has future intensification potential.

"The best retail assets have become some of the most sought-after real estate in the GTA, particularly in the last couple of years,” said Jain. “Particularly properties that are necessity-based, service-oriented and very difficult to replicate.”

Vellore Corners had the most competitive bidding process among all the newly acquired properties, according to Jain.

Mixed-use property

Soneil also acquired a 9.8-acre mixed-use complex at 1118-1126 Finch Ave. W. that’s comprised of:

• An eight-storey, 118,043-square-foot class-A office building with retail at grade at 1120 Finch. It has 13 units with 39,917 square feet of vacancy, according to the Humbold website.
• A 28,724-square-foot office space with a variety of tenancies at 1122 Finch, which the Humbold website said had 1,849 square feet available.
• 36,944 and 22,160-square-foot facilities with 17-foot ceilings and flexible space configurations appropriate for factory outlets, designer discount or other warehouse-style retailing at 1118 and 1126 Finch. Truck-level loading docks are available at the rear of 1126 Finch, which the Humbold website said had 21,965 square feet of vacant space in four units. There were no vacancies at 1118 Finch.
• A fully leased 32,673-square-foot educational, institutional and light industrial facility at 1124 Finch suitable for research and development, data centre, call centre, computer, laboratory, telecommunications and other uses.

“The units within the office portion are fairly small, but there’s a lot of vacancy, which creates an opportunity for us because we’ve had a good amount of success in our other office assets by being able to lease to tenants who have to start with a small space, and then can slowly grow with the building,” said Jain. 

“We see that as a good way to solve the vacancy problem. Leasing and managing multi-tenant assets is something that we do internally and feel very comfortable with. So, it's a very tangible way to add value to the property.”

CIBC provided acquisition financing while CBRE’s national investment team brokered the deal.

Soneil continues to grow

Brampton, Ont.-based Soneil is a private real estate corporation with a portfolio of more than six million square feet. It owns and manages industrial, office and retail space across the GTA.

Soneil acquired three Richmond Hill, Ont. office buildings from Dorsay Development Corporation for $84.6 million in August. It continues to seek opportunities in real estate investments and developments where it has conviction in the asset and location and believes it can add value and derive solid long-term returns.

“We are remaining aggressive when it comes to seeing what's on the market and bidding on the right asset,” said Jain. “Given how much there is to sell right now in the GTA, I think that something will come soon.”