- What A joint venture has hired RBC to market two malls
- Why The sellers are looking to land an off-market deal
- What next IMCO is also considering selling a mall
Three malls in the Greater Toronto Area with an estimated combined value north of $400 million are about to hit the block, Green Street News Canada can reveal.
A joint venture between RioCan REIT and Hudson’s Bay Co. plans to list the 493,000 sq ft Georgian Mall and the 451,000 sq ft Oakville Place in the coming weeks. Meanwhile, Investment Management Corp. of Ontario is considering selling the 1 million sq ft Niagara Pen Centre.
RBC has the sales assignment for Georgian Mall and Oakville Place. The marketing campaigns have yet to launch, and the buzz is RBC and the owners are looking to land an off-market deal without a broader sales pitch.
Pricing guidance is $155 million for Georgian Mall and $140 million for Oakville Place, which would put first-year capitalization rates for the malls around 8% and 7.5%.
Georgian Mall, at 509 Bayfield Street, is the largest mall in Barrie, 90 km north of Toronto. It’s 95% occupied and has a weighted average lease term of 6.2 years. The property is anchored by Hudson’s Bay, and HomeSense is a shadow anchor. Other tenants include H&M, L.L.Bean and Sport Chek. The average gross rent is $55.18/sq ft.
Oakville Place is at 240 Leighland Avenue in Oakville, midway between Toronto and Hamilton. The property is 98% occupied and has a weighted average lease term of 7.7 years. Hudson’s Bay is an anchor tenant, and a second anchor space, vacated by Sears in 2017, is occupied by Mark’s and GoodLife Fitness. The average gross rent is $43.55/sq ft.
RioCan purchased Georgian in 2012 for $318 million with a six-year mortgage of $185 million. The REIT paid $259 million for Oakville in 2013, assuming a $112 million mortgage.
More than 260,000 residents with an average household income of $112,000 live within 16 miles of Georgian Mall, and approximately 80,000 vehicles pass the mall each day, according to 2020 estimates. Within 10 km of Oakville Place, there are over 358,000 residents with an average household income of $168,000. More than 72,000 vehicles pass daily.
IMCO has yet to select a broker for Pen Centre and is still weighing its options. Market pros peg the value of the Niagara Region’s largest mall at $125 million, which puts the first-year cap rate around 8.5%. The mall, at 221 Glendale Avenue in St. Catharines, is 86% occupied. It has a weighted average lease term of 5.1 years, and the gross rent is $35.06/sq ft. Anchor tenants include Hudson’s Bay, Landmark Cinemas, Walmart and Zehrs.
HBC, led by chief executive Richard Baker, owns Hudson’s Bay, Saks Fifth Avenue and Saks Off 5th brick-and-mortar stores. RioCan, helmed by president and chief executive Jonathan Gitlin, has an enterprise value of about $14.3 billion. The duo formed a real estate partnership in 2015.
IMCO, which invests on behalf of Ontario’s public sector institutions, is led by CEO Bert Clark. The Toronto-based organization is working to reduce its retail holdings, which made up 20% of its real estate investment portfolio at yearend.
