Greybrook Realty Partners and Marlin Spring Investments are ending 2018 with a spree of purchases, adding 667 apartment units in Montreal and Quebec City to the partners’ recently announced acquisition of 566 rental units in Texas.
The most recent acquisitions involve eight apartment buildings in Montreal, as well as two apartment buildings and a townhouse complex in Quebec City. Greybrook and Marlin Spring paid $117.5 million for the properties.
The portfolio consists of 450 rental units in Montreal and 217 rental units in Quebec City.
Greybrook and Marlin Spring plan to institute a value-add program at the properties, renovating rental suites, improving common areas and increasing building efficiencies.
Seven of the eight Montreal properties are in the suburb of Hampstead; the eighth is downtown near both McGill University and Concordia University. The two Quebec City apartment buildings are in the Limoilou District while the third property, Gingras townhomes, is west of the downtown.
Quebec apartments are in demand
Marlin Spring and Greybrook are enthusiastic about the Quebec market.
“Strong economic drivers, robust population growth and rising home ownership costs have supported tightening rental markets across Montréal and Québec City in recent years,” said Peter Politis, the CEO of Greybrook Realty Partners, in a release. “With consistent rental demand and rent growth expected to persist, we will continue to explore attractive opportunities in these submarkets.”
The companies cite the fact Quebec represents approximately 20 per cent of Canada’s GDP and is Canada’s second-largest provincial economy. According to RBC’s Provincial Outlook Report, Québec is expected to lead all provinces in GDP growth in 2018 with a rate of 2.6 per cent.
The province’s population has grown more than nine per cent between 2007 and 2017, and unemployment is at its lowest rate since 1976.
This has contributed to strong housing demand and a drop in vacancy rates in both Montreal and Quebec City. CMHC data shows between 2015 to 2017 Montreal’s vacancy rate fell from four to 2.8 per cent, and Quebec City’s vacancy rate fell from 3.5 to three per cent.
Greybrook, Marlin Spring partnership
“Marlin Spring and Greybrook have a strong history of successful partnerships and we are delighted to partner on this acquisition, a great addition to our Canadian portfolio of value-add assets,” said Ben Bakst, CEO of Marlin Spring Investments, in the release.
“With current rents for each property sitting at below market value relative to comparable units in the vicinity, we believe an opportunity exists to meaningfully increase the properties’ net operating income by executing a value-add program to upgrade the assets.”
The Montreal and Quebec City purchase effectively doubles the number of properties Marlin Spring and Greybrook have acquired together in recent years. They’ve employed similar value-add strategies with those apartments and rentals as well.
Just two weeks ago, they announced the addition of two garden-style residential townhome communities in Houston, Lakeview Apartments and Lakeview Estates (see Greybrook, Marlin Spring expand investment venture).
“With the acquisition of this portfolio and our recent acquisition of two garden-style apartment properties in Houston, Texas, we have acquired over 1,200 units as part of our multi-family value-add portfolio in the past three weeks,” Politis said in the release.
The two companies are also partners in the development of Waterfront II, a proposed two-tower, mixed-use condominium project along the Toronto Lakeshore. Currently in planning stages, it is designed to include more than 540 residential units and 11,500 square feet of commercial space.
About Greybrook, Marlin Spring
Greybrook Realty Partners is a Toronto-based asset management firm that invests equity in value-add and development-based assets. Greybrook and its affiliates have invested in over 50 real estate projects in Canada and the United States.
In aggregate, its real estate investment portfolio is expected to result in the development of more than 32 million square feet of residential and commercial density, with an estimated completion value of $14 billion.
Marlin Spring Investments acquires, develops, repositions and manages residential assets throughout North America. To date, Marlin Spring has acquired more than 20 residential projects and more than 7,000 residential units in various stages of development, construction, and repositioning across Canada and United States.
The firm’s real estate portfolio totals more than five million square feet of residential density with an estimated completion value of over $3 billion.