Today, a month after announcing a new partnership with Dori Segal, its former CEO, for investing in Toronto properties, income-producing real estate company Gazit Globe said that it would spend C$190 million (NIS 500 million) on its first acquisitions in Toronto.
In the main deal, Gazit Globe will join forces with a partnership between Segal and an investment fund operating in Toronto to jointly purchase the York Mills Centre property for C$250 million (NIS 655 million). Gazit Globe and the partnership, managed by Segal, will buy 66.7% of the property in equal shares, while a private real estate investment fund will acquire 33.3%.
Gazit Globe says that the property is an office complex with 53,000 square meters of rental space, of which 49,700 square meters consists of offices, on a 6.75-acre site. The property is located in Midtown Toronto at the intersection of Yonge Street and York Mills Street.
According to Gazit Globe, occupancy of the property is currently at 94%, with an average lease duration of 8.4 years. The tenants are financially sound concerns, such as Royal Bank of Canada (RBC) and Toronto Stock Exchange-listed residential real estate development company Minto. Completion of the deal is slated for December, subject to the usual conditions.
Attractive medium-long-term return expected
Midtown Toronto is a business district located north of the city center. It has convenient access roads, and has been growing in recent years. Seven residential real estate projects are under construction in the northern part of Yonge Street, and more than ten are in the planning stages. These projects will add over 7,000 housing units to the area. Opposite the acquired property is a site with 43,000 square meters zoned for residential and commercial use.
Gazit Globe believes that the property will generate an attractive return in the medium and long term. The company plans to pay for the acquisition with a ten-year loan, backed by a lien on the property with 60% leverage. At the same time, the partnership announced that it had bought three commercial properties in Toronto in areas with strong demographic characteristics for C$23 million (NIS 60 million).
Gazit Globe also announced a high rate of response to its buyback offer for its Series 11 bonds. A month ago, Gazit Globe offered NIS 1.338 billion for Series 11 bonds with an aggregate par value of NIS 1.135 billion. The company reported today 86% acceptance of its offer, and that it would buy bonds with a par value of NIS 977 million from the public for NIS 1.2 billion.
Published by Globes, Israel business news - en.globes.co.il - on December 4, 2019
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