Homburg REIT Purchases 29 Canadian Shopping Centers for $114.9 Million

After paying $114.9 million for 29 neighborhood shopping centers, Montreal-based Homburg Canada Real Estate Investment Trust will be adding 728,000-square feet of retail space to its portfolio. The property, which is being sold by international property investor Delek Global Real Estate Group, is largely anchored by the Jean Coutu Group Inc. pharmacies.

While the purchase includes 29 neighborhood shopping centers, three of which are located in Ontario, the 24 Jean Coutu leasings represent half of the portfolio’s net income. Other tenants included in the portfolio are Shoppers Drug Mart, IGA, a bank and Dollarama. The leasings have an average remaining lease term of 7.2 years. According to Homburg REIT officials, the company hopes to attract new tenants to the shopping centers, most of which are found in the Greater Montreal area.

“With this deal we continue to grow our footprint in Montreal and Quebec and get access to more high-quality tenants,” Jim Beckerleg, who is the CEO of Homburg Canada Real Estate Investment Trust, is reported as saying in a recent montrealgazette.com article.

In order to purchase the shopping centers, Homburg REIT will assume $74.6 million of existing mortgages as well as $40.3 million of equity. The company is also planning to sell its multi-residential Atlantic region portfolio for $65 million as part of its move away from investing in the residential sector.

“The residential sector is no longer part of our strategy,” said Beckerleg. “We’ll continue to focus on the retail and office sectors of the commercial market.”

After repaying the mortgages on the Atlantic region portfolio, which features 1,261 residential units within 29 properties and 42 buildings, the company will see net proceeds of $37 million. After completing its transactions, REIT’s total Canadian portfolio will include 8 million square feet of commercial leasable space in Ontario, Quebec, Atlantic Canada and the West. Some of the company’s best-known assets include Alexis Nihon Plaza, CN Central Station, Calgary’s Scotia Centre and Centre Lav.

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