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  • Andrew Cigna

Northview Makes Headlines with $742 Million Acquisition

This apartment property in Calgary would be part of a new $2.7 billion REIT

In an exciting development in the world of real estate investment, Toronto-based publicly traded fund, Northview, has announced its plans to grow its apartment portfolio by acquiring over 3,300 multifamily suites and 119,000 square feet of commercial space. This substantial deal, valued at $742 million, will pave the way for the creation of a real estate investment trust (REIT) with holdings in nine provinces and two territories, establishing Northview as a key player in the Canadian market.

Transformation and Growth Opportunities:

The acquisition will not only significantly expand Northview's existing portfolio but also bring forth numerous growth opportunities. With the addition of these high-quality portfolios, the new REIT aims to enhance access to capital, resulting in increased financial stability. This strategic move will set the foundation for future growth prospects, solidifying Northview's position as a market leader in the multifamily real estate sector.

Recapitalization and Debt Management:

The decision to embark on this acquisition aligns with Northview's objective to deleverage and strengthen its balance sheet. The fund aims to decrease its debt to gross book value by approximately 500 basis points. Additionally, the existing bank facilities are expected to be extended, providing more flexibility in managing debt obligations. These strategic moves will contribute to the overall financial stability and long-term success of the newly formed Northview Residential REIT.

Stakeholders and Investments:

Northview's expansion is made possible through collaboration with Starlight Investments and KingSett Capital, both of which will increase their investments in the new REIT. Starlight, through its affiliates, will become the largest unitholder with an approximate 28% effective interest, while KingSett and another institutional investor will hold approximately 22% and 14% of the REIT, respectively. This blend of expertise and capital infusion from key stakeholders ensures the success and growth of Northview Residential REIT.

Acquisition Details:

The acquisition comprises a portfolio of 12 properties beneficially owned by Galaxy Value Add Fund LP. Valued at $453 million, this deal involves assuming $209 million in mortgages and $40 million in credit facilities, with the remainder paid in units. The properties are located in various regions, including Airdrie and Jasper in Alberta, Montreal in Quebec, and Dartmouth and Halifax in Nova Scotia. Additionally, Starlight will sell four properties, generating approximately $109 million, with $57 million in mortgages assumed and the balance satisfied in exchangeable units. Moreover, an additional $180 million worth of properties will be acquired in Winnipeg, with mortgages assumed and redeemable units issued to institutional investors.

The Road Ahead:

To facilitate the transformation, Northview plans to internalize management and restructure as Northview Residential REIT, a listed traditional open-ended real estate investment trust on the Toronto Stock Exchange. The formation of the new REIT is projected to have an enterprise value of $2.7 billion. The finalization of the acquisitions and the subsequent restructuring will be subject to approval at an upcoming meeting, which is expected to take place next month. If approved, the deal is set to close in August 2023, marking a significant milestone for Northview and the Canadian real estate investment landscape.

Northview's ambitious acquisition of over 3,300 multifamily suites and 119,000 square feet of commercial space positions the fund for tremendous growth and establishes it as a prominent player in the Canadian real estate market. The creation of Northview Residential REIT sets the stage for increased financial stability, access to capital, and numerous growth opportunities for unitholders. As the industry eagerly awaits the outcome of the upcoming vote and the subsequent closing of the deal, Northview's expansion represents an exciting chapter in the multifamily real estate sector.

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