of The Clarion
A real estate management firm has announced the closing of its transaction to acquire the Kindersley Mall as part of a large portfolio of 44 retail properties.
Strathallan Capital Corp., a Toronto-based firm that manages and operates four private funds, issued a news release on Oct. 4 to announce the closing of its transaction to acquire the properties from a subsidiary of OneREIT, the mall’s former property manager.
The announcement comes on the heels of a vote on Sept. 25 by unit-holders of OneREIT to approve the transaction. Another real estate investment trust called SmartREIT has also acquired assets and liabilities from OneREIT, but 44 properties including the Kindersley Mall have been purchased by Strathallan.
According to news releases, the total transaction was valued at $1.1 billion. The purchase price for the Strathallan portfolio of properties was $703.5 million, along with other costs and considerations, in August.
The 44 properties in the portfolio have a total of 4.6 million square feet of retail space and the primary uses of the properties include grocery stores, drug stores and services. The former management trust’s board of trustees unanimously recommended the transaction to unit-holders.
Brian Spence, the chairman for Strathallan, said the OneREIT transaction represents the single largest acquisition the firm has made in terms of the size and number of properties involved in a single portfolio.
He noted that the single most expensive property the firm acquired previously was purchased for approximately $165 million, but the property was located in a metropolitan area and the firm tends to focus on acquisitions in tertiary markets.
The transaction took a long time to complete, Spence said.
“It was long and drawn out,” he said about the process. It took time to work out the details because there were several groups and people involved. “We started this maybe two years ago.”
The transaction involved a special committee of OneREIT trustees, a board of directors, SmartREIT and Mitchell Goldhar, who had ownership stake in both OneREIT and SmartREIT, he said. The transaction was complicated, but Strathallen was lucky to have SmartREIT absorb the public shell, he said. Strathallan acquired only physical assets.
Strathallan is excited to close the transaction because it is a rare opportunity to acquire a portfolio of properties so quickly, he said. According to Spence, the OneREIT unit-holders voted 99 per cent in favour of the transaction at the meeting in September.
Spence said the firm knew the grocery store at the Kindersley Mall was closing but the Home Hardware closure came as a surprise. Staff will continue to work to add value to the properties, he said.
“There are a lot of these properties like Kindersley where clearly we need to add some value and bring our expertise to the table,” he said. That value could come through new tenants, renovations or other changes to a property. “That’s what we do.”
In cases where the firm can’t add value to the property, he said it would be sold.
Spence added the company doesn’t hold on to its assets long term. Properties are generally sold once they’ve been stabilized.
© Kindersley Clarion