Minto Apartment REIT acquires $209M stakes in Montreal, Toronto properties

montreal
The Montreal skyline.

Ottawa-based Minto Apartment REIT (TSX:MI.UN) is deepening its reach in Toronto and entering the Montreal market for the first time with two sizeable property deals in Canada’s two most-populous cities.

The REIT announced Thursday it is partnering with IG Investment Management to take a 50 per cent stake in Montreal’s Rockhill Property. Valued at $134 million, the deal will mark Minto REIT’s first foray in the Montreal real estate market, bringing a six-building, 1,004-suite property into its portfolio. Rent at the Rockhill buildings averages $1,352 per month.

In Toronto, Minto REIT will also take a 50 per cent stake in the 409-suite Leslie/York Mills apartment complex. The $75-million deal will see the REIT take over ownership in the apartments from the investment trust’s majority shareholder, Minto Properties, and enter into co-tenancy with the other existing owner, a subsidiary of the Healthcare of Ontario Pension Plan. Rent at the three-tower LYM complex averages $1,707 per month.

For both acquisitions, Minto REIT will act as the asset and property manager, earning fees for those services.

In order to finance the acquisition, the REIT will be taking on mortgage loans totalling $158.5 million.

Minto REIT also announced Thursday it will be raising money through a unit offering. The investment trust said it has entered into an agreement with underwriters to issue 7,660,000 units at a price of $19.60 per unit for gross proceeds of $150 million. The agreement comes with an overallotment option which, if exercised, would bring the total amount raised up to $172.5 million.

Proceeds from the unit offering will also go towards acquisition costs, as well as paying down existing debt on previous property purchases.

Following the close of the acquisitions, Minto REIT will have a stake in nearly 6,000 apartment suites across Canada, an increase of 39 per cent since going public in July 2018. The REIT’s shares have risen nearly 10 per cent on the TSX since the debut, trading at around $19.89 on Friday afternoon.

Minto REIT expects both acquisitions to close in the first week of May.