‘Highly sought-after’ Jean Edmonds Towers bring Quebec investor into Ottawa real estate market

A Quebec-based investor’s partnership with a leading commercial real estate company to buy a major downtown office complex marks the insurance firm’s first steps into what observers are calling Ottawa’s increasingly attractive real estate market.

Morguard announced in late October it was joining forces with iA Financial Group to buy the Jean Edmonds Towers, a 552,000-square-foot property consisting of two highrises at 300 Slater St. and 365 Laurier Ave.

The $186-million deal will see iA Financial, a publicly traded firm that offers a range of life and health insurance products as well as savings and retirement plans, own a 50.1 per cent stake in the property, with Morguard controlling the rest. The site was previously owned and operated by Brookfield Asset Management, which put the buildings on the market earlier this year.

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The two 20-storey highrises are linked by a ground-level retail atrium. They are currently 98 per cent occupied by the federal government and are home to Immigration, Refugees and Citizenship Canada and the Canada Border Services Agency. The feds are in the midst of investing tens of millions of dollars in a floor-by-floor renovation of the complex that includes upgrades to common areas, lobbies and washrooms as well as a redesign of workspaces.

Brookfield originally tried to divest the property in 2016 but wasn’t able to find a buyer. Cushman & Wakefield Ottawa managing director Nathan Smith, who helped broker the deal, said the site drew interest from a number of “private equity and institutional capital” investors this time around, mainly due to its central location and stable, long-term government tenants, who still have about eight years remaining on their lease.

“It is the type of property that’s highly sought-after across the country,” he said.

Morguard will provide property management services at the towers, giving the firm operational management of a full block in Ottawa’s central business district. The company and its affiliates also manage and hold ownership interests at 280 Slater St., 301 Laurier Ave W., 333 Laurier Ave W. and 150 Bank St.

Class-B buildings

While the deal is dwarfed by the $480-million price tag of the transaction that saw a trio of investors purchase Constitution Square in September 2017, it’s still among the city’s largest deals ever.

Unlike Constitution Square, a top-tier class-A property, the 44-year-old Jean Edmonds Towers are considered class-B buildings. But iA Financial Group vice-president of real estate investment Mario Bedard said the site is an attractive commodity because it offers a “steady-flowing” stream of rental income.

“That’s perfect for us,” he said, adding the company is eyeing other potential deals in the capital as part of a bid to expand its portfolio across the country. The firm currently owns about $1.4 billion worth of real estate assets, mostly in Quebec and Vancouver, and the Jean Edmonds transaction is its first foray into the Ottawa region.

“It’s a market we like,” Bedard said.

Recent reports from both Avison Young and PwC show that real estate watchers are similarly bullish on the capital.

Landmark deals such as the Constitution Square sale and Investors Group acquiring a 50 per cent stake in Minto Place have attracted outside attention, according to Avison Young, while PwC highlighted the forthcoming light-rail line and increasing construction activity in the city as boons for Ottawa’s commercial real estate market.

Morguard’s block

Representatives from Morguard were unavailable for comment before press time. In a statement, the company said the Jean Edmonds acquisition sets the stage for “potential master planning opportunities” for its properties in the immediate area.

Colliers International associate vice-president Michael Pyman agrees the deal “opens up potential” for a makeover of the towers down the road.

“It gives options for (Morguard) to link their entire block together, either below grade or above grade with breezeways,” he said, noting the firm now has an ownership interest in about 800,000 square feet of real estate in that part of the core.

The deal brings Morguard’s managed real estate portfolio in the city to more than five million square feet. The firm owns or manages 2,800 residential suites in the National Capital Region. The Jean Edmonds Towers were built in 1974 by Robert Compeau and are the former home of the Ottawa Journal newspaper.