In early January 2018 the trend of large scale national transaction continued. According to the Capital Rate Report of the first quarter of the year published by Colliers International, roughly 42% of the PIRET portfolio is located in Ontario with an estimated value of approximately $1.28 billion.
The report states that the large scale transactions lead to another record setting year in terms of total dollar volume sales in the investment market. Among such transactions was the acquisition of Canadian Real Estate investment Trust (CREIT) in a transaction worth approximately $6 billion. Once closed the transaction, Choice Properties will have a total enterprise value estimated at over $16 billion and be the largest REIT in the country.
Another transaction, and not less important one, was the sale of 50% stake in the Bay Adelaide Centre in Downtown Toronto to the private company Dadco Investments for $850 million. The center is comprised of two towers totaling over 2.2 million square feet of prime office and retail space.
Taking this all into account, the report states that it is quite expected that investors are going to be more cautious when it comes to non-core assets in tertiary markets. As a result there is expected to be some softening of cap rates for certain asset classes in smaller GTA markets.
Below are the Q1 2018 Capital Rates for Toronto.
To see the Capital Rate reports for Montreal, Calgary, Vancouver, Edmonton, Ottawa, Winnipeg, Halifax, Victoria, or the cumulative Canadian Cap Rate report press the link to download the paper.