Business

Winnipeg Free Press - PRINT EDITION

Local trust cashing in

REIT profits selling city properties

By: Murray McNeill

26/11/2009 1:00 AM | Comments: 0

KEN GIGLIOTTI WINNIPEG FREE PRESS / May 26 2009 - 090526 - Manitoba Human Right Museum members meet with WFP Editorial Board ,in FP boardroom ,re: financing and building of the museum - Arni Thorsteinson Chair and Trustee Administrator

Enlarge Image

Winnipeg's real estate investment market is cooking and one local investment trust is using that to sweeten its own financial pot.

Selling prices in the city are up, and sellers are getting multiple offers for their properties. In a few cases, buildings are even selling for more than the asking price.

"Five years ago you still might have gotten at or near list, but not above list," said Don White, an investment broker with Colliers Pratt McGarry and chairman of the WinnipegREALTORS' Commercial Division. "What is different now is that prices are trending up. People are prepared to pay more for some of these properties."

That's why Winnipeg-based Lanesborough Real Estate Investment Trust put all four of its local investment properties on the auction block, including the landmark Colony Square apartment/retail complex across from the University of Winnipeg.

The trust wants to sell 15 of its 40 real estate properties in Canada and use the proceeds to pay down debt. And company CEO Arni Thorsteinson said the Winnipeg properties are among the ones being sold because Winnipeg real estate is in big demand right now among both local and out-of-province investors.

Earlier this week, the REIT struck a deeal to sell its 48-suite Chancellor Gates apartment complex in Fort Garry for just under $8 million. That's roughly $1.25 million more than it paid for it two years ago, for a return on its investment of 18 per cent for the two years.

And less than two months ago, it sold its Kenaston Village Mall/Kenaston Place office/retail complex for $18.35 million -- 45 per cent more than it paid five years ago for the property and some subsequent upgrades to it.

In both cases, the company received multiple offers and close to its asking price. And that's why it's sticking to its guns and demanding its asking price for its other two Winnipeg properties -- Colony Square and the McIvor Mall retail complex Henderson Highway.

Thorsteinson said both properties are drawing lots of interest from investors and several purchase offers have been received.

"But we've been sending them back because they're too low."

Lanesborough wants $46 million for Colony Square -- $8 million more than it paid just last year. And it's seeking $12 million for the McIvor Mall, which is almost double the $6.7 million it paid five years ago.

White said quality properties are attracting quality offers because "the (Winnipeg) market has become more accepted because it has proven its stability over time. And investors always like stability."

The CEO of Artis Real Estate Investment Trust, another locally based trust that has been buying up Winnipeg properties in recent years, agreed stability is one of Winnipeg's biggest attractions.

"Winnipeg real estate continues to provide investors with reliable returns that grow over time," Armin Martens said. "This is our history and the trend is expected to continue for the foreseeable future."

murray.mcneill@freepress.mb.ca

Merger plan ups Huntingdon units

A reverse takeover between Huntingdon Real Estate Investment Trust and IAT Air Cargo Facilities Income Fund has been turned into a merger that will see Huntingdon hold the majority of the resulting combined company.

The two companies announced Wednesday the all-equity merger previously valued at $370 million had been amended.

IAT, which owns and leases aviation-related buildings, will now have its unitholders get 9.75 HREIT units, instead of the previously agreed upon 11.75 units, for every IAT unit held.

"What they've done is sweeten the offer (for Huntingdon unit holders)," said Arni Thorsteinson, the Winnipeg businessman who was Huntingdon's CEO until a few months ago when IAT president Zachary George took over the helm.

"And the reason they did that is they weren't getting the necessary support (for the merger proposal)."

Thorsteinson the proposal needs the approval of two-thirds of both the Huntingdon and IAT's unit holders. Both groups are scheduled to vote on the revised proposal on Dec. 7.

Thorsteinson wouldn't speculate on what the outcome of the vote is likely to be, and George couldn't be reached for comment.

Upon closing, IAT will hold 48 per cent of the merged company instead of a previous 53 per cent stake.

-- CP / staff

Republished from the Winnipeg Free Press print edition November 26, 2009 B6

Rate this
This article has not yet been rated.

We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high. If you thought it was well written, do the same. If it doesn’t meet your standards, mark it accordingly.

You can also register and/or login to the site and join the conversation by leaving a comment.

Rate it yourself by rolling over the stars and clicking when you reach your desired rating. We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high.