Industrial real estate | Montreal-based Brasswater acquires $100 million portfolio

Brasswater, in partnership with Vista Properties, acquired an industrial portfolio of 23 buildings in Montreal from a private company.

Andre Dubuc
The Press

The buildings total 55,000 m² (588,000 square feet) of leasable area and are 99% leased to 166 tenants.

Following the sale of Cominar’s industrial assets to Blackstone last March, this $100 million transaction is one of the largest of the year in the Montreal industrial market, both in terms of gross leasable area than total purchase price, support the buyers in a press release.

Seventeen of the properties are located in the borough of Saint-Laurent, grouped along Bégin, Guénette and Thimens streets. The rest of the portfolio is located in LaSalle, rue Lapierre and rue Clément.

The seller is DHP, headed by Denis Paquin.

The buildings are around 50 years old with ceilings at around 6 meters (20 feet), which is rather low by today’s standards. They offer premises of a minimum of 2500 square feet, which is ideal for young and small businesses.

There is no question of demolishing old buildings to build new ones of a larger volume, as we see on occasion, assured Ian Quint, president of Brasswater.

Instead, it intends to renovate the facade of some of them and increase the budgets allocated to asset maintenance.

The context is favorable to rent increases in the industrial sector. Due to the scarcity of supply, the availability rate of premises is at rock bottom and rents are on the rise. New landlords active in Quebec are particularly incisive in rent increases for SMEs, as reported The Press Friday. Opportunistic, Brasswater will not hesitate to follow in their footsteps.

As most of the in-force leases in the newly acquired portfolio require a rental rate below market rent, Brasswater’s goal is to sign leases or renewals at the list price on a rolling basis. He’s asking $15 per square foot plus fees and taxes for a 5-year lease, he said in a phone interview. The new leases contain clauses for an automatic increase in rents once a year of around 3 to 4% per year.

This transaction marks its 12^e acquisition of the year for Brasswater, formerly Groupe Quint. Investments during the year amount to $500 million in Quebec and elsewhere. Its portfolio now reaches 232,000 square meters (2.5 million square feet) of existing properties and 595,000 square meters (6.4 million square feet) of land to be built.

The company of 70 employees is active in particular in Salaberry-de-Valleyfield, where it is currently constructing 2 buildings for nearly 46,500 square meters (half a million square feet). It has also just acquired an industrial fringe in Delson, near Highway 30. It has also acquired land in Laval and Saint-Eustache.