Groupe Touchette Real Estate and Melinor Investments Inc. have acquired a three-building industrial portfolio in Cornwall, Ont. from Harlo Capital for $40.2 million.

Harlo was represented by CBRE in the transaction. Guillaume Jacob, senior vice-president with CBRE Montreal's national investment team, told RENX the portfolio received 11 bids from a mix of private and institutional investors — primarily from Toronto and Montreal.

“We were very surprised by the number of groups at the table and how competitive it got,” Jacob said. “That speaks to the fact that there's not a lot of industrial product in the market, generally speaking. 

“So I think that was part of it, but also the price was well below replacement cost and it had a really good yield going in. I think that made it attractive to a lot of groups.”

Montreal-based Groupe Touchette Real Estate is dedicated to real estate development, acquisition, asset management and related activities. It owns approximately 30 assets in seven provinces and focuses on logistics, office and retail buildings as well as industrial, commercial and institutional land.

Melinor is a Montreal-headquartered investment company.

Jacob said the ownership split of Harlo’s former Cornwall industrial portfolio between the two companies was confidential.

Harlo Capital is a Toronto-based private equity company that invests in real estate developments across Canada. It’s part of Harlo Group.

Building details

Harlo sold the three mid-bay buildings on Boundary Road in Cornwall because it was looking to recycle capital, according to Jacob. The capitalization rate for the transaction was 7.95 per cent.

The three buildings have strong covenant tenants and provide secure cash flow with growth potential.

• The 144,490-square-foot building at 705 Boundary Rd. sits on 11 acres of land, has a 22-foot clear height and was built in 1969. It’s 100 per cent occupied and has a weighted average least term (WALT) of 6.2 years, with its key tenants being Amazon and Fieldless Farms.
• The 171,339-square-foot building at 725 Boundary Rd. sits on nine acres, has a 22-foot clear height and was built in 1977. It’s 99 per cent occupied and has a WALT of 3.1 years, with its key tenants being Purolator and Johns Manville.
• The 107,312-square foot building at 825 Boundary Rd. sits on 18 acres, has an 18-foot clear height and was built in 1970. It’s 100 per cent occupied and has a WALT of 5.8 years, with its key tenants being Canada Post and High Energy Transport Inc.

Cornwall an important industrial market

Cornwall - Ontario’s easternmost city and located where its home province, Quebec and New York converge — is well-positioned for distribution and logistics facilities. 

The city of approximately 50,000 people is located along Highway 401, the St. Lawrence River and a main CN rail line. It has a bridge that crosses to the United States and a deep sea harbour, while it’s an hour’s drive away from international airports in Montreal and Ottawa. 

Industrial land in Cornwall ranks among the most affordable in Ontario and the city’s modest development charges also make it attractive. 

Cornwall has industrial inventory of 11.8 million square feet, a 2.2 per cent availability rate and a 0.9 per cent vacancy rate. Net asking rents in the second quarter of this year averaged $9.41 per square foot, which was up six per cent year over year.

Michelin acquired a new, built-to-suit, two-building, 984,000-square-foot distribution facility, which sits on a 63-acre site in the Cornwall Business Park, from Broccolini for $246.35 million late last year.

Broccolini also built a 1.35-million-square-foot distribution centre across the street at 1501 Industrial Park Dr. for Target in 2012 that’s since been taken over by Walmart.

The 1,600-acre Cornwall Business Park, immediately adjacent to Highway 401, is home to some of Canada’s largest distribution centres as well as manufacturers and transportation companies.