CAPREIT announced that it has waived conditions and will acquire a Montreal luxury apartment, comprised of 256-suites and located in the affluent Côte-Saint-Luc neighbourhood.

The property is well-located within walking distance of a high-end shopping centre, hospital, community centre and public library. The purchase price, to be initially financed in cash from the CAPREIT’s Acquisition and Operating credit facility, is $23.5 million, generating a very strong going-in capitalization rate of approximately 6.51 per cent and a price per suite of approximately $92,000, well below replacement cost. Closing of the transaction is expected on or before May 3, 2017.

The property was constructed in 1975 and is currently operating as a seniors’ residence. On closing, the vendor will deliver the property to CAPREIT substantially vacant and will deposit $2.5 million in escrow to be disbursed to CAPREIT on a monthly basis in an equal to the rents projected for any suites that remain vacant for a period of up to two years after closing. CAPREIT will invest approximately $8.6 million in capital improvements over a three-year period, including a garage restoration, fire safety systems, in-suite and common area renovations, and energy efficiency initiatives. The property also has the potential to add additional suites on the ground floor over time.

CAPREIT, working with the vendor, has initiated certain capital projects and has begun marketing the property to prospective residents for occupancy on or after closing.

“This unique and highly accretive transaction is just another example of how we are bringing our culture of innovation to our focus on enhancing long-term Unitholder value,” commented Thomas Schwartz, President and CEO. “As we invest in this new property, and apply our proven management programs to efficiently lease-up the building and reduce operating costs, we will generate a very strong return on investment with, stable, sustainable and growing cash flows over time.”