Artis REIT is on track to largely exit Canadian retail in 2024 as it seeks to improve its financial performance.
On Dec. 22, the Winnipeg-based REIT announced the sale of four properties in Calgary and four in Winnipeg for an aggregate price of $222 million. The deal will close in the first half of 2024, pending review by the Competition Bureau.
“The sale of this portfolio of Canadian retail properties is an important step towards achieving our near-term objective of strengthening our balance sheet, reducing debt and enhancing liquidity,” said Samir Manji, president and CEO of Artis in a statement announcing the deal.
Artis’s four holdings in Calgary include Crowfoot Corner, Crowfoot Village, Sunridge Pointe and Sunridge Spectrum, totalling 293,660 square feet. It has six properties in Winnipeg, with the four included in the Dec. 22 sale announcement totalling 301,539 square feet; these include Linden Ridge Shopping Centre, Linden Ridge Shopping Centre II, McGillivray Boulevard and the Shoppes of St. Vital.
The four properties sold to a private buyer, the Walia Group of Companies, Artis told Western Investor.
The sale price works out to $373 per square foot.
The deal follows transactions earlier this year for five retail properties with an aggregate value of $121.7 million. While the assets weren’t named at the time, company filings indicate they included Liberton Square, Namao South and Sunrise Towne Square in Edmonton; the Visions building in Calgary; and St. Vital Square in Winnipeg. The properties totalled 407,554 square feet, or an average of $298 per square foot.
The premium on the current deal points to the strength of interest in retail assets in Western Canada, and bodes well for deals involving Artis’s remaining retail assets.
“This transaction reflects the quality of Artis’s real estate portfolio,” Manji said. “We are also seeing very strong interest in Artis’s retail portfolio located in other Western Canadian markets with the recent drop in bond yields further strengthening the large number of buyers who have expressed interest in one or more of these markets.”
Combined with last week’s offering of 17 properties in Alberta and Saskatchewan last week, the Dec. 22 deal leaves Artis with just Pembina Village Shopping Centre and 330 Main Street in Winnipeg.
Pembina Village is under contract and is set to close in early 2024, said Heather Nikkel, senior vice-president, investor relations with Artis. She said 330 Main is connected to the adjacent 300 Main and 360 Main Street properties and located above Winnipeg Square, which makes it a more complex proposition.
“It’s not a stand-alone asset, she told Western Investor. “We are not actively seeking buyers at this time.”
Artis’s divestment of its Canadian retail holdings is part of a business transformation initiative launched in March 2021 that prioritizes “unlocking value through the monetization of certain assets.”
In November, Artis announced that BMO Nesbitt Burns Inc. would be advising it as part of a strategic review process “to consider and evaluate strategic alternatives that may be available to the REIT to unlock and maximize value for unitholders.”
Avison Young, which has the mandate to sell Artis’s Saskatchewan and northern Alberta retail assets was not involved in the current transaction and declined comment on Artis’s recent dispositions.