One of Canada's largest residential landlords plans to complete the first sale of a purpose-built, concrete rental tower in North Vancouver in 23 years.
Starlight Investments has reached an agreement to buy the North Shore's 88-suite Parklea Apartments, at 151 East Keith Road, from an unnamed family owner for $25.5 million, HQ Commercial principal Mark Goodman told Business in Vancouver February 7.
Goodman helped broker the transaction along with his father David Goodman, who is a fellow principal at HQ Commerical. Both also publish the Goodman newsletter.
"The buyer's rationale was that it is a very low-risk building that is well maintained and has great views from the third floor on up," Mark Goodman said. "It is virtually 100% full."
One remarkable aspect of the transaction is that the capitalization rate for the 15-storey tower is a low 3.3%.
A capitalization rate is the ratio between an asset's net operating income and its original price. For example, a $1 million property that generates $100,000 annually after expenses would give the owner a 10% capitalization rate.
Capitalization rates tend to rise and provide better returns for the owner when there is more risk at finding quality tenants to replace any who leave.
The 3.3% capitalization rate is low compared to other North Vancouver transactions but is hard to compare given that other rental buildings that have sold in the area have been wood-frame structures and not any of the other 12 concrete mid-rises or high-rises.
"Wood-frame buildings and concrete ones are different animals," Goodman said.
The space has a net rentable area of 56,465 square feet, meaning the structure sold for about $452 per square foot.
Daniel Drimmer founded Starlight Investments Ltd. in 2011. He is a third generation real estate investor with more than 18 years of Canadian real estate experience.
Starlight has more than $3.5 billion of assets under management and a portfolio that includes 27,000 prime multi-family units in more than 350 properties located across Canada and the southeastern U.S., according to its website.
