Dundee makes a return to Ottawa in 2010
A black-and-white help-wanted ad published earlier this month sums up a significant shift in Ottawa’s commercial real estate landscape over the last year.
© Google Street View image
150 Metcalfe St.
“Dundee Realty is back in the Nation’s Capital.”
After an absence of more than two years, the real estate arm of the Toronto-based wealth management firm was active in Ottawa’s resurgent real estate market in 2010.
It picked up several assets brought to market as part of larger portfolio sales, namely a 23-storey class-A office tower downtown, industrial space on St. Laurent Boulevard and several suburban offices in deals totalling roughly $76.6 million.
Add in its purchase of the Gateway Business Park and office buildings on Innovation Drive in Kanata in late 2009, and its local acquisition total climbs to more than $108 million.
“We’ve always wanted to come back to Ottawa,” said Bruce Traversy, principal of Dundee Real Estate Asset Management, during October’s real estate forum.
“The underlying stability can smooth out a lot of the bumps.”
In 2007, Dundee sold several properties – 222-230 Queen St., 110 O’Connor St., and 700, 750-770 Palladium Dr. – to GE Canada Real Estate Equity Holding Co. for almost $218 million, according to local real estate appraisal and advisory firm Juteau Johnson Comba Inc.
The sale was part of a broader portfolio sale, worth more than $2.3 billion, as Dundee divested its slow-growing eastern Canadian assets at close to the peak of their valuations.
Not long after, however, attitudes started to change about Dundee’s exposure to the western Canadian market in general, and Calgary in particular.
“As that perception deteriorated, so did their share price,” said one analyst, who asked not to be named.
That perception, combined with the overall decline in the commercial real estate market, sent Dundee REIT’s share price plummeting from $46 in June 2007 to a low of $7.30 at the end of the 2008.
Since then, Dundee has diversified its asset base. In 2010 alone, it closed or secured under contract more than $928 million in Canadian acquisitions, including those in Ottawa.
“Dundee took advantage of a combination of very attractive acquisition conditions and significant availability of high-quality assets in the National Capital Region to grow rapidly,” said the analyst.
Investor reaction has been very positive, with shares now hovering around the $30 mark.
There are signs Dundee may still be shopping for assets. At the end of November, the REIT announced plans for a $100-million equity offering, with the proceeds going towards acquisitions, as well as general trust purposes.
The analyst said there are also rumours that Dundee may attempt to grow in 2011 by acquiring another publicly traded entity.
» 2340 St. Laurent Blvd. (industrial)
-114,724 sq. ft.
» 150 Metcalfe St. (office)
-109,374 sq. ft.
» 2200 & 2204 Walkley Rd. (office)
-156,551 sq. ft.
» 2625 Queensview Dr. (office)
-46,156 sq. ft.
Source: Dundee REIT