Winnipeg-based Shindico Realty Inc. has acquired a portfolio of nine industrial outdoor storage (IOS) assets occupied by TransX, a division of Canadian National Railway Co.
The deal closed June 30 and includes 211 acres of yard space and 372,700 square feet of industrial space, with site coverage across the portfolio averaging five per cent.
The purchase builds on a long-standing partnership with the Tolaini-Banville family, which established TransX in 1963 and eventually sold the business to CN Rail in 2019 but retained the real estate.
Shindico has been manager of the real estate portfolio, and when the family looked for options to diversify its activities it stepped up as a buyer.
“We were already managing it for the family,” Justin Zarnowski, general counsel for Shindico, told Western Investor. “We said we’d happily purchase the equity share as well as being the managers, because we have a strong conviction in the properties.”
The deal unfolded as a share sale. The purchase price was not disclosed.
“This portfolio stands out as a rare collection of IOS assets in top-tier markets,” said Shindico founder and chair Sandy Shindleman said in announcing the deal. “With minimal site coverage and purpose-built functionality, these properties provide the kind of operational flexibility that is in high demand and short supply. They strengthen our national industrial footprint and align with our long-term strategy to own and manage irreplaceable logistics real estate.”
The portfolio includes locations in Calgary, Edmonton Regina, Winnipeg and Montreal, as well as two sites in each of Greater Toronto and Metro Vancouver. The sites further Shindico’s growing industrial portfolio, including the 22-acre Plessis Business Park in Winnipeg, part of a portfolio of leased and managed properties of more than 170 assets occupied by more than 4,700 tenants.
The four sites in B.C. and Alberta break new ground for Shindico, which got its start in Portage La Prairie in 1975. It has since grown beyond Manitoba to Saskatchewan and Ontario as well as Arizona, and began exploring opportunities in Alberta earlier this year.
Shindleman was looking at acquisition opportunities in the Calgary office sector in January, but B.C. has always been a more challenging proposition given asset pricing. But the TransX portfolio gives it 22,100 square feet of industrial space on 13 acres in New Westminster, giving it a foothold in Metro Vancouver’s stable and perennially tight industrial market.
“This is a partnership that if you would have asked us two years ago, ‘Is this where Shindico’s going to deploy a lot of capital?’ probably we wouldn’t have said yes,” Zarnowski said. “But it was the right fit, the right opportunity and we were able to get it done.”
Demand for industrial outdoor storage space has positioned such assets in a class of their own, with the sale of 1371 McKeen Ave. in North Vancouver heralding its coming of age.
“There’s a number of large institutional investors around the globe showing interest in IOS, which offers land with future development potential, as well as current income,” said Tony Quattrin, vice-chair with CBRE Ltd.’s National Investment Team in Vancouver in a statement at the time. “With the limited amount of industrial land in Metro Vancouver, the investor here took a long-term view that it was a good investment for reasonably priced land supported by a strong holding income.”
Shindico notes that well-located outdoor storage sites have seen strong demand, as zoning restrictions and urban development pressures have limited new supply.
“Shindico sees long-term value in acquiring and managing properties that offer logistics users rare access to flexible, open land in major metros,” the company said in announcing the TransX purchase.
“These are really institutional grade sites,” Zarnowski added. “They’re really coupon-clipping sites. There’s no chance that [CN] is not going to be paying us rent.”
