Leyad buys Mega Centre in Quebec Lebourgneuf: $66.5 million • RENX

Leyad continues a busy 2024 with the follow-on off-market acquisition of the 341,000-square-foot Mega Centre Lebourgneuf shopping center in Quebec City from Choice Properties and Ontario Teachers’ Pension Plan for $66.5 million.

It’s the second major retail transaction in Quebec City in less than a month. Groupe Mach and Sarees Investments recently acquired Les Promenades Beauport, which offers more than 125 stores and services in approximately 600,000 square feet of gross leasable area, from Cominar for $80 million.

“Transaction activity has increased in retail,” Leyad CEO Henry Zavriyev told RENX. “I think the market has become more confident about the product.”

Leyada’s recent retail acquisitions have been public entities that, Zavriyev said, “were the best managers and owners of real estate.

“They’ve done a great job of managing these properties over the last 20 or 30 years, and that’s part of our job. There’s really limited capital to go around. These are really well-maintained properties.”

Selling points of Mega Centre Lebourgneuf

Zavriyev was sold on the Mega Centre Lebourgneuf location at 5600 Boul. des Gradins because it is located near major highways and is easily accessible to both local shoppers and visitors from nearby regions. The residences and other nearby shops make it an attractive hub in Quebec’s capital.

The open-air shopping center is home to 34 tenants, including Costco, Canadian Tire, Sail, Maxi, Linen Chest, Value Village, Dollarama, The Home Depot, Structube, Sports Experts and Staples.

“These are all your national AAA retail tenants,” Zavriyev explained. “It fits the profile of the centers we’ve been buying over the last year and will continue to buy.”

There were four vacancies at Mega Centre Lebourgneuf, but two were filled during Leyada’s due diligence process, and Zavriyev is confident the remaining two will be filled soon.

“There is a lot of interest and renting these spaces is quite easy because they are small,” Zavriyev explained.

The potential for future high-density housing development

According to Zavriyev, the 43-acre site has 1,550 parking spaces and will be prime for high-density housing development in seven to 10 years. Zavriyev believes that between 4,000 and 5,000 units could be built there.

Montreal-based Leyad is exploring other retail acquisitions, and Zavriyev plans to close several before the end of the year.

“These are really well-located shopping centers with AAA tenants that have very good leases. We are confident that they will be good tenants regardless of how the market develops over the next few years,” he said.

“I think there’s a dislocation in retail between pricing and what I think should be the real value,” Zavriyev added. “It’s just underpriced right now because there’s not enough liquidity in retail.

“There’s liquidity in residential and industrial, but I think that’s going to change in the next few years. So right now we’re just looking for yields, and we can get them in retail. As long as the tenants are domestic and the covenants are there, we’re very happy with the product.”

Leyada’s other retail acquisitions in 2024

Leyad’s acquisition of Mega Centre Lebourgneuf follows other retail acquisitions by the company this year.

• Cornerstone Prince Albert in Prince Albert, Saskatchewan was acquired from Choice Properties and Springwood Developments for $94 million in June. The power centre comprises approximately 440,000 square feet of leasable space and major tenants include Sobeys, Rona, Michaels and Shoppers Drug Mart.
• Leyad acquired the Garden City Square Power Center at 783-915 Leila Ave. in Winnipeg from Primaris in June for $32 million. The 162,209-square-foot center sits on 15.7 acres and is fully leased to tenants including Staples, Mark’s, Liquor Mart, Moores, McDonald’s, Marshalls, Dollarama and Planet Fitness.
• Leyad acquired the four-story, 79,000-square-foot Johnston Terminal at 25 Forks Market Rd. in Winnipeg for an undisclosed price from Winnipeg-based Artis REIT in April. The multi-tenant retail, commercial and office building was originally a railroad warehouse in the 1920s before being renovated.
• Leyad began the year by acquiring the 182,031-square-foot North Sydney Mall, located on a 21.23-acre site in North Sydney, Nova Scotia, from Econo-Malls in February for an undisclosed price.