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First Capital Grabs 2.1-Acre Development Site in Toronto Amid Flurry of Deals

Developer and Mall Owner Announces Land Assembly in Midtown, Raising $200 Million in Equity
July 10, 2018
The Hazelton Hotel in downtown Toronto, of which First Capital is now the majority owner after acquiring a 60 per cent stake for $44.4 million.

Toronto-based First Capital Realty Corp. is about to take 100 per cent control of 2.1 acres of development land in the key Yonge and Eglinton area of Canada's largest city, the company said as part of a flurry of development announcements.

The TSX-listed developer and shopping centre owner entered into a binding agreement to acquire a land assembly at the corner of Yonge Street and Roselawn Avenue where it already owned 37.5 per cent of the assembly through its ownership interest in Main & Main Urban Realty LP. It will be buying the remaining 62.5 per cent interest for about $71.9 million, excluding closing costs, making the total acquisition cost for the land assembly about $102 million.

"[It is] a high growth node that is well served by public transportation and amenities, and is an area targeted to accommodate significant population growth," said First Capital in a release, noting the land has corner exposure with 330 feet of prime frontage along Yonge Street. The property currently has approximately 70,000 square feet of retail space and 122 surface parking stalls.

The deal is expected close in late 2018.

That deal and others coincide with an equity offering from First Capital that saw it agree to sell 9,757,000 common shares on a bought deal basis at $20.50 through a syndicate of underwriters led by CIBC Capital Markets and TD Securities Inc. for gross proceeds of $200 million. There is an over-allotment option that could take the total raised to $230 million.

Other deals announced by First Capital in conjunction with the release on the equity raise including acquiring a 60 per cent interest in the Hazelton Hotel in downtown Toronto for about $44.4 million, excluding closing costs. The property is located immediately adjacent to First Capital's Yorkville Village Mall entrance and includes 225 feet of Yorkville Avenue frontage.

"This acquisition offers near and long-term value creation opportunities for the hotel and it will provide a tremendous opportunity to continue to expand the company's vision for the neighbourhood," First Capital said, in its release. "The purchase price was below current market value as a result of a call option held by the company on the property. The vendor, who originally developed the property as Toronto’s first 5-star hotel, will retain a 40 per cent interest and will continue to manage the hotel."

First Capital said it has also entered into a binding agreement to acquire a 100 per cent interest in the ground-floor retail component of 775 King Street West in Toronto for about $22.8 million, excluding closing costs. The property has three separate fully leased retail units of 18,000 square feet, anchored by an 11,650-square-foot Shoppers Drug Mart at the base of a 17-storey condo tower developed by Minto. The deal is expected to close in the third quarter of 2018.

In Vancouver, First Capital has an agreement to buy 100 per of about 30,500 square feet of brand new ground floor retail space with 90 below grade parking stalls in Kerrisdale, an affluent neighbourhood on Vancouver's west side, southwest of the downtown core. The purchase for the deal, expected to close in the third quarter of 2018, is $21.8 million, excluding closing costs.

Garry Marr, Toronto Market Reporter  CoStar Group   
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