With more than a billion in asset dispositions last year, Winnipeg-based Artis REIT has stepped back from plans to exit the retail space in Western Canada.
Avison Young was retained to sell 17 properties in Alberta and Saskatchewan totalling more than a million square feet in 2023. The properties encompassed 57 buildings with 153 tenants. Average occupancy within the portfolio in fall 2023 was 85 per cent.
The offering included all of Artis’ retail properties in Saskatchewan, Grande Prairie, Fort McMurray and Edmonton. Avison Young described it as one of the largest retail offerings in the country in 2023, and it could have been a blockbuster deal for 2024.
But that didn’t happen, and Artis continues to hold 19 retail assets with occupancies last fall averaging 92.8 per cent. All of the assets are within Western Canada.
“We had a range of retail assets that were potential dispositions last year, some were through Avison, others involved non-brokered deals with private buyers,” Artis president and CEO Samir Manji told Western Investor. “In light of the other transactions (retail, industrial and office) that were part of $1 billion of dispositions last year, we took the remaining retail assets that were listed with Avison off the market.”
The retail assets Artis retains include the Crowfoot Village and Sunridge Spectrum properties, the sale of which was announced Dec. 22, 2023, as part of a planned sale of eight commercial assets in Calgary and Winnipeg worth a total of $222 million.
The billion-dollar disposition drive last year most recently saw 220 Portage Ave., the 17-storey office building in the heart of Winnipeg that Artis calls home, sold to a private investor.
Built in 1966 and extensively renovated in 2017, the property sold for a price reported by media to be in the range of $30 million. Key tenants include the Royal Bank of Canada and Norima Consulting Inc., in addition to Artis. Current occupancy is close to 90 per cent, whereas Colliers reported occupancy in downtown Winnipeg office space averaging 83.2 per cent at the end of 2024.
Strong occupancies ensure stable cash flow from 220 Portage, whereas downtown Winnipeg as a whole is seeing downward pressure on lease rates. Colliers pegged office rents in Winnipeg at $15.41 per square foot at the end of 2024.
The divestments by Artis were part of a business transformation plan that began in March 2021.
“The first step is unlocking value through the monetization of certain assets,” Artis said at the time. “This will be achieved by evaluating and completing the sale of a portion of its industrial, office and retail assets in an opportunistic and disciplined manner, with the goal of maximizing value on a tax-efficient basis.”
In November 2023, Artis announced that it had retained BMO Nesbitt Burns Inc. to provide financial advisory services to the REIT as part of a strategic review process “to consider and evaluate strategic alternatives that may be available to the REIT to unlock and maximize value for unitholders.”
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