Crombie REIT (CRR.UN-T) says it has a binding agreement to acquire the remaining 50 per cent interest in Zephyr, a two-tower mixed-use residential and retail property in Vancouver, from its development and operating partner Westbank Corp. for $133 million.

The transaction means Crombie will own 100 per cent of the rental residential component of the property at 1661 Davie St., in addition to its existing full ownership of the ground-floor, grocery-anchored retail portion of the asset. The retail portion is anchored by a Safeway grocery store.

The transaction is to close in October, subject to approval from Canada’s Competition Bureau.

"We are pleased to announce that upon closing of this transaction, Crombie will become the sole owner of one of Canada's premier rental residential assets. Zephyr is in one of the country's top markets and further enriches the quality of our rental residential platform," Mark Holly, president and CEO of Crombie REIT, said in Monday’s announcement. "The acquisition delivers on our strategy of optimizing our portfolio and to own and operate high-quality assets in vibrant community hubs that serve the everyday essential needs of Canadians. 

“Our strong financial condition allowed us to pursue this important opportunity providing immediate recurring cash flow with significant future growth potential."  

About Vancouver's Zephyr towers

Completed in 2021, Zephyr is a mixed-use rental residential asset which includes other necessity-based retailers, in addition to the grocery store, in its podium which fronts Davie Street and connects the two towers. 

Located in the West End of downtown Vancouver, many units in the towers offer panoramic views of English Bay and Stanley Park. Zephyr’s two residential towers comprise 330 rental suites, and were 93.9 per cent occupied at June 30. 

The project offers a high walkability score - 97 out of 100 - in a city ranked among the most walkable cities in the world.

As a result of the acquisition, Crombie will consolidate Zephyr and assume the additional 50 per cent of existing mortgages, approximately $89 million, with remaining term to maturity of over three years. The balance of the purchase price will be funded by drawing on a new unsecured bank credit facility, the announcement states. 

Together, the debt has a blended interest rate of 3.4 per cent.

Westbank has sold, or reduced its stake, in several major properties this year as it has moved to reduce its debt, including two major transactions announced in March.

Allied Properties REIT (AP-UN-T) announced it would acquire a 90 per cent stake in Vancouver's distinctively designed 400 West Georgia office tower from Westbank in a financing transaction which valued the property at $395 million. Allied also announced it was increasing its ownership of 19 Duncan St. in Toronto to 95 per cent in a transaction which valued that property at $525.7 million.

The LEED Platinum 400 West Georgia offers over 350,000 square feet of office space and retail, as well as 163 underground parking stalls.

The LEED Gold, 57-storey 19 Duncan is a redevelopment of the former Southam Press Building in Toronto. It comprises 154,074 square feet of office space, 15,411 square feet of retail, 464 rental-residential units, common areas and other facilities, plus 131 underground parking stalls. 

About Crombie REIT, Westbank

Crombie REIT is based in Stellarton, N.S., and is one of Canada’s largest owners, operators and developers of real estate assets. Crombie's portfolio primarily includes grocery-anchored retail, retail-related industrial and mixed-use residential properties.

As at June 30, Crombie’s portfolio contained 304 properties comprising approximately 19.3 million square feet, inclusive of joint ventures at Crombie's share, in addition to its pipeline of future development projects.

Westbank is Vancouver-based, privately owned investor, developer and real estate owner. The company, established over 30 years ago, lists Vancouver, Toronto, Seattle, Tokyo and San Jose and core cites for its activities.

Its developments include residential, hotels, retail, creative workspace, district energy, affordable housing, exhibitions and public art, with over $50 billion of projects completed or under development.