A recent $79 million deal for a pair of Royal Oak retail parks in Calgary’s northwest was, and has the potential to be, one of the biggest retail deals made in the city this year.
Royal Oak Park and Royal Oak Place, both built by Certus Developments, were sold to Salthill Capital in a deal facilitated by Barclay Street Real Estate this summer.
Manish Adiani, vice president and partner at Barclay Street, along with vice president George Larson closed the deal—one that Adiani said reflected a return of interest in Calgary’s retail market for institutional investors.
“It just shows that national companies or institutions are now looking at Calgary and Alberta favourably. Salthill Capital is a good example. They’ve been fairly active in the last two years. I think they’ve been the most active institution buying some grocery-anchored retail shopping centres,” he said.
That interest is returning to Calgary as post-pandemic spending at retail has increased, said Adiani.
“Alberta with the 2014–2015, oil price slumps we saw a lot of institution money left Alberta. After COVID, I’d say probably 2021, Q3 second half of 2021, is where we’ve seen activity pick up and it’s been steady. That has attracted that institutional money again,” Adiani said.
“It’s good to see that activity. I think it creates that positive outlook for Alberta, and that probably will attract more institutional money.”
Value to be found by investors in Calgary retail
Adiani said that the deal reflected the value proposition offered by the stable portfolio of retail renters at both parks.
“I think the value is created by the center’s design, and also their tenants.”
“The tenant mix that we have in those assets are fantastic. I think we’ve got everyone there from nationals, to mom-and-pop shops—local brick-and-mortar kind of tenants. They’re amazing.”
Retail tenants include the Shoppers Drug Mart, Tim Hortons, and the Bike Shop.
Retail sales, according to statistics from the Government of Alberta, rose to $8.71 billion in April, up from $8.4 billion during the same month in 2023.
Alberta was the fourth-highest province for retail sales during April, behind Ontario, Quebec, and B.C.
Health and personal care retail, which represents a number of the tenants in both parks, saw a 17 per cent increase year-over-year in that sub-sector of the retail trade in the province.
Adiani said that the $79 million price tag for the deal reflected an analysis done by Salthill on the long-term value of the two retail parks.
“Really the driver off of transacting in these properties is the basic calculation of net rent, what the total income generated of the centre is, plus what the upside is in the near future, and if it’s a 10-year hold analysis that a purchaser is looking at.”
She said that for local consumers it was unlikely that anything would change for their day-to-day visits.
“The deal doesn’t necessarily affect the consumer directly, because the businesses are still there operating. They will continue to operate because most of the businesses there have long-term leases.”
He said that indirectly, consumers would be affected as it would be likely rents would continue to increase at the retail locations along with the overall increase in rents seen in retail locations across the country.
“That’s just the norm. I think that’s kind of universal, it’s not very specific to these assets. So, a sale of this size for this transaction doesn’t necessarily impact the consumer on their day-to-day purchases in spending.”
