CHC Realty Capital Corp. recently announced that it has entered into an agreement to acquire a property in London, Ontario. The property is a 17-storey apartment building located at 675 Richmond Street in downtown London, approximately 2.0 km from the University of Western Ontario.

The purchase price for the property was $55.0 million, subject to adjustments and excluding acquisition costs. The building has 368 beds in 187 apartments, as well as 12,642 square feet of commercial space. Built in 1998, the property is currently undergoing renovations, which are scheduled to be completed in 2015.

At present, the property is 84 per cent occupied (including vacant units under renovation). Average monthly rents are approximately $1,670 per unit and the property generates annual effective gross income of approximately $3.8 million. CHC expects year one net operating income of approximately $2.75 million, resulting in a going-in capitalization rate of approximately 5.05 per cent. The vendor has agreed to pay CHC an income guarantee on monthly gross rental income from the property based on 96 per cent occupancy for a period of one year from the closing date.

“675 Richmond is a trophy asset which we are pleased to be able to acquire for CHC’s student housing business,” said Mark Hansen, President and CEO of CHC. “It is an institutional quality building located close to one of Canada’s pre-eminent universities and is in the heart of downtown London where students want to live. Although it has been rented mainly to students to date, it has still been run as a traditional apartment building and we believe that we can add value by focusing the building solely on student rental.”