Creation of Joint Venture Partnerships with Montez Corporation ("Montez"), whereby Montez will acquire a 50% interest in The Marlstone and partner to advance Barrington Street and Brunswick Place through the entitlement process, resulting in value realization and enhanced balance sheet flexibility.
The partnerships establish a stable revenue stream through Crombie's development and management services platform, delivering immediate cash flow through fee income across all three projects.
Enables Crombie to continue to prudently manage its capital allocation and balance sheet capacity.
NEW GLASGOW, NS, April 11, 2025 /CNW/ - Crombie Real Estate Investment Trust ("Crombie") (TSX: CRR.UN) today announced that it has signed a joint venture agreement with Montez Corporation, a leading integrated multi-asset real estate investor, developer, and asset manager, whereby it will sell 50% of The Marlstone, a mixed-use residential rental project currently under development, in Halifax, Nova Scotia, to Montez (the "Marlstone Joint Venture"). Crombie and Montez have also formed two separate joint venture partnerships to advance two key assets, Barrington Street and Brunswick Place, in Halifax, Nova Scotia (the "Entitlement Partnerships"). The Entitlement Partnerships aim to unlock embedded value from Crombie's mixed-use residential development pipeline while reducing future capital requirements, accelerating value creation, generating revenue from development services, and preserving optionality with respect to development timing and delivery.
Crombie Real Estate Investment Trust logo (CNW Group/Crombie REIT)
"These partnerships represent a significant milestone in Crombie's value creation roadmap," said Mark Holly, President and CEO of Crombie. "The partnerships provide immediate stabilized cash flow through predictable management fee income, while maintaining flexibility on how and when to proceed as each property advances through entitlement approvals. Importantly, the balance sheet capacity freed up by these arrangements enables us to continue our strategic investments in our core necessity-based retail portfolio, further enhancing the growth profile of our portfolio and creating long-term value for Unitholders."
"We're proud to be entering into a long-term strategic partnership with Crombie, fully supported by institutional capital, to deliver this best-in-class residential development and unlock future opportunities that will benefit the Halifax region," said Manfred Lau, President and CEO of Montez.
The Marlstone Joint Venture
Crombie has entered into a joint venture arrangement with Montez which will see Montez acquire a 50% interest in Crombie's under development residential project The Marlstone, in Halifax, Nova Scotia for a total purchase price of $32.2 million. Crombie received $19.2 million in cash proceeds, with Montez assuming $13.0 million in construction financing debt. Crombie will act as development, construction, leasing, and asset manager for the 291-unit project earning development and management service fees.
The Entitlement Partnerships
Crombie and Montez have entered into two joint venture arrangements at Barrington Street and Brunswick Place, potential future mixed-use sites, with the objective of advancing the entitlement and design process to define a built form that maximizes the development potential for each site. On an ongoing basis, Crombie and Montez will share all costs equally. Crombie will manage all aspects of the Entitlement Partnerships and earn development and management service fees, enhancing cash flow. Both the Barrington Street and Brunswick Place properties will remain wholly owned by Crombie throughout the entitlement period. Once entitlement is achieved, both parties will align on the optimal path forward, including timing and participation.
Strategic Highlights:
Immediate Value Recognition
The Marlstone Joint Venture results in value realization, confirming our underwriting process through third-party validation.
Accelerated Entitlement Value Creation While Preserving Optionality
Crombie has structured the Entitlement Partnerships to provide a path to unlock the embedded value within its development pipeline, advancing two assets through the entitlement, design, and approval process. While sharing entitlement costs, Crombie and Montez retain flexibility to determine the optimal path forward once projects reach the final entitlement phase. This structure provides the ideal combination of accelerated value creation and strategic optionality, while also earning development management fees, ensuring Crombie can make future decisions that maximize Unitholder value based on market conditions and its capital allocation priorities at that time.
Enhanced Capital Allocation and Flexibility
Crombie expects construction of The Marlstone to be completed during the first half of 2026. Sharing past and future costs with Montez enhances capital efficiency while preserving financial flexibility. Partnering on The Marlstone, Barrington Street, and Brunswick Place will enable Crombie to optimize balance sheet deployment toward strategic growth initiatives within its necessity-based retail portfolio.
Stabilized Development and Management Services Revenue
Crombie will earn recurring development and management fees across all three partnerships, establishing a predictable revenue stream that further stabilizes and enhances visibility of an important cash flow contributor.
Strategic Alignment with Quality Partner
Following comprehensive evaluation, Montez emerged as the ideal partner, bringing complementary strengths including multi-asset real estate investment; institutional capital relationships particularly in Atlantic Canada; and a shared long-term strategic vision that aligns with Crombie's value creation approach.
Founded in 2002, Montez is an integrated real estate investment, development, and asset management firm, investing on behalf of institutional investors and the pension plans of several Fortune 500 companies. As a long-term, thematic investor, Montez has experience across multiple asset classes, including retail, office, industrial, multi-family, alternatives, and mixed-use residential projects throughout Canada. Montez manages over $3.3 billion in equity across income, growth, urban, and development strategies. Montez's portfolio currently includes more than 100 properties totaling 27 million square feet.
Scotiabank acted as an exclusive financial advisor to Crombie on these transactions.
About Crombie REIT
Crombie invests in real estate with a vision of enriching communities together by building spaces and value today that leave a positive impact on tomorrow. As one of the country's leading owners, operators, and developers of quality real estate assets, Crombie's portfolio primarily includes grocery-anchored retail, retail-related industrial, and mixed-use residential properties. As at December 31, 2024, our portfolio contains 304 properties comprising approximately 19.1 million square feet, inclusive of joint ventures at Crombie's share, and a significant pipeline of future development projects. Learn more at www.crombie.ca.
Cautionary Statements
This press release contains forward-looking statements that reflect the current expectations of management of Crombie about Crombie's future results, performance, achievements, prospects, and opportunities. Wherever possible, words such as "may", "will", "estimate"," anticipate", "believe", "expect", "intend", and similar expressions have been used to identify these forward-looking statements.
Specifically, this press release includes forward-looking statements regarding the timing of completion for The Marlstone, Crombie's ability to earn recurring development and management fees, and Crombie's ability to make decisions that maximize Unitholder value. Forward-looking statements necessarily involve known and unknown risks and uncertainties. A number of factors, including the availability of labour and construction materials, management fees, tenant rents, building sizes, financing, and the cost of any such financing, capital resource allocation decisions, and general economic conditions, and those discussed in the 2024 annual Management's Discussion and Analysis under "Risk Management" and the Annual Information Form for the year ended December 31, 2024 under "Risks", could cause actual results, performance, achievements, prospects, or opportunities to differ materially from the results discussed or implied in the forward-looking statements. These factors should be considered carefully, and a reader should not place undue reliance on the forward-looking statements. There can be no assurance that the expectations of management of Crombie will prove to be correct, and Crombie can give no assurance that actual results will be consistent with these forward-looking statements.
