A provincially backed investment fund has made its first move into Toronto’s battered condo market, paying $22.3M for 43 unsold units and shifting them into long-term rentals.

High Art Capital acquired the condos at Line 5, the 1,005-unit, two-tower development at 117-127 Broadway Ave. near Yonge and Eglinton, The Globe and Mail reported, citing CoStar’s review of land-transfer records.

The purchase works out to about $518K per unit. That is well below current advertised pricing at the development, where available one-bedroom units have recently been marketed from about $760K and two-bedroom units from more than $1.1M. The exact unit mix in High Art’s portfolio was not disclosed.

Line 5 was developed by Reserve Properties and Westdale Properties and launched before the pandemic, when investor demand for new Toronto condos was drastically different.

Rather than reselling the units individually, High Art intends to operate them as rentals. The firm’s broader strategy is to acquire blocks of completed, unsold GTA condos and turn them into rental portfolios, with Del Condominium Rentals and Menkes Condominium Rentals supporting leasing and tenant management.

The Line 5 purchase is the first acquisition for High Art’s $1.3B housing initiative, backed by up to $300M from Ontario’s Building Ontario Fund. It plans to acquire about 2,200 condos, including 550 affordable rental units.

The deal lands as developers continue to grapple with weak sales. Just 215 new GTA condos sold in August, 78% below the 10-year average, according to Altus Group data released by BILD.