Jesta Group plans to complete its planned $500-million Toronto bulk-condo purchase program over the short term.

Anthony O’Brien, senior managing director at Jesta, told Connect that the company plans to execute its strategy fully over the next five years.

“The strategy is buy, rent and sell, essentially,” said O’Brien in an interview.

After purchasing the units at a discount, Jesta will sell each one individually to generate strong returns as Toronto’s hard-hit condo market recovers, he added.

Jesta plans to invest the funds in bulk purchases of unsold Toronto condominium inventory, targeting more than 1,000 units over the next 12 months.

The family-owned global real estate firm entered the Toronto residential market with the acquisition of a $30-million bulk-condominium portfolio in downtown Toronto, the first investment as part of the $500-million program. The deal is among the first large-scale bulk condo inventory acquisitions of its kind in the city, according to Jesta.

The acquired portfolio is located near Toronto Metropolitan University and within walking distance of transit, shopping and recreation in one of downtown Toronto’s established urban corridors.

Jesta is actively pursuing additional bulk acquisitions of existing developer condominium inventory in high-quality downtown Toronto locations.

“Most of our focus in Toronto is really in the core of downtown,” said O’Brien. “We’re not looking at more of the suburbs or outlier regions at this point with this strategy.”

The company is partnering with select family offices and institutional investors as it expands the strategy.

The move comes as many condo developers across Canada are grappling with expenses tied to slow presales. In several cases, would-be buyers have backed out of presale contracts, forfeiting deposits worth thousands of dollars in each instance.

The transaction was brokered by Jeff Lever, a Cushman & Wakefield executive vice-president. When the investment program was announced, Lever said

O’Brien said Jesta has assigned Cushman & Wakefield to represent the company in all of its bulk-condo purchase transactions.

When the deal was announced, Lever said Jesta is moving early and decisively in what the commercial real estate advisory firm expects to become a “significantly more active segment of the Toronto market.”

O’Brien said Montreal-based Jesta is looking to expand its program to other parts of Canada.

“We’re actively looking at a few in Montreal right now,” he added. “And, and we do have an interest to look at Vancouver. We just haven’t started yet.”

Ultimately, Jesta is looking to capitalize on the market’s recovery while saving considerable sums on development.

“We are a developer at heart,” said O’Brien. “And in recent years, we’ve realized that you can buy this inventory at a price significantly below what it costs to build it today.”

Pictured: Downtown Toronto

Photo: Shutterstock