Groupe Mach has agreed to acquire approximately 2,000 rental apartment units from Groupe Huot and assume $560 million in mortgages, according to multiple reports.

The transaction is being conducted under a court-monitored sale process after financially troubled Huot filed for bankruptcy protection earlier this year. Both companies are based in Montreal and the reports indicate that all of the properties are located in Quebec.

Bloomberg reported that Mach will buy about half of Huot’s outstanding debt and underlying assets. The Superior Court of Quebec approved Mach’s agreement with first-tier and second-tier creditors, mainly banks and institutional lenders on Friday, according to the wire service.

Some private investors stand to lose millions of dollars, but Mach President Vincent Chiara plans to give them a minority stake in the assets as a sign of good faith.

“We will have to refinance this portfolio,” he told Bloomberg. “The portfolio’s average [interest] rate is not far from 10%, whereas the market may be at 5% or 6%. Out of $600 million, that’s $24 million a year that goes down the drain. We need to stop this.”

The deal illustrates Mach’s ongoing strong appetite for multi-family real estate assets. Mach plans to redevelop a vacant former federal building in downtown Gatineau, Que., as an apartment building. The company is also redeveloping a former federal building in Ottawa as a rental-housing asset.

Photo: Groupe Huot