Talinn, Estonia-based developer Hepsor AS launched a Canadian subsidiary earlier this year and hasn’t wasted any time in becoming involved with its first projects.
Andres Pärloja, chairman of Hepsor’s supervisory board, told RENX in an email interview the company started exploring expansion into other countries after the outbreak of the war in Ukraine due to potential geopolitical tensions in that region for decades to come.
Canada was seen as a stable market with a growing population and a shortage of housing, storage and logistics facilities.
“If you combine demographics with business environment, then Canada probably ranks as one of the most attractive countries for our line of business,” Pärloja said.
“There is one thing that we have noticed in Canada, probably because of your relatively low energy prices compared to Scandinavia: the energy efficiency and green thinking in construction solutions seem to be more slogans than actual reality.
“Hepsor, in its home markets, is known as an innovator in green, energy-efficient construction solutions and this might well be something where we could use our experience in Canada and add value to the local market.”
Hepsor has been active in Estonia for 12 years and in neighbouring Latvia for about half of that time. It has completed more than 1,600 new homes and 387,500 square feet of commercial space. Another 1.9 million square feet of development is planned.
Pärloja said about 60 per cent of Hepsor’s European development is residential and the remainder is divided among industrial, office and retail.
He’d be comfortable being involved in all of those asset classes in Canada once the company is more familiar with the market.
Partnership with Elysium Investments
Toronto-based Elysium Investments, the real estate offshoot arm of the Minkids Group family office, has become Hepsor’s main land development and equity partner in Toronto.
Elysium was launched by Harley Mintz, Sayf Hassan and Jamie Torpey earlier this year. Torpey is also a partner in VPH Group, a Vilnius, Lithuania-based commercial real estate developer and manager for tenants across the Baltic countries.
Hepsor executives will use Elysium’s downtown office space while in the city before the company establishes a permanent staff and office of its own in the next six to nine months.
Hepsor is Elysium’s limited partner in the Weston Limited Partnership, which has plans to develop a mixed-use multifamily project on a 1.78-acre site at 3406-3434 Weston Rd. in Toronto that was acquired for $19.8 million through a receivership sale in June.
Plans for Weston Road site in Toronto
The Weston Road site has a limited partnership ownership structure jointly controlled by Pinemount Developments Ltd. and Elysium.
Pinemount, a Toronto-based real estate development and management firm focused on delivering mid- and high-rise multifamily buildings within a two-hour drive of its hometown, is the lead development manager.
The Weston Road site is occupied by a fully tenanted, 19,363-square-foot single-storey commercial plaza built in 1960 that can provide holding income before redevelopment.
While the intention is the construction of a rental apartment project Pinemount and Elysium would develop, own and manage, the site could potentially be taken through the entitlement process and sold to another developer if the right offer is made.
The newest Toronto multifamily development site
Hepsor is also part of the Elysium Isabella Limited Partnership that assembled and acquired three properties from private property owners at 164-168 Isabella St. in downtown Toronto.
The existing single-family homes on the site have heritage features Pärloja said will be retained as an architectural element within the podium of a proposed residential tower once rezoning and other approvals are received. That’s expected to take up to 30 months.
There are plans for a 450,000-square-foot high-rise development, but the partners have not yet decided whether to sell at that point or carry on to the construction phase.
Hepsor’s future Canadian plans
Negotiations are under way for two more Toronto development sites Pärloja said would be similar in nature to those on Weston Road and Isabella Street.
In addition to its Toronto activity, Pärloja said Hepsor is also in negotiations on a 200,000-square-foot industrial development deal in Montreal where it would partner with a local developer.
“Canada’s demographic growth pattern is rather aggressive,” Pärloja said. “It will create a lot of opportunities for sure, but at the same time it involves a lot of serious risks.
“I hope the Canadian government has the smarts to make the most out of these opportunities and to successfully navigate around possible risks.”