Crombie REIT enhances capital efficiency with Montez-backed joint ventures

How will Crombie REIT’s new joint ventures reshape Halifax’s real estate landscape?

Crombie Real Estate Investment Trust has initiated a series of transformative joint venture partnerships in Halifax, Nova Scotia, through strategic collaboration with Montez Corporation. Announced on April 11, 2025, the deal marks a significant step in Crombie’s broader value creation roadmap by monetising part of its development portfolio while enhancing balance sheet flexibility, accelerating entitlement processes, and establishing predictable revenue streams through fee income.

As part of the agreement, Montez will acquire a 50% stake in The Marlstone, a residential rental project currently under construction, for a total purchase price of CAD 32.2 million. Crombie received CAD 19.2 million in cash, with the remaining CAD 13.0 million covered by Montez via assumption of construction-related debt. Additionally, both companies will work jointly to progress two major development sites—Barrington Street and Brunswick Place—through the entitlement and design phases.

These joint ventures are designed not only to derisk Crombie’s development exposure but to align its long-term urban strategy with Halifax’s evolving housing and mixed-use infrastructure needs. Crombie retains operational control and will earn development and management service fees across all projects, reinforcing revenue stability.

Why is The Marlstone joint venture a cornerstone in Crombie’s development strategy?

The Marlstone stands out as a strategic asset in Crombie’s Halifax development pipeline. The 291-unit residential rental complex, located in a high-demand urban corridor, is a key example of Crombie’s shift toward mixed-use urban intensification. By divesting a 50% interest to Montez, Crombie not only achieves near-term liquidity but also validates the asset’s value through third-party underwriting.

Importantly, Crombie will continue to lead the project’s development, construction, leasing, and asset management functions, ensuring seamless execution and sustained fee income. The completion of The Marlstone is expected in the first half of 2026, with rental income and service fees forecasted to become accretive to Crombie’s overall earnings.

This structure represents a capital-light development model. The joint venture reduces Crombie’s upfront capital burden, allows it to recycle cash into core operations, and provides a hedge against rising construction costs—while still capturing upside through retained ownership and fee-generating management responsibilities.

What is the role of the Entitlement Partnerships in Crombie’s growth roadmap?

In parallel to The Marlstone transaction, Crombie and Montez have launched entitlement-focused joint ventures targeting Barrington Street and Brunswick Place—two high-potential properties in Halifax’s downtown. These assets are in pre-development stages and will benefit from co-funded entitlement, design, and municipal approval processes.

Crombie will lead the entitlement activities, managing planning submissions, design coordination, and stakeholder engagement. Crucially, ownership of both sites remains with Crombie during this phase, allowing the trust to retain full upside optionality. Once approvals are granted, both firms will determine the optimal forward path, which could include full-scale development, partial monetisation, or phasing strategies based on market absorption trends.

This structure reflects a low-risk, high-upside model that accelerates value creation from Crombie’s development pipeline while minimising short-term capital drawdown. Fee income from managing the entitlement process further boosts cash flow without diluting control or future participation.

How does this partnership enhance Crombie’s capital allocation and financial flexibility?

The joint venture framework significantly strengthens Crombie’s capital efficiency. By partnering with Montez across three development projects, Crombie unlocks value, shares financial exposure, and gains additional liquidity for redeployment into its necessity-based retail portfolio.

Crombie’s retail holdings—anchored by grocery stores and essential services—are seen as defensive assets in volatile market conditions. The new liquidity allows Crombie to enhance, reposition, or selectively acquire additional retail properties while continuing to advance urban residential projects without overleveraging its balance sheet.

In a tightening interest rate environment, the ability to reduce construction financing exposure while maintaining project momentum is strategically advantageous. Crombie’s retained asset management roles also mean it continues to generate steady cash inflows throughout the project lifecycle, even as development costs are co-managed with Montez.

Why was Montez Corporation selected as Crombie’s preferred strategic partner?

Crombie’s decision to partner with Montez follows a thorough evaluation process focused on strategic alignment, capital reliability, and regional expertise. Montez, a Toronto-based firm managing over CAD 3.3 billion in equity, is known for its long-term investment approach and institutional capital access.

Its portfolio spans over 27 million square feet across mixed-use, residential, retail, office, and industrial assets, with a growing footprint in Atlantic Canada. Montez’s experience in managing complex entitlement and development timelines makes it a credible and capable partner for Halifax’s urban evolution.

Moreover, Montez’s access to pension capital and thematic investment strategies aligns well with Crombie’s measured approach to growth and capital discipline. This alignment ensures joint ventures that are not only well-financed but also strategically patient—allowing Crombie to maximise long-term unit holder value without sacrificing near-term returns.

How will Crombie’s revenue model benefit from recurring fee income?

The partnerships signal a shift in Crombie’s revenue structure toward greater diversification. Through its ongoing roles as development and asset manager, Crombie secures recurring fee-based income from all three joint ventures. This income stream is less cyclical than leasing income and adds predictability to cash flow forecasting.

While not yet replacing rental income as the dominant revenue source, these fees enhance Crombie’s operating income profile and support its strategic objectives of self-funding growth, maintaining distributions, and avoiding excessive reliance on debt or equity issuances.

The model also prepares Crombie for potential future developments where similar capital-light, fee-rich joint venture structures could be applied to other pipeline assets—creating a blueprint for scalable value creation.

What is the latest sentiment on Crombie REIT’s stock performance?

As of April 13, 2025, Crombie REIT (TSX: CRR.UN) is trading at approximately CAD 13.94. The unit has appreciated by over 7% year-to-date and by 7.67% over the past 12 months, reflecting growing investor confidence following its development-focused initiatives and balance sheet improvements.

Analyst sentiment remains broadly positive, with 7 out of 9 analysts issuing “Buy” recommendations. The average 12-month target price stands at CAD 16.00, indicating an expected upside of roughly 15% from current levels. Crombie also offers a competitive dividend yield of 6.28%, reinforcing its appeal to income-focused investors.

The REIT’s hybrid model—combining necessity-based retail with urban residential development—differentiates it from many peers and provides a balanced risk-return profile. Analysts believe the joint ventures with Montez could unlock additional NAV (net asset value) and improve Crombie’s free cash flow outlook over the medium term.

Based on current fundamentals, Crombie REIT earns a “Moderate Buy” rating. Investors seeking both income stability and exposure to long-term development upside may find Crombie’s units attractive, especially given the strategic capital recycling demonstrated in recent deals.