(Bloomberg) -- The son of Alimentation Couche-Tard Inc. co-founder Richard Fortin is betting on one of Canada’s hottest real estate markets to diversify the billionaire family’s retail fortunes.
Eric Fortin, president of Kastello Immobilier, is looking to expand the firm’s real estate holdings to more areas of Quebec, as the rental market sees strong growth from an influx of immigrants.
Founded by Eric Fortin in 2018, Kastello has invested in almost 30 projects, mainly rental residential properties, along with a few industrial and office buildings. Solstice, one of Kastello’s key projects, is a 44-story luxury housing tower in downtown Montreal. The Fortin family has invested more than C$100 million ($72 million) in the real estate investment firm since its founding.
The Brossard, Quebec-based company has built more than 1,700 rental units through partnerships, and expects to add another 1,300 in the next two to three years, including multi-family homes and condominiums.
For Fortin, real estate is a way to expand the family holdings beyond its convenience store empire, which includes more than 16,000 locations around the world. Couche-Tard wants to expand further with its roughly $47 billion bid for 7-Eleven owner Seven & i Holdings Co. Eric and Richard Fortin own almost 32 million shares combined in Couche-Tard, a stake worth $1.7 billion, according to the Bloomberg Billionaires Index.
“We wanted to diversify our assets into something that we know that is solid and stable over time,” Fortin, 52, said in an interview. “We wanted to make sure that we invest something that we can give to the next generation.”
The rental market in Quebec has seen robust growth with a record number of immigrants flooding in.
The vacancy rate in Montreal, the largest city in the French-speaking province, fell to 1.5% last year as housing supply struggled to keep pace with demand, pushing rents for a two-bedroom apartment up a record 7.9%, according to a report by the Canada Mortgage and Housing Corp. The provincial capital of Quebec City also registered its lowest vacancy rate in 15 years. Average rents rose 4.8%, an increase not seen since at least 1990, according to the report.
“It’s fortunate that we were able to raise the rents over the years,” Fortin said. “But we would also need to make sure the price stays competitive in that market and provide good value to our customers.”
The vacancy rates at Kastello’s properties are less than 4%, and strong housing demand and good locations helped the company turn a profit over the last three years, he said.
Though home values in Quebec are lower than in many markets in Canada, they’ve been rising at a faster pace. Montreal prices increased 172% from January 2018 to September 2024, according to the Canadian Real Estate Association, outpacing the 143% gain for Toronto and 113% for Vancouver over the same period.
When Fortin finished his bachelor’s degree from McGill University in 1994, his father and Couche-Tard founder Alain Bouchard sent him to manage a store in Lachine, Quebec, where he did everything from planning staff shifts to keeping products on shelves.
He spent more than a decade at the convenience store chain, rising through the ranks to become director of merchandising in 2007. Eric left the company the following year to start a produce grocery venture. The business didn’t take off, and he sold it after more than seven years.
As the Fortins’ fortune swelled along with the rise in Couche-Tard shares, Eric and his father decided the clan should branch out to real estate. Both Fortins remain directors at Couche-Tard.
Most of Kastello’s projects are developed through a 50%-50% partnership, a structure the Fortin family considers the best way to maintain control while hedging risks.
“We’re starting to be known in the market,” Fortin said. “We will focus on picking the right sites and building great projects to expand our portfolio.”
--With assistance from Ari Altstedter and Mathieu Dion.
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