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Olympic village rental apartments sold for $41.5 million

August 23rd, 2013 · 2 Comments

After a year of trying to sell off these 119 apartments (which were built to be rentals as part of the NPA’s effort to create some nod to affordability after killing the previous COPE council’s plan for the village), the receiver finally found a buyer for these units at the Olympic Village.

What this reduces the city’s overall debt to, I’m not sure. But at least this is off city hands now. My story here.

Published Tuesday, Aug. 20, 2013 08:00AM EDT

Last updated Tuesday, Aug. 20, 2013 06:14PM EDT

A large Canadian investment group has bought the dozens of market rental apartments at the Olympic Village site for about $350,000 a unit.

The name of the buyer was kept out of recent court documents filed by the receiver managing the City of Vancouver-owned property. However, The Globe and Mail received confirmation that the purchaser is a fund operated by Bentall Kennedy, a real-estate advising and investment managing company.

“This is our first multifamily rental investment,” said Malcolm Leitch, chief operating officer for investment management at Bentall. Mr. Leitch is listed as the only director of the limited company that was formed in July by Bentall to take ownership of the property, BK Prime False Creek Residences Holdings Ltd. “This is in our view one of the top rental projects in the city. And we’re very happy with [the price].”

That sale of the 119 units will reduce the City of Vancouver’s leftover debt from the Olympic Village financial mess by $41.5-million in one swoop and get it out of at least one part of its landlord business in the development.

The city still owns the 252 social-housing units in the 1,100-unit project.

A University of B.C. real-estate analyst says that it’s a good move by the city, even though it’s hard to tell how exactly the price compares to other bulk apartment sales in Vancouver.

The average price of apartment units bought in bulk sales is $270,000, according to numbers compiled by apartment brokers David and Mark Goodman. The top price recently was $402,000 a unit for buyers of a Kerrisdale apartment project.

“It doesn’t leap out that this price is too low,” said Tsur Somerville, director for the UBC Centre for Urban Economics and Real Estate. “And, as an economist, I would say there’s no reason on earth why governments should own market rentals.”

Tenants in the three buildings, who were notified about the sale last week, appear unfazed and even hopeful about the change.

“The receiver has been very officious. They haven’t treated the people who rented those units terribly well,” said James Clarke, who has been renting one of the units since 2010. “At the end of the day, these are our homes.”

Mr. Leitch said the plan is to continue renting the units indefinitely.

“If you look at the returns, rental gives you the lowest volatility. Rents are stable.”

Bentall’s investment pool attracts capital from large institutions and individuals. It has a portfolio of about $3-billion, Mr. Leitch said.

The City of Vancouver ended up having to carry the construction debt for the project after the New York hedge fund financing the private developer balked over cost overruns as the 2008 recession began.

Eventually, that private company, Millennium Development Corp., agreed to put the project in receivership. Since then, the receiver Ernst & Young, working with the city, has been aiming to sell off the remaining condos and lease out the rest of the commercial space.

It’s estimated by those close to the project that the city will lose between $240-million and $290-million in total – including the $170-million that was anticipated for the land, which it will never get.

There are still 90 unsold condos on the market and 26 more being rented.

Since the receiver was appointed, there have been 339 condos sold for a total price of $331-million, as well as several million in rent collected. However, the cost of receiver and legal bills, repairs to existing units, and strata fees has meant that the city only netted $250-million of that so far.

By the end of 2010, the city’s financial report indicated the debt was $504-million. The city was unable to provide a representative to say what the current debt level is or to comment on the sale.

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