Olympic Village Sold!

The city just took one big step towards getting out of their Olympic Village obligations with smaller losses.

Dozens of market rental units have been sold in one bulk sale to an investors group at an average of $350k a piece.

“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.

We’ve seen some pessimism about the losses faced by taxpayers on this project, so it’s nice to see that number reduced by $41.5 million.

So where does that leave us now for those keeping score?  The city isn’t saying, but here’s an estimate:

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.

Read the full article in the Globe and Mail.

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Son of Ponzi
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Son of Ponzi

Wow,
Another 125 rental units in the OV. And all sold way below market value.
There are bound to be some very upset investors/owners who bought during the pre Olympic hype.

YVR
Guest
YVR
If I recall the city turned a bunch of units into rental units back in 2011 because they couldn’t sell them at the time (for the asking price). Now they sell them after turning them into rentals for $350K each. The big problem here is had they lowered the price back in 2011 they could have easily sold them for significantly more than the average price of $350K each. In addition to getting more money they would not have had these units bleeding money for the past few years. Just another buggled part of the project which adds to the City losses. On a side note it shows that if you must invest in real estate buying a REIT is going to get you much better value than going out and buying a mom and pop rental. Mom and pop… Read more »
Loon
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Loon
Randy Randerson
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Randy Randerson

I wonder how much rent they would charge for those rental units. Using the rule of Price/Rent ratio lower than 15, monthly rent for one of these units would have to be higher than $1944 a month in order to make sense investment-wise.

Seems like the rent will still be a little bit higher than the surrounding areas and downtown.

southseacompany
Member
southseacompany

Canadian real estate news in Hong Kong’s South China Morning Post;

“Canadian home prices up, frustrating Hongkongers waiting to buy
HK buyers hoping for a correction before diving into the Canadian market may just have to wait”

http://www.scmp.com/comment/insight-opinion/article/1297937/canadian-home-prices-frustrating-hongkongers-waiting-buy

Who knew there were bears in HK waiting for Canadian prices to tank before jumping in.

Son of Ponzi
Guest
Son of Ponzi

Administrator,
Could we have a Cantonese version of VCI for our fellow bears in Hong Kong?
United we stand.

BWilson
Guest
BWilson

I’m guessing these are the units: http://villagerentals.ca/plans.html

Interesting data points for all the “investor” landlords out there.

Bentall who itself isn’t even an experienced rental unit investor probably paid ~$500/sq ft for these units, outbidding more experienced institutional investors. There are some really dumb investors in the Vancouver market even on this kind of scale ($10-50 million rental buildings), they’re always local. No one outside of Vancouver would invest at these low cap rates. Experienced, smart real estate investors in Vancouver look elsewhere, even Toronto where cap rates are much more reasonable.

taylor192
Member

@#4 Randy

The units are mostly 1 bdrm and will rent for much less than $1944/mn. IG has to be banking on appreciation as even at $350K/each the numbers don’t add up to a good ROI.

southseacompany
Member
southseacompany

Today’s National Post:

“‘A tale of two markets’: Condominium prices falling while low-rise homes continue to soar”

http://business.financialpost.com/2013/08/20/condominium-prices-falling-while-low-rise-homes-continue-to-soar/

“In the Greater Toronto Area, provincial government policy, which encouraged intensification, has helped foster the condo market. But it’s not just a Toronto issue — Vancouver’s condo market has had the same strength over the past five years.

The Real Estate Board of Greater Vancouver says single family detached home prices are up 16.8% over the last five years while apartment prices have risen just 0.2% during the same period.”

taylor192
Member

@#2 YVR

I would be skeptical of REITs. People have been dumping huge amounts of capital into them which they use to buy more property driving up the price of commercial RE. No different than Canadians bidding up residential RE, just on a bigger scale with other people’s money.

Take your money and run. Once free money stops flowing REITs will be in just as much trouble if not more than RE.

B!B!B!
Guest
B!B!B!

LOL!

“In the Greater Vancouver Area, areas made of lowlands sediment such as Richmond and Delta, are most susceptible to landslides”

http://www.scq.ubc.ca/the-big-one-understanding-why-the-big-earthquake-is-predicted-for-vancouver/

a landslide in a place that is completely flat. something that can only be explained with bear logic.

Oh, and vc.info admin, thanks for IP banning me. did you also ban VHB? i haven’t seen him around.

well, if the market goes down, i’m sure hey’ll start posting again. just in time to take credit for it 🙂

lazyrenter
Guest
lazyrenter

@#2 BBB

Holy selective quotation Batman, finish the sentence… “landslides and liquefaction.” Look up Christchurch in case you don’t know what that means. Every single Richmond property totalled, would be my guess.

crabman
Guest
crabman

B!B!B! seems to be as clueless about geology as he is about RE investing.

Randy Randerson
Guest
Randy Randerson

@#8

WTF, it’s mostly 1 bedroom apartments? They don’t even rent for more than $1300 a month, so how are they suppose to have a good ROI in this situation. It’s like “Look, I got a bargain, I only paid $350,000 a unit from $500,000! But it’ll likely drop to $250,000 in the future.”

crabman
Guest
crabman

$500/ft for Olympic Village actually seems reasonable. If going rents are $2.5/ft, that would put the price-to-rent ratio at 16.6.

OTOH, condos are currently going for an average of $850/ft, putting the P/R ratio at a ridiculous 28.3.

http://www.6717000.com/123w1st/listings/

Son of Ponzi
Guest
Son of Ponzi

A severe earthquake will cause the dykes in Richmond and South Delta to rupture resulting in catastrophic flooding.
YVR will be out of action for a long time, which will seriously hamper rescue efforts.
That’s why some experts are saying that we should stop expanding YVR and instead start expanding Abbotsford International.

Son of Ponzi
Guest
Son of Ponzi

India’s Rupee hits all time low!
I think that this will affect RE in Surrey as investors will liquidate in order to keep their businesses in India afloat.

Bo Xilai
Guest
Bo Xilai

A Chinese insurance executive who allegedly took 500 million yuan ($US82 million) from her company and fled the country has been escorted back from Fiji by police.

http://www.radioaustralia.net.au/international/2013-08-21/runaway-chinese-insurance-executive-chen-yi-escorted-home-from-fiji/1179072

Guess where she was headed? Canada. Dollars to donuts she was headed for YVR.

Son of Ponzi
Guest
Son of Ponzi

# 18
of course she was headed for Vancouver.
Where else can you launder 82 million without any questions asked?

Burnabonian
Guest
Burnabonian
http://www.cbc.ca/news/business/story/2013/08/21/pol-finance-flaherty-economists-summer-policy-retreat.html “Finance Minister Jim Flaherty said today he is satisfied with the measures his government has already taken to calm the housing market and has “no plans” to intervene any further.” Read: no more “engineering a soft landing” or whatever the bull(shitters) cling to. Flaherty’s gonna let ’em burn. Maybe he became a VCI reader. […] “Flaherty said he’s “not a big fan of so-called fiscal easing or whatever it’s called.” “We’re moving toward a balanced budget, I think that’s the best protection for Canadians,” he said. He said he anticipates the issue of quantitative easing will come up at the G20 meeting in September in Russia, and that it is contentious. “As you know, we in Canada have not been fans of quantitative easing unlike the United States and elsewhere,” said Flaherty. “The danger in the longer term, to… Read more »
VanRant
Member
VanRant

@ Bo Xilai

Suitcase full of money going in the opposite direction – back to China!

http://www.cbc.ca/news/canada/british-columbia/story/2013/08/12/bc-blessing-scam-immigration-hearing.html

Son of Ponzi
Guest
Son of Ponzi

@ Madashell
Of course, once the money has been laundered it is being “repatriated”.
What a joke!

Chabar
Member
Chabar

@Madashell

Vancouver police say suspects in the so-called blessing scam convinced Chinese seniors that they would need to have a large sum of money and jewelry blessed by a spiritual doctor to ward off the bad luck.

They would be better off if they invested in a new hospice instead of bringing stupidity to the next level.

Best place on meth
Member
Best place on meth

“Guess where she was headed? Canada. Dollars to donuts she was headed for YVR.”

Guess where she’s headed now?

Firing squad. 🙂

Son of Ponzi
Guest
Son of Ponzi