Real Estate in Vancouver: Moving to Big Landlords of Apartment Buildings

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Big funds are interested in buying apartment buildings, but housing advocates have concerns

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Real estate investment trusts and other financial firms that make investments so they can pay their shareholders are increasingly considering buying rental apartment buildings in Vancouver, according to business brokers.

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It’s a trend that’s accelerating away from family owners or larger family owners, they say.

In the first half of 2020, for the sale of multi-family properties in British Columbia worth more than $5 million each, there were 30 transactions valued at $620 million, the third highest volume record high, according to brokerage Avison Young.

Vancouver broker Mark Goodman has 27 rental apartment listings and is preparing seven more. In total, its available listings represent $486.6 million in property value. This time last year, he had 16 listings worth $114 million.

“Some landlords are tired, reeling from rising vacancy rates, stress from higher costs and want to hand over the baton,” Goodman said. “Then there are buyers looking for a long-term game, not for wealth creation, but for wealth preservation.”

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Goodman describes the market as balanced between supply and demand for listings, although he sees more rental properties for sale than in the past.

“While private investors made up the majority of sellers and buyers in the first half of 2020, real estate investment trusts, or REITs and institutions, are expected to increasingly emerge as buyers, especially for larger transactions, in the second half of the year and into early 2021,” according to a fall 2020 report from Avison Young.

Rental apartment buildings are seen as a very attractive and reliable investment for REITs and other financial firms in these uncertain times, said John Bunting of PwC Canada’s British Columbia region real estate practice.

“It’s called (investing in) ‘beds and sheds,’ or the first basic needs of safety, security, shelter and food,” he said.

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Bidding began Monday for a set of 10 apartment buildings, with more than 400 rental suites in Vancouver.

A Vancouver-based family business, Hollyburn Properties Ltd., is selling these properties, which it has owned for decades. They represent almost a third of the 33 multi-family rental properties it owns in the Vancouver area.

Lance Coulson of real estate brokerage CBRE, who has the SEOand hollyburn spokeswoman Olivia Brown did not respond to questions and there is no publicly listed asking price.

Com. Jean Swanson had a motion on the Vancouver City Council agenda last week that mentioned the Hollyburn listing, picking it out as an example of a “portfolio that could be attractive to REITs” because of its large number of buildings and units and its likely higher price. dollar value, she said.

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Swanson’s motion called for ‘protecting tenants from real estate investment trusts’ and asks city staff to contact Ottawa and address the negative security impact of REIT purchases of apartment buildings. and housing affordability.

“The purpose of REITs is to make money for their unit (or stock) holders,” Swanson said. “And if the purpose of housing is to make money, then there will be people who can’t afford it.”

Housing advocates and nonprofit housing providers agree that REITs focused on financial returns for their shareholders may not be as motivated to have happy, stable tenants when they set higher rental prices, for example. example. Swanson said greater REIT ownership in rental properties can lead to gentrification and homelessness for tenants.

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On the other hand, “we are seeing increased pressure on rental housing providers large and small,” says David Hutniak of LandlordBC, citing higher vacancy rates, increased insurance, cleaning and taxes. “It’s just not a viable proposition for more and more owners.”

Hutniak is wary of the “unintended consequences” of measures such as vacancy control that would help keep rents lower for tenants but could repel the big capital REITs can bring in, saying the investment is badly needed.

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