BC Business
As part of our January/February real estate feature, we outline some potential investments in B.C. residential real estate.
Half a billion dollars, provided by the NDP government starting last year, is being granted to nonprofit housing organizations to allow them to buy private apartment buildings to come onto the market. And that investment appears to be going gangbusters.
In the first six months of 2024, 24 percent of all apartment transactions in B.C., by dollar volume, have been sales to nonprofits. In some suburban areas, the proportion is up to 50 percent. That’s in contrast to previous years, when perhaps 3 percent of all apartment sales were to nonprofits. This fund, the first of its kind in Canada, has been hailed by housing activists as a welcome new strategy for getting more apartments out of the private and speculative market.
Mark Goodman, whose company, Goodman Commercial Inc., has been involved in many sales to nonprofits over the years, is less positive, saying it’s an inefficient way to provide affordable housing and is taking market housing out of an already tight rental pool.
There are people in the world who have money and are willing to invest it in socially meaningful projects while accepting a slightly lower return than they would get elsewhere.
A fund called Sacha Investments Ltd. has been putting money into mostly nonprofit housing projects in B.C. for the last two years. It has US$150 million ready to invest in B.C. and Alberta and has committed C$45 million already.
It’s been surprisingly challenging work to get money to projects because BC Housing’s system doesn’t make it easy to place private capital, says the fund’s local chief real estate investment officer, Kira Gerwing, who was formerly with Vancity.
But Sacha has been successful in working with nonprofits who are being given money through the Rental Protection Fund, because there’s more leeway there since the apartments they buy are supposed to run on a break-even basis with no subsidy from BC Housing.
While it seems almost unbelievable that people in the current world are willing to accept lower returns on their investment money, Gerwing says there are many out there. Her fund’s sponsor, who has asked to remain anonymous, says: “If we keep extracting profits at a high level, it’s coming at the cost of our communities.”
You’ve heard of initial public offerings on the stock market for everything from Facebook to Visa to, perhaps, Reddit. This September, one of B.C.’s biggest developers launched a precedent-setting $82-million IPO for a single tower it is building in Burnaby, the Citizen on Kingsway near Metrotown.
The Anthem Citizen Real Estate Development Trust, the first of its kind in Canada, is the latest from founder Eric Carlson.
“Policy changes, increased costs, shifting market cycles and more create an ongoing challenge for developers hunting for capital, which requires innovative and creative thinking to get projects off the ground,” said Carlson in the news release announcing the new venture. “This IPO is a great way to continue to push the boundaries of what is possible and take a new approach to making housing happen.”