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September 3, 2014
What Lured Manulife To Burnaby?
Manulife Real Estate Fund made its first office play in B.C. last week, snapping up 3383 Gilmore Way, a 146k SF LEED Platinum building in Burnaby. Manulife Canadian Property Portfolio manager Tim Blair tells us what drew his team to the town where Michael J. Fox grew up. (You don't even need a Delorean to get there.)
3383 Gilmore Way (pictured below) is Manulife's first office acquisition in the province. Tim says the building's appeal lies in its “strong tenant quality” (it's 100% leased at the moment, with HSBC as anchor tenant) and stable cash flow. Plus the acquisition enables the fund—with $550M in assets under management—to diversify its national portfolio, both in terms of geography and property type, Tim says. With the deal, Manulife Canadian Property Portfolio now holds 22 office and industrial buildings (or 3.1M SF of space) across the country.
Tim wouldn't dish on how much Manulife paid for 3383 Gilmore Way, a five-storey building with floor plates up to 33kSF. But he notes that the property, one of four LEED CS Platinum-certified office buildings in Metro Vancouver, has systems that are among the "most advanced in the industry” (including a heat-reflecting roof, rainwater harvesting, and motion sensor lighting controls) helping generate operational cost savings while also being kind to Mother Nature. Developed by Morguard Investments in 2009, the property was originally known as Discovery Green Building.
Why Investors Love These Kerrisdale Buildings
HQ Real Estate Services principal Mark Goodman tells us the recent sale of two elderly apartment buildings in Vancouver's affluent Kerrisdale neighbourhood has set the stage for redevelopment opportunities in an area with no demolition restrictions. Bel Aire Apartments (pictured below), a three-storey building with 11 suites located at 6356 East Blvd, sold for $5M. Mark, who brokered the deal, says the building, built in 1955, is a “strategic holding property” for an undisclosed buyer who's “looking to the future.” The allure for investors of properties in this part of Kerrisdale: their C2 zoning doesn't prohibit demolition, opening the door to larger-site assemblies and redevelopment.
It's the same situation with Maple Grove Apartments, just down the road at 6344 East Blvd. The three-storey, 10-unit co-op building (built in 1951) last week sold for $5.2M. It also sits on a C2-zoned site, clearing the way for a future redevelopment of the site. Mark says the value per door of buildings like these is “far above and beyond” what typical apartments are selling for in the city—$125k more per unit in some cases—an indication of the latent value in the land. “And that value can be realized without restriction.”
Western Canada's Hotel Hotbed
Western Canada accounted for 60% of the total transaction volume nationwide in the first half of the year. B.C. was particularly dominant, notes Colliers International hotels manager Russell Beaudry (pictured with group VP Robin McLuskie), leading the country with $170M in sales—30% of the national volume. The average price for hotels sold in the west was $11.4M, Russell points out, versus $6.8M in Eastern Canada. The difference here can be explained by the larger transactions in Western Canada in the first six months of the year, Russell says; deals in the east involved smaller, limited-service assets in secondary and tertiary markets.
The sale of the 477-room Fairmont Empress Hotel in Victoria (pictured) to Bosa Developments was among the the top transactions in the first half of the year (though no price was disclosed), as was Argus Properties' $19.7M purchase of the Hotel Eldorado, a boutique resort in Kelowna. Nationwide, there was considerably less hotel transaction volume in first-half 2014 compared with last year ($570M vs $840M). But Russell indicates there's a broad appetite for hotels among a variety of investors, and he predicts overall total volume for the year could ultimately hit $1.5B.
Bisnow Makes the Inc 5000!
Okay, it's not the Fortune 500 top industrial companies or the Forbes 400 billionaires, but, hey, the Inc 5000 is pretty cool—the fastest-growing private companies in the whole US. And we ain't at the bottom, but actually toward the "top," at #1,643. With a 258% growth rate over three years. So, we'll take it! And profound thanks to you, our readers and event attendees, for helping make it happen. And for giving us the privilege of working in and for an industry that we love, that literally changes the face of America and does so much for the country every day. No punchline. Sometimes we gotta be serious.
Speaking of hotels, what's the coolest one you've ever stayed at? The worst one you've ever had the displeasure of experiencing? Send tales to firstname.lastname@example.org.