Serial immigrant investor lands Tsawwassen Mills megamall

Frank O’Brien
Western Investor

Weihong Liu, who arrived in Canada eight years ago, now owns three of the biggest shopping malls on the B.C. coast

 A recent immigrant to Canada who bought Tsawwassen Mills this year has big plans for the giant South Delta mall, as she has for other large B.C. shopping centres her company, Central Walk, has purchased since 2014.

In the eight years since she moved to B.C., serial investor Weihong Liu has spent an estimated $858 million buying three B.C. retail centres.

Tsawwassen Mills was developed by Ivanhoe Cambridge, the real estate arm of Caisse de dépôt et placement du Québec, the Quebec pension fund, under a long-term lease for the property from Tsawwassen First Nation (TFN). It opened in 2016.

The 1.2 million-square-foot mall, second largest in B.C., sits on 107 acres, containing about 200 stores and restaurants and extensive open-air parking for 5,000 vehicles. It is a duplicate of Ivanhoe Cambridge’s Cross Iron Mills mall north of Calgary.

Central Walk bought the mall at 5000 Canoe Pass Way, Tsawwassen, on May 6, 2022. Financial details were not released, but the property’s latest assessed value is pegged at $407 million.

In a press release, Central Walk chairman Hong Liu, CEO Andy Wang and investment and asset management director Valen Tam said the sale was jointly produced by the efforts of many parties including Blake Cassels & Graydon LLP, Ds Avocats, real estate companies Colliers and JLL, and the Tsawwassen First Nation.

Weihong Liu, with her brother and company official Liu Ergang, have apparently bankrolled the B.C. purchases, at least partly, with proceeds from the sale of the Central Walk shopping centre Weihong developed in Shenzhen, China. She sold that 1.5-million-square-foot mall to Hong Kong’s Link Real Estate Investment Trust in February 2019 for the equivalent of $1.25 billion.

Weihong Liu moved to Canada in 2014, and acquired Woodgrove Centre, the largest shopping centre in Nanaimo, B.C., in 2020 (currently assessed at $195.4 million), and paid $4.5 million for the Arbutus Ridge Golf Club in Cobble Hill, just north of Victoria. Her company briefly owned the landmark Fairmont Empress Hotel in Victoria but sold it to Vancouver developer Nat Bosa in 2014.

In May 2021, Central Walk, bought the 522,000-square-foot Mayfair Centre mall in Victoria from Ivanhoe Cambridge in a $258 million deal.

Since then, Central Walk has unveiled plans for a makeover of both Woodgrove and Mayfair malls, the latter including a retail expansion and potential residential component.

In a May tour of Tsawwassen Mills, Central Walk officials said it planned to expand the food services at the mall and “focus on developing a prominent entertainment presence at the property” as well as making changes to core retail offerings.

Details of the mall’s remake were vague then and are on hold today, however, according to the Damien Teissedre, marketing manager of Tsawwassen Mills.

“At this time we are not discussing redevelopment in mourning of the late TFN Chief Ken Baird. We will reopen comments and discussions once a new chief and direction is elected, and a conversation to discuss the future has been had. We are fully committed to the growth of these TFN lands and the community,” Teissedre told Western Investor.  

 

© 2022 Western Investor

13.5 acres of industrial in Rosser, Manitoba, fetches $3.39 million

Western Investor Staff
Western Investor

Land, about 17 kilometres from downtown Winnipeg in the rural municipality and close to CentrePort, was bought by a local trucking company.

Shindico Realty Ltd., Winnipeg, for Western Investor

 

Property type: Industrial land

Location: 8056 Park Royale Way, RM of Rosser, Manitoba

Size of land in acres: 13.57 acres

Sale price: $3.39 million

Brokerage: Shindico Realty Inc., Winnipeg, Manitoba

Broker: Ian Corbett

 

© 2022 Western Investor

80 acres of raw land near Winnipeg sells for $3.4 million

Western Investor Staff
Western Investor

Rural land in Rosser, Manitoba, purchased by out-of-province investor for future development

 

Potential for development. Shindico Realty Ltd, Winnipeg, for Western Investor

 

Property type: Raw land

Location: Rural route on Mollar Road, RM of Rosser, Manitoba

Sale Price: $3,400,000

Brokerage: Shindico Realty Inc., Winnipeg, Manitoba

Broker: Ian Corbett

 

 

© 2022 Western Investor

TD reports Q3 financial results

Fergal McAlinden
other

Find out how the banking giant fared in 2022’s third quarter

TD Bank Group reported that its net income for the third quarter was down year over year, coming in at $3.21 billion compared with $3.55 billion in Q3 2021, although the banking giant surpassed average analyst expectations on net interest income and overall profit.

Net interest income was up to $7.04 billion, a 17% jump, with analysts having estimated an average of $6.62 billion. Profit amounted to $2.09 per diluted share in Q3, higher than analysts’ average projected profit for the bank of $2.04 per diluted share.

The bank put away $351 million in provisions for credit losses, while it said its Canadian retail division had posted record revenue in Q3, “supported by continued momentum in banking and insurance volumes, rising interest rates, and growth in customer activity.”

Its net interest margin rose to 1.74% from 1.64% in Q2, meaning the difference between its loan earnings and expenses on deposit is expanding.

TD’s CEO Bharat Masrani pointed to several factors that fuelled the company’s performance during the third quarter.

“Continued business momentum, increased customer activity and the benefits of our deposit rich franchise contributed to TD’s strong performance in the third quarter,” Masrani said in prepared remarks accompanying the news release.

“Investments in talent and innovation, combined with our focus on prudent risk and financial management, strengthened our business and extended our competitive advantage.”

LATEST NEWS

Copyright © 1996-2022 Key Media, Inc.

In-person contact fuels Vancouver’s retail revival as sanctions lift

Peter Mitham
Western Investor

Diversified neighbourhoods, such as West 4th Avenue, faring the best as retail reboots

 Huge crowds returned to West Fourth Avenue, Vancouver, for the 2022 Khatsalano street party July 9.|Facebook/Khatsalano

Retail vacancies in Vancouver are falling as consumers return to in-person shopping, with services leading the way.

Downtown vacancies fell to 4.7 per cent in the first half of 2022, according to CBRE Ltd., down from a pandemic peak of 6.2 per cent a year earlier.

“These last six months have seemed to be the most optimistic and active months that I’ve seen in the last three years for retail leasing,” said Adrian Beruschi, senior vice-president with CBRE. “People are shopping again. People like to shop, they like to be out of their house.”

While plenty of lease signs remain both downtown and across the region, Beruschi said activity on retail space has increased as the economy has normalized.

A report from RBC Economics last month noted that momentum in the service sector was increasing across Canada, and that’s definitely been playing out in B.C.

Beruschi said spending has shifted from goods, easily ordered online during the pandemic, back to services, which is largely dependent on in-person transactions. This is in turn driving the kind of tenants seeking space, from quick-service restaurants to personal services.

“We’re seeing a lot more service retail where you need to visit,” he said. “Dental offices, medical offices, hair salons, tattoo parlours, tattoo-removal parlours.”

Clothing sales have exploded, according to RBC, as restaurants and entertainment venues reopened, rising from parity with February 2020 levels in May to 40 per cent to 50 per cent higher this summer.

“Online shopping will continue to thrive and grow, but I think people are still going to want to get out of the house, try stuff on, and walk around and grab a coffee,” Beruschi said.

This has driven the fortunes of diversified strips like West 4th Avenue in Kitsilano, home to a mix of popular restaurants, local boutiques, and national brands with more coming. Arc’teryx is moving to a new flagship location in the neighbourhood, and Adidas is also scheduled to open its doors this fall.

The West 4th Avenue stroll hosted huge crowds for the Khatsalano street party this July 9 after a two-year pandemic hiatus.

“I would say 4th Avenue has been the golden child, the poster boy, of Vancouver retail leasing. It’s got thriving local boutiques, it’s got restaurants with lineups outside the front, and it’s got international brands and big local brands like Arc’teryx,” Beruschi said. “It’s firing on all cylinders in a really positive way.”

Two challenges face the retail sector, though.

One, it’s incredibly hard to get stores open thanks to a combination of municipal processing backlogs, particularly in Vancouver, supply chain issues and construction delays. Many units are leased but they’re still shuttered as a result.

“Between municipal process, construction delays, supply chains for equipment, getting stores physically open has probably never been more challenging,” Beruschi said.

Second, areas like downtown have yet to see traffic recover to pre-pandemic levels.

“The central business district will thrive once people are back in the office a little more regularly,” he said. “I think that will come in September, once this stretch of spectacular weather subsides and kids are back in school and people are back to their more typical routine.”

Coffee shops and other venues that depend on office workers will benefit the most, with summer tourist traffic showing what’s possible.

“I’m standing here on Hastings and Burrard and it doesn’t feel any different than it did four years ago,” Beruschi said. “People are walking, there’s tourists pulling their luggage, there’s a little bit of road rage happening on illegal turns.”

While specific neighbourhoods and segments of the retail environment will face challenges, the numbers point to stable and even rising lease rates in popular areas like West 4th.

“Retail’s in a really positive spot,” he said. “There’s a lot of challenges, but I think we’ll see a lot of entrepreneurial spirit from the retail segment moving forward.”

 

© 2022 Western Investor

Pre-Construction In the Age of Rising Interest Rates

Corben Grant
Canadian Real Estate Wealth

 As markets across the country begin to cool from last year’s highs, the world of preconstruction is facing its own share of new changes. As interest rates rise and developers and buyers alike reassess their plans, it is becoming increasingly difficult to navigate the space for successful investing – though there is still lots of potential for those who know where to look.

To help shine a light on the changing environment in preconstruction, we spoke to Tony Sbrocchi and Aleksandra Nowak from The Condo House, a real estate team that specializes in preconstruction in and around the GTA. Both Sbrocchi and Nowak have a long history of working both with buyers and developers in precon, providing them with a unique insight into the forces affecting the market today.

What’s changed in preconstruction?

The first major factor that began to affect the preconstruction market earlier this year was the changes introduced in the 2022 federal budget. Changes to the way assignments are taxed as well as limits on foreign buyers played a role in cooling demand for preconstruction homes, particularly from investors.

The biggest disruptor though, as is common across so many markets today, is rising interest rates. Higher interest rates increase the carrying costs of mortgages, drive home prices lower, and cause buyers to reevaluate their pre-construction purchasing decisions. This is especially true for those investing with money borrowed from their home equity.

“Right now the Bank of Canada is increasing rates to fight inflation, but the problem is when you raise interest rates it cools the housing market and prices fall,” explained Sbrocchi. “You might think: who cares about the resale market when you’re talking about precon? What we need to understand is a lot of buyers in precon are pulling equity from their homes to make a purchase.”

“So what you’ve done is increased the cost to borrow for that investor, and at the same time reduce the amount they can borrow, because now their properties have lost value. This can make buyers reluctant to move forward, or even unable to do so. Now if you talk to developers, they’re mostly in the same boat of pushing to find buyers, which is proving not as easy as before.”

New developments can take years to complete, and developers must price projects based on their best projections. The issue now is that many developers are finding that costs are exceeding their expectations, and buyers are dropping off, which can severely disrupt their plans. While homeowners can usually lower their prices in the event of a market downturn, developers don’t have the same luxury, putting them in a tough place.

There are a few other ways developers can deal with the situation, however. Some projects may simply still have enough demand to move forward. Others may stall while they attempt to find more buyers and raise more funds. A third portion may need to be cancelled altogether, leaving investors with nothing to show for time and money.

“At the end of the day we always need investors in the pre-construction market, because, without them, the builders can’t get projects off the ground. They’re the ones who come in at the beginning, put their money down and get the builder to that point that he can get financing – many end-user condo buyers would rather wait until the building is finished.”

How to navigate a changing market

This doesn’t mean that preconstruction is out of the question for investors. Opportunity remains, the key is simply what investors choose to pursue, and where. Understanding what still works in our changing times and investing with reputable developers can help investors to come out positive on the other side. 

“I think for investors at this point in time, depends on the product they’re looking at. Condos, anything more than mid-rise, I’d be hesitant about that because we don’t know where that marketplace is going right now. Smaller scale projects will tend to do a little better in these type of markets, because the builder is not going to be as dependent on investors.”

The shifting market also gives buyers much more leeway in negotiating with developers. Though developers may not be able to lower prices outright, there are many allowances that can be made at the negotiating table. In this case, it’s ideal to work with agents who have good relationships with the developers.

“Builders can’t just reduce prices across the board beacuse and at the end of the day it’s the builders responsibility to make sure they protect the value of the initial purchasers investments. But, what we’re starting to hear in the background is, present us a deal, maybe we can work with it.”

Finally, investors just getting into the market may also see the current conditions as an opportunity to find deals on resale condos outside of preconstruction, according to Nowak.

“I was recently dealing with a condo that in February, they could have gone for 650,000 that now sold for around 580,000. But buyers who bought a few years ago may have already made their profits, and they can afford to lower the price a bit. In that case, it actually was a deal for that investor.

Despite the current turbulence, the pair indicates there is a light at the end of the tunnel. Especially in the area around the GTA, you’re investing into one of the largest and growing areas of the country. Though things may be down for the foreseeable future things will likely turn around and see demand and values rise again. The history of the market at least would bear out this truth based on previous slumps.

“I think long term, there’s obviously going to be a rebound. Precon is going to continue, we’re just going to see a bit of a slowdown, as we did in 2012, 2014, or 2017. Builders will just make the decision to put stuff either on the back burner or just not proceed with it to come out unscathed. It’s not about doom and gloom, it’s more about stepping back to reassess and then move forward.“  

 

© Canadian Real Estate Wealth 

Housing in Canadas Biggest Cities Crashed: Could Small Markets Follow?

Andrew Button
other

Canadian house prices are crashing now that banks like CIBC (TSX:CM)(NYSE:CM) are raising mortgage rates.

 House prices are crashing in Canada’s biggest cities. In Toronto, Vancouver, and elsewhere, prices are coming down, following decades of consistent gains. In July, house prices fell 5.3% nation-wide, with the biggest declines being recorded in large urban centres. Since the crash began in March, prices have fallen 22% from the $816,000 peak.

For younger Canadians, this may be taken as good news. Millennials have been complaining about high housing costs for years, now prices are finally within reach. For now, interest rates are taking a bite out of affordability, but if the current trends continue then house prices could fall to a level where total costs (price + interest payments) decline.

However, there’s one catch…

These price declines aren’t happening evenly across the country. The biggest declines are being observed in big cities; smaller markets are seeing lesser declines. In fact, in the Maritimes, prices are barely declining at all.

In this article, I’ll explore the possibility of the “big city housing crash” spilling over to smaller markets.

Housing crashes in Toronto

Toronto is the poster child of the housing market correction this year. Its prices are down to pre-pandemic levels and still falling. While house prices in smaller cities are generally lower than those in Toronto, the latter has a larger percentage decline. Since February, Toronto has seen a staggering $395,000 decline in house prices. Vancouver, as we’ll see shortly, is in the same boat.

Vancouver in the same boat

Vancouver, like Toronto, is seeing a significant housing correction this year. According to The Daily Hive, the average Vancouver home price is down 25% from the February peak. That’s well ahead of the 22% correction seen nationwide. Vancouver was long known as a top destination of foreign homebuyers. The city implemented a foreign home buyer tax to cool the market several years ago, which may have contributed to this year’s correction.

Smaller markets next?

Having looked at the real estate activity in Toronto and Vancouver, we can now turn to the matter of smaller markets. There are two forces pushing Toronto and Vancouver house prices down this year:

1. Interest rate hikes
2. Extreme valuations in 2021

Interest rate hikes should affect small markets just like big ones. When the Bank of Canada Raises interest rates, banks like Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) increase mortgage rates.

When this happens, home buyers who borrow from CM pay higher interest costs on homes of the same price. Basically, it makes the total cost of buying a home go up. As a result, the price tends to fall.

Additionally, a bank like CM will be aware of how higher interest rates affect peoples’ ability to borrow. It may require bigger down payments or higher income before issuing a loan. Recently, the government brought in regulations requiring CM and other banks to more closely scrutinize peoples’ finances before giving them mortgages; this could be putting downward pressure on prices, too.

All of the above applies to large cities as well as small ones. The valuation thing … not as much. Canada’s extreme February prices were largely a function of $1 million plus average prices in the biggest cities. In places like St. John’s and Moncton, you can still find houses for $300,000. So, perhaps those markets were never overvalued like Toronto and Vancouver were. If so, prices there may fall less compared to the big cities.

 

© 2022 The Motley Fool Canada

RBC’s Q3 profits slip

Fergal McAlinden
other

The banking giant’s third-quarter results were down from last year and came in lower than analysts expected

Royal Bank of Canada (RBC) saw its year-over-year net income in 2022’s third quarter plummet by 17% to $3.58 billion, with adjusted earnings of $2.55 per share falling well short of average analyst expectations of $2.67.

That result arrived as the banking giant put away $340 million in provisions for credit losses, mostly in its Canadian banking division, with “unfavourable changes in our macroeconomic environment” largely behind that move, RBC said.

The company registered a 4% dip in personal and commercial banking operations profits compared with the same time last year, with those coming in at $2.02 billion, while income from its capital markets business slumped 58% year over year to $479 million.

That capital markets drop was attributed mostly to markdowns on loan underwriting in the US totalling $385 million, while RBC’s corporate and investment banking revenue also fell, to $625 million.

Mortgages, credit cards, and business lending all helped spur a 10% jump in RBC’s average loan volumes despite the lower yearly profits on the personal and commercial banking side.

The bank’s chief executive, Dave McKay, indicated in a press release that despite an “uncertain world,” it continued to “operate from a position of strategic and financial strength” moving forward.

“Our balance sheet is strong, and our talented team is as focused as ever on delivering the innovative products, insightful advice and leading partnerships that our clients count on,” he said.

 

Copyright © 1996-2022 Key Media, Inc.

National Bank sees third-quarter profits drop

Fergal McAlinden
other

The results arrive in an “increasingly complex backdrop,” says bank’s CEO

National Bank of Canada’s profit for Q3 2022 came in lower than the same time last year, with net income dropping from $839 million in 2021’s third quarter to $826 million this time around.

That meant diluted earnings per share were $2.35 in the quarter ended July 31 compared with $2.36 last Q3, with higher provisions for credit losses in an uncertain economic climate largely behind the lower figures.

Still, the bank narrowly surpassed the expectations of analysts who had on average anticipated an adjusted profit of $2.34, according to Refinitiv, a financial markets data firm.

Its revenue was up from $2.3 billion to $2.4 billion year over year, with provisions for credit losses, coming in at $57 million, marking a sharp change from the same time last year when the bank announced a reversal of $43 million set aside for credit losses.

On the personal and commercial side, the bank saw 11% growth to $335 million over the same time last year, caused largely by higher revenues thanks to loan growth and higher net interest margins because of the rising-interest-rate environment.

Its financial markets division posted 12% growth, rising to $280 million on an annual basis, with wealth management also seeing double-digit growth (10%, to $181 million).

Laurent Ferreira, National Bank’s chief executive officer, said it had achieved “excellent results” in the third quarter and strong growth across its business segments.

“We continue to operate in an increasingly complex backdrop,” he said. “Despite these challenges, the bank is in a solid position with strong capital levels and substantial allowances for credit losses which, along with our prudent positioning, gives us comfort in the current environment.”

 

Copyright © 1996-2022 Key Media, Inc.

62-floor One Burrard Place opens in downtown Vancouver

Frank O’Brien
Western Investor

Exclusive soirée marks completion of $500 million project as tallest residential tower in the city.
A by-invitation-only soirée on August 17 opened One Burrard Place, a $500 million mixed-use development that represents the tallest residential tower in Vancouver and the largest city project undertaken by Reliance Properties and Jim Pattison Developments.
The event marked the closing of sales on hundreds of condominiums in the sold-out towers.
“We are extremely proud of One Burrard Place because our design by IBI Group had to be approved by an international panel for tall buildings in order to be approved for development,” said Jon Stovell, CEO of Reliance Properties. “Our design had to demonstrate architectural excellence and significant environmental standards, so we are thrilled to be able to deliver on these important elements.”
The overall development covers almost an entire city block and consists of two residential towers totalling almost 800 homes: One Burrard Place and 2Burrard Place, which is under construction. The third building is a recently completed Class AAA office tower, designed by the late Bing Thom. It has been almost entirely leased by Vancouver-based fashion giant Lululemon Athletica.
The first three floors will be occupied by Jim Pattison Downtown Toyota, which will also include an underground auto repair and service centre.
“The 62-storey One Burrard Place sets a new benchmark for luxury”,” according to Reliance, including the city’s first butler-concierge service and on-demand access to local luminaries for in-home catering, and even a closet and style consultation with expert designers.
All residents and commercial tenants will have access to Club One, 30,000 square feet of amenities that include a giant swimming pool, sauna, jacuzzi, spa, gym, indoor/outdoor yoga, private shopping, and an outdoor patio with kitchen.
The entire One Burrard and 2Burrard Place completely sold out during the development and construction phase. Aside from the tower condominium, the project includes 50 market rentals.

2022 Western Investor