Liquidation and sale of new western stratum finds solution in bumpy market – .

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Liquidation and sale of new western stratum finds solution in bumpy market – .


Just as the owners of Kinnaird Place strata decided to sell their building because they could not afford major repairs, the market cooled, the developers disappeared, the land value of the building collapsed and a main flooded the units.

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Kinnaird Place, an older residential building near downtown New Westminster with 61 units recently sold for $ 22.7 million. The multi-year saga leading to the liquidation of its strata and the sale of its building should be noted by anyone in units with major shortcomings to correct in a context of rising costs and a volatile real estate market.

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“It was a roller coaster,” said Crystal Hunt, who bought her unit in 2015. “Things have fluctuated so much, up and down, up and down. “

About a third of homeowners were, like Hunt, first-time buyers with young families, entering a growing market. Another third were homeowners who had been there for decades, dating back to the building’s construction in 1984, many of whom had low, fixed incomes. The final group was made up of tenants, the majority paying more affordable and affordable rates.

“There weren’t a lot of people who wanted to sell,” said Hunt, citing the building’s prime location between the Pattullo and Alex Fraser Bridges, overlooking Mount Baker and overlooking the Fraser River, near downtown. city ​​of New Westminster, a park and public transportation.

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But around 2016, it became apparent that the building was in need of major multi-million dollar repairs and upgrades. Calculations were starting at the approximate stage of a special levy of $ 80,000 for each unit, Hunt said.

“Is it reasonable to ask a 75-year-old woman (in this building) to fork out a hundred thousand dollars for a special levy?” Said Gianmario Mameli, another owner, who bought his unit in 2016.

“A lot of times it’s a developer who comes into the building,” Hunt said. “With us, it was the other way around. We were trying to move forward. ”

“The Strata Council realized, ‘We can’t get the money we need to do the minimal work. How are we going to get more money? Said Matt Nugent, a real estate broker with Macdonald Commercial.

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Strata therefore hired Nugent and three other brokers at Macdonald in August 2017 to find a buyer.

But, in March 2018, the B.C. government announced a new speculation and vacancy tax and an increase in its tax on foreign buyers just as Ottawa’s new stress test made it harder. obtaining mortgage loans. All of this threw a quick chill in the market.

“In the first quarter of 2018, sales (of pre-sale condos) were incredible,” said Nugent. “And then, in the second quarter, sales fell completely. “

Two developers with signed contracts to buy the building abruptly abandoned their offers.

Then, in March 2019, as developers evaporated and the building’s property value collapsed, a city water main burst.

“I had a bunch of people knocking on my door, ‘You know, the water is pouring in,’ Mameli said. “I go down and there is a foot of water. I’m in my indoor coat, trying to help people get their things out.

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Residents of around 14 units had to move for months due to the damage. A few have tried to put their units up for sale on their own, “and get out faster,” Mameli said, but a group of homeowners also appealed to city council and staff for help, explaining their link.

Ultimately, the city presented a deal that made Merchant House Capital, a Victoria-based asset management group, interested in buying the property throughout the strata termination process. It envisioned tenants to continue with Merchant and owners to stay if they wanted to rent for a period of time after a sale.

In return, Merchant secured nuanced concessions from the city for its future development plans, exempting it from having to exclusively build perpetual rentals at the main site, according to CEO David Fullbrook.

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“The strata were going to be stuck in this limbo for several years,” said New Westminster Mayor Jonathan Côté. “The city saw an opportunity to keep rental housing affordable rather than leaving the building vacant or demolished until it could be redeveloped. “

The only thing left to do was see the process through the pandemic lockdown, starting in March 2020. At first, the strata could not meet in person to vote on the disbandment. It wasn’t until September that the Kinnaird Place stratum became the very first stratum to come online. More than the necessary 80 percent of the owners agreed and eventually everyone joined in. At the end of March, the sale was completed.

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