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Ottawa real estate insiders weigh in on fed’s ‘disposal list’ of properties



Local real estate leaders are not surprised by the federal government’s choice of properties on its recent “disposal list,” but many are still not sure what direction redevelopment will take.

On Thursday, Public Services and Procurement Canada released a list of properties it plans to dispose of in the National Capital Region, including L’Esplanade Laurier downtown, the Sir Charles Tupper Building on Riverside Drive, and the 1500 Bronson Building and Annex.

PSPC said the move was part of its “long-term real estate portfolio plan to optimize the office space under our responsibility, lower operating costs and reduce greenhouse gas emissions.”

Real estate leaders have been anticipating a move like this for some months, as federal office buildings continue to sit empty despite federal civil servants returning to a mix of in-office and remote work.

Neil Malhotra, who is vice-president of Claridge Homes as well as a member of the city’s downtown revitalization task force, said he isn’t surprised by anything in yesterday’s announcement.

“I think, inside the industry, the majority of the properties listed, people have been aware they were coming up for disposal,” he said. “We’ve been aware that some of this stuff was coming. It’s obviously needed. That said, these are complicated disposals for the government. They have a process to go through of things they need to check off.”

Malhotra said while it’s too early to estimate the value of the properties, many present interesting opportunities for developers.

“In healthy markets, there are mostly good opportunities, especially in well-established neighbourhoods and developing areas,” he said.

Converting some of the properties for new uses is one option, said Kevin McHale, executive director of the Sparks Street BIA.

“I think it could have a pretty dramatic effect,” he said. “It (could be) more residential, more commercial, more hotel projects or entertainment space. I think the biggest thing regardless is whether the plot of land is any good to be used for something like that.”

McHale is curious to see how the divestment process plays out.

“(The government) has to figure out how to expedite the process,” he said. “This can’t be a multi-year removal from the list. If you’re not using these buildings, get rid of them as quickly as possible and ensure that you’re selling them to groups that have the resources and the plan to move right away.”

He added that the majority of the properties on the list are older and will need extensive work before they can be used for a new purpose.

“It comes down to what group ends up with them and how deep their pockets are,” McHale said. “Many of these buildings are kind of at the end of their life. We’re talking about large investment buildings, probably billions of dollars. The cost of converting commercial to residential, for example, is very expensive.”

In fact, the expense associated with this kind of project could keep some developers away, said Nico Zentil, senior vice-president of CBRE Limited.

“At the end of the day, if we’re asking the private sector to make sense of a real estate opportunity, it has to be economic,” he said. “Unfortunately, for firms like these, they have to turn a profit. It has to have a return.”

For that reason, Zentil and McHale both see an opportunity for the city to introduce incentives for developers to consider these types of properties, especially as they anticipate more vacant office buildings to hit the market going forward.

“They can help boost the economic growth profile of these opportunities,” said Zentil. “That’s where I think the conversation needs to go: some form of incentive to make these properties attractive enough for the private sector to step in and use those buildings in an efficient way, whether it’s a community space, an amenity space or all of the above.”

In some cases, Malhotra said, it may be easier to start from scratch.

“Office building conversions to residential are very complicated,” he said. “The bigger the building is, the harder it is to get light in. Realistically, probably the most logical way to get anything done effectively on some of these properties is to look at demolishing them to be able to maximize the potential density and opportunity.”

Jason Shinder, CEO of District Realty, said in an email that a move like the federal government’s “disposal list” aligns with the issues facing the current office market downtown, which include low demand and oversupply.

“The government selling off these assets in general will allow for the private sector to assist in a reduction of the supply via repurposing the properties to another use, dramatically upgrading the properties, or demolishing the properties for new development,” he said. “Any of these choices by the private-sector buyers will help to improve the balance and ensure the viability of the commercial office market.”

He added that disposing of the properties, rather than continuing to play wait-and-see, is the right move.

“The worst thing for the commercial office market is to think that leaving the buildings empty will be temporary and eventually everything will fill up and get better,” he said.

The NCR properties on the disposal list are:

  • Jackson Building (122 Bank)
  • Rideau Falls Lab (1 John)
  • Sir Charles Tupper Building (2720 Riverside)
  • Graham Spry Building (250 Lanark)
  • L’Esplanade Laurier – East Tower (140 O’Connor)
  • L’Esplanade Laurier – West Tower (300 Laurier)
  • L’Esplanade Laurier – Commercial (171-181 Bank)
  • Brooke Claxton Building and Annex (70 Columbine)
  • Asticou Centre (241 Cité des Jeunes)
  • 1500 Bronson Building and Annex (1500 Bronson)



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Former B.C. Realtor has licence cancelled, $130K in penalties for role in mortgage fraud



The provincial regulator responsible for policing B.C.’s real estate industry has ordered a former Realtor to pay $130,000 and cancelled her licence after determining that she committed a variety of professional misconduct.

Rashin Rohani surrendered her licence in December 2023, but the BC Financial Services Authority’s chief hearing officer Andrew Pendray determined that it should nevertheless be cancelled as a signal to other licensees that “repetitive participation in deceptive schemes” will result in “significant” punishment.

He also ordered her to pay a $40,000 administrative penalty and $90,000 in enforcement expenses. Pendray explained his rationale for the penalties in a sanctions decision issued on May 17. The decision was published on the BCFSA website Wednesday.

Rohani’s misconduct occurred over a period of several years, and came in two distinct flavours, according to the decision.

Pendray found she had submitted mortgage applications for five different properties that she either owned or was purchasing, providing falsified income information on each one.

Each of these applications was submitted using a person referred to in the decision as “Individual 1” as a mortgage broker. Individual 1 was not a registered mortgage broker and – by the later applications – Rohani either knew or ought to have known this was the case, according to the decision.

All of that constituted “conduct unbecoming” under B.C.’s Real Estate Services Act, Pendray concluded.

Separately, Rohani also referred six clients to Individual 1 when she knew or ought to have known he wasn’t a registered mortgage broker, and she received or anticipated receiving a referral fee from Individual 1 for doing so, according to the decision. Rohani did not disclose this financial interest in the referrals to her clients.

Pendray found all of that to constitute professional misconduct under the act.

‘Deceptive’ scheme

The penalties the chief hearing officer chose to impose for this behaviour were less severe than those sought by the BCFSA in the case, but more significant than those Rohani argued she should face.

Rohani submitted that the appropriate penalty for her conduct would be a six-month licence suspension or a $15,000 discipline penalty, plus $20,000 in enforcement expenses.

For its part, the BCFSA asked Pendray to cancel Rohani’s licence and impose a $100,000 discipline penalty plus more than $116,000 in enforcement expenses.

Pendray’s ultimate decision to cancel the licence and impose penalties and expenses totalling $130,000 reflected his assessment of the severity of Rohani’s misconduct.

Unlike other cases referenced by the parties in their submissions, Rohani’s misconduct was not limited to a single transaction involving falsified documents or a series of such transactions during a brief period of time, according to the decision.

“Rather, in this case Ms. Rohani repetitively, over the course of a number of years, elected to personally participate in a deceptive mortgage application scheme for her own benefit, and subsequently, arranged for her clients to participate in the same deceptive mortgage application scheme,” the decision reads.

Pendray further noted that, although Rohani had been licensed for “a significant period of time,” she had only completed a small handful of transactions, according to records from her brokerage.

There were just six transactions on which her brokerage recorded earnings for her between December 2015 and February 2020, according to the decision. Of those six, four were transactions that were found to have involved misconduct or conduct unbecoming.

“In sum, Ms. Rohani’s minimal participation in the real estate industry as a licensee has, for the majority of that minimal participation, involved her engaging in conduct unbecoming involving deceptive practices and professional misconduct,” the decision reads.

According to the decision, Rohani must pay the $40,000 discipline penalty within 90 days of the date it was issued.



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Should you wait to buy or sell your home?



The Bank of Canada is expected to announce its key interest rate decision in less than two weeks. Last month, the bank lowered its key interest rate to 4.7 per cent, marking its first rate cut since March 2020.

CTV Morning Live asked Jason Pilon, broker of Record Pilon Group, whether now is the right time to buy or sell your home.

When it comes to the next interest rate announcement, Pilon says the bank might either lower it further, or just keep it as is.

“The best case scenario we’re seeing is obviously a quarter point. I think more just because of the job numbers that just came out, I think more people are just leading on the fact that they probably just gonna do it in September,” he said. “Either way, what we saw in June, didn’t make a big difference.”

Here are the pros of buying/ selling now:

Pilon suggests locking in the rate right now, if you don’t want to take a risk with interest rates going up in the future.

He says the environment is more predictable right now, noting that the home values are transparent, which is one of the benefits for home sellers.

“Do you want to risk looking at what that looks like down the road? Or do you want to have the comfort in knowing what your house is worth right now?” Pilon said.

And when it comes to buyers, he notes, the competition is not so fierce right now, noting that there are options to choose from.

“You’re in the driver seat right now,” he said while noting the benefits for buyers.

Here are the cons of buying/ selling now:

He says one of the cons would be locking in the rate right now, then seeing a rate cut in the future.

The competition could potentially become fierce, if the bank decides to cut the rate further more, he explained.

He notes that if that happens, the housing crisis will become even worse, as Canada is still dealing with low housing inventory.

An increase in competition would increase the prices of houses, he adds.

Selling or buying too quickly isn’t the best practice, he notes, suggesting that you should take your time and put some thought into it.

Despite all the pros and cons, Pilon says, real estate remains a good investment.

According to the latest Royal LePage House Price Survey for the second quarter of this year, the average home price in Canada is $824,300. That’s up 1.9 per cent from the same time last year, and up 1.5 per cent from the first quarter of 2024.

In the Ottawa Housing Market Report for June 2024, the average price of a home was up 2.4 per cent from this time last year to $686,535, but down 0.6 per cent from May 2024.

Experts believe many potential buyers are still hesitant of jumping into the housing market and waiting for another interest rate cut of 50 to 100 basis points.

“I don’t think it’s going to be the rush that we see in the past, because people are used to more of a conservative approach right now,” said Curtis Fillier, president of the Ottawa Real Estate Board. “I think there’s still a bit of a hold back, but I definitely do think with another rate cut, we’ll probably see a very positive fall market.”

With files from CTV News Ottawa’s Kimberly Fowler



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Real estate stocks soar to best day of year on rate cut bets



(Bloomberg) — The stock market’s worst group notched its best day of the year as a cooler-than-expected inflation report stoked bets that the Federal Reserve will start cutting interest rates in September.

Shares of real estate companies jumped 2.7% Thursday for their biggest gain of 2024, climbing to their highest level since March as investors snapped up homebuilder, digital and commercial real estate stocks alike. Real estate also was the best-performing group in the S&P 500 Index Thursday, with volume that was around 30% higher than the 30-day average, according to data compiled by Bloomberg.

Arguably the most significant news to come from the latest consumer price index reading was a pullback in housing-related inflation. Shelter costs rose just 0.2% for the slowest monthly increase in three years. Homebuilders, which have risen 7.1% this year, were up 7.3% for the session, the most since 2022. Shares of D.R. Horton Inc., which is scheduled to report earnings next Thursday, gained 7.3%.

“Housing has really been the last shoe to drop in terms of winning the battle against high inflation,” Preston Caldwell, chief U.S. economist at Morningstar wrote in a note to clients Thursday. “Leading-edge data has strongly indicated for some time now that a fall in housing inflation was in the works.”

A rally in real estate stocks is bad news for short sellers who have been piling into the group, which is the worst performer in the S&P 500 this year. To start the week, short interest as a percentage of float hovered near 49% in the SPDR Homebuilders ETF, the highest level since February for the exchange-traded fund, according to data from S3 Partners.

Property owners are rallying as well. Real estate investment trusts, which were brutally penalized during the two-year run up in borrowing costs, advanced by as much as 3%. And the outlook for the group appears to have turned a corner, according Rich Hill, senior vice president and head of real estate strategy and research at Cohen & Steers Capital Management.

“We think this is a compelling backdrop for listed REITs especially as fundamental growth remains on solid footing,” he said, referencing the latest inflation data and rate outlook. “The rally that started in October of 2023 pushing returns more than 20% above their trough looks set to continue if inflation cools and interest rates continue to decline.”

Shares of industrial REIT Prologis Inc., which reports second-quarter results on Wednesday, rose 3.3% to hit their highest level since April. U.S. Treasury yields tumbled, with the 10-year bond falling to 4.2% and the policy-sensitive two-year note slipping to 4.5%.

(Updates indexes and stock prices for market close.)



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