Subversive Real Estate Acquisition REIT LP Announces US$182.8 Million Qualifying Transaction to Become Publicly Traded Internally Managed Cannabis REIT - Technical420 - Technical420 | Canada News Media
Subversive Real Estate Acquisition REIT LP Announces US$182.8 Million Qualifying Transaction to Become Publicly Traded Internally Managed Cannabis REIT – Technical420 – Technical420
US$182.8 Million Qualifying Transaction composed of 15 cannabis ind ustrial and retail properties in nine states, including California ,Ohio , Florida , Nevada , Washington , Arizona , Maryland , Michigan and Pennsylvania
Additional US$17.9 million of post-close transactions under binding terms to close shortly after Qualifying Transaction, increasing portfolio size to approximately US$200.7million
Private Placement of US$40 million aggregate principal amount of convertible debentures expected to be accretive to 2021 AFFO and agents’ option to purchase up to an additional US$25 million convertible debentures
Under no redemption scenario, cash of more than US$120 million expected to be available for execution of three existing purchase options and its future pipeline, estimated to be approximately $500 million
Targeted 7.5% initial annualized cash distribution yield, paid monthly
The platform combines deep industry and real estate knowledge with longstanding experience and top-tier operator relationships in the high growth cannabis industry, which is expected to reach US$30 billion in US retail sales by 2023
Post-close, positioned to offer compelling combination of growth and income potential as the second publicly traded cannabis REIT
First instance of the popular SPAC vehicle converting into a public REIT
TORONTO , Oct. 7, 2020 /CNW/ – Subversive Real Estate Acquisition REIT LP ( NEO: SVX.U) (NEO: SVX.RT.U) (OTCBB: SBVRF ) (the “REIT LP”) today announced it has entered into binding agreements (the “Agreements”) to acquire real properties in the amount of approximately US$97.4 million and originate or acquire US$85.4 million of first lien mortgages (collectively, the “Initial Portfolio”), to become a leading real estate capital provider for prominent cannabis operators that own or are seeking industrial and retail real estate in high growth markets in the United States . The acquisition of the Initial Portfolio will be the REIT LP’s qualifying transaction (the “Qualifying Transaction”) and is the first instance of the popular SPAC vehicle converting into a public REIT.
The REIT LP also announced a private placement (the “Private Placement”) of subscription receipts (the “Subscription Receipts”). On Closing, the Subscription Receipts shall convert into US$40.0 million aggregate principal amount of 6% senior secured convertible debentures (the “Debentures”) at a price of (a) US$1,000per Debenture and 137,500 limited partnership units of the REIT LP (“Debenture Units”) or (b) US$950 per Debenture, as specified by the holder (each, as applicable, the “Offering Price”) . The REIT LP has also granted Canaccord Genuity Corp. (“Canaccord Genuity”) and Compass Point Research & Trading, LLC (“Compass Point”, and together with Canaccord Genuity, the “Agents”) a 30-day non-transferable option to purchase Subscription Receipts convertible into up to an additional US$25.0 million Debentures and up to an additional 125,000 Debenture Units.
“We are thrilled to announce our Qualifying Transaction that delivers on what this experienced cannabis real estate team set out to create, which is a diverse initial portfolio consisting of high quality, mission-critical industrial and retail assets operated by leading U.S. cannabis operators”, stated Michael Auerbach , Executive Chairman of the REIT LP and Founder of Subversive Capital, the REIT LP’s lead sponsor. “Subversive REIT LP’s platform combines disciplined real estate underwriting with deep operator and industry knowledge to meet the needs of the high growth cannabis industry.”
Mr. Auerbach continued, “With a robust pipeline including asset purchase options, we are very pleased to be entering the public market via our SPAC transaction, which should allow us greater access to capital to continue to grow our business and deploy capital into a capital-starved industry. We believe that our strong portfolio and platform positions the REIT LP to provide an attractive level of distributions as well as a substantial growth opportunity over time.”
“The cannabis industry continues to grow at an incredible rate, COVID-19 notwithstanding, driving demand for well-located cannabis industrial and retail assets,” said the REIT LP’s CEO Richard Acosta . “Our compelling thesis regarding the value of strategic cannabis real estate assets was validated by our ability to raise and deploy capital with some of the strongest and most well-known operators in the space. We are excited to be providing much-needed growth capital to operators across the supply chain, while providing investors an exciting investment opportunity that combines meaningful growth and income potential as the second publicly traded cannabis REIT.”
Following closing of the Qualifying Transaction (the “Closing”), the REIT LP will be internally managed by the REIT LP’s General Partner, Subversive Real Estate Acquisition REIT (GP) Inc. (the “General Partner”). On Closing, the General Partner’s management team and board of directors is expected to be comprised of:Michael Auerbach (Executive Chairman and director), Richard Acosta (Chief Executive Officer and director), Michael Miller (Chief Financial Officer), Eric Clarke (Chief Operating Officer), Leland Hensch (director), Scott Baker (director), Omar Mangalji (director), Octavio Boccalandro (director), Anne Sullivan (director) and Craig Hatkoff (director). The REIT LP expects that Anne Sullivan and Leland Hensch will resign from the board of directors shortly after Closing. The Board will conduct a search for their replacements at such time.
The sponsors of the REIT LP are Subversive Real Estate Acquisition Sponsor Corp., Inception Altanova Sponsor, LLC and CG Investments Inc. IV (collectively, the “Sponsors”).
The REIT LP’s currently issued and outstanding restricted voting units (“Restricted Voting Units”) and rights (“Rights”) are listed and posted for trading on the Neo Exchange Inc. (the “Exchange”).
The completion of the Qualifying Transaction is conditional upon, among other things, approval by the Exchange. The Exchange has conditionally approved the continued listing of the limited partnership units of the REIT LP (the “Limited Partnership Units”), including the Limited Partnership Units issuable in connection with the Qualifying Transaction (including, for greater certainty, upon the redemption of certain units (the “Exchangeable Units”) of a subsidiary of the REIT LP that are economically equivalent to the Limited Partnership Units), the Debenture Units and Limited Partnership Units underlying the Debentures, and the Rights and the Debentures. Continued listing of the Limited Partnership Units and the Rights and the listing of the Debentures is subject to the REIT LP fulfilling all of the requirements of the Exchange. It is expected that the Limited Partnership Units, Rights and Debentures would trade under the symbols “SVX.U”, “SVX.RT.U” and “SVX.DB.U”, respectively.
Summary of the Qualifying Transaction
The REIT LP entered into the Agreements on October 6, 2020 to acquire approximately US$97.4 million of real properties, comprised of 10 properties (comprising approximately 690,000 square feet of gross leasable area), and to acquire or originate five first lien mortgages (secured by properties comprising approximately 810,000 square feet of gross leasable area or 860,000 square feet of gross leasable area following the expenditure of year one funding commitments) for US$85.4 million , for a portfolio value of approximately US$182 .8 million (the “Initial Portfolio”). The REIT LP has also entered into binding agreements to acquire two additional real properties totaling 40,000 square feet, for an aggregate purchase price of US$17.9 million , which are expected to close in the fourth quarter of 2020. Following these two acquisitions, the REIT LP’s portfolio will be comprised of 12 properties (approximately 730,000 square feet of gross leasable area) and five first lien mortgages (secured by properties comprising approximately 810,000 square feet of gross leasable area or 860,000 square feet of gross leasable area following the expenditure of year one funding commitments) and will have an aggregate value of approximately US$200.7 million .
The Initial Portfolio, through property acquisitions and first lien mortgages, currently consists of industrial (89.1%), retail (10.2%) and hybrid of industrial/retail (0.7%) properties. With the two additional properties, the REIT LP’s portfolio will consist of industrial (81.2%), retail (11.0%) and hybrid of industrial/retail (7.8%) properties. The geographic and square footage breakdown of the acquired properties (including the properties to be acquired after Closing) and those securing the mortgages is as follows:
California – 8 assets across Los Angeles , North Hollywood , Desert Hot Springs , Coachella , Greenfield , and San Francisco (total of 432,000 square feet) (including the two additional assets expected to be acquired following the Closing)
Florida – two assets across Alachua and Jacksonville (total of 296,000 square feet)
Nevada – one asset in North Las Vegas (455,000 square feet)
Arizona – one asset in Mesa (9,000 square feet)
Maryland – one asset in Lutherville – Timonium (6,000 square feet)
Michigan – one asset in Lansing (65,000 square feet)
Ohio – one asset in Columbus (7,000 square feet)
Pennsylvania – one asset in Johnstown (3,000 square feet)
Washington – one asset in Tacoma (319,000 square feet)
Upon completion of the Qualifying Transaction: (a) the class of Restricted Voting Units will be automatically renamed as the Limited Partnership Units, (b) holders of Rights will be entitled to receive, for no additional consideration, one Limited Partnership Unit for every eight Rights held, subject to adjustment under the terms of the applicable rights agreement, (c) the REIT LP shall be authorized to issue two classes of securities: Limited Partnership Units and proportionate voting units, (d) the remaining proceeds of the REIT LP’s initial public offering will be released from escrow, and (e) the Debentures and Debenture Units will be issued to subscribers in connection with the Private Placement.
In connection with the Private Placement, and subject to the extent that the Agents’ option is exercised, on Closing the Sponsor will relinquish up to 2,112,500 Limited Partnership Units. In addition, pursuant to an agreement to be entered into on Closing, the founders of the REIT LP will (a) not be entitled to distributions on 506,125 Limited Partnership Units until the earlier of 12 months from Closing or the date on which unitholders achieve a 20% total unitholder return, (b) not be entitled to distributions on and relinquish (i) 1,000,000 Limited Partnership Units unless a 20% total unitholder return is reached within 18 months of Closing, (ii) 1,000,000 Limited Partnership Units unless a 50% total unitholder return is reached within 36 months of Closing, and (iii) 1,000,000 Limited Partnership Units unless a 100% total unitholder return is reached within 60 months of Closing.
Summary of the Private Placement
The REIT LP has also announced that it has entered into the Private Placement. On Closing, the Subscription Receipts will convert into US$40.0 million aggregate principal amount of 6% Debentures at the Offering Price. The Offering Price will be funded on conversion by the subscribers of the Subscription Receipts. The REIT LP has also granted the Agents, a 30-day non-transferable option to purchase Subscription Receipts convertible into and up to an additional US$25.0 millionDebentures and up to an additional 125,000 Debenture Units. The Subscription Receipts were issued pursuant to an agency agreement dated October 6, 2020between the REIT LP and the Agents. Compass Point is registered as a broker dealer in the United States , and is not registered to sell securities in any Canadian jurisdiction. Accordingly, Compass Point only distributed Subscription Receipts in the U.S. pursuant to exemptions from registration requirements in the U.S. and other jurisdictions where such sales were permissible. The Agents are entitled to a cash commission equal to 4.0% of the aggregate gross proceeds from the Private Placement. The Offering Price and the other terms of the Private Placement were determined by an arm’s length negotiation between the REIT LP and the Agents. The Debentures and the Debenture Units are expected to be qualified under the Final Prospectus (as defined below).
The Debentures, when issued, will be convertible at the option of the holder into Limited Partnership Units of the REIT LP at US$11.50 per unit, representing a conversion rate of approximately 86.9 units for each US$1,000 principal amount of Debentures, subject to adjustment in accordance with a trust indenture to be entered into on or before Closing that will govern the Debentures. The Debentures will bear interest at a rate of 6.00% per annum payable semi-annually on March 31 and September 30 until maturity on the fourth anniversary of the Closing, with interest payments commencing on March 31, 2021 .
The Debentures may not be redeemed by the REIT LP prior to the third anniversary of Closing. On and after the third anniversary of Closing and prior to the Maturity Date, the Debentures may be redeemed by the REIT LP for their principal amount thereof plus accrued and unpaid interest on not more than 60 days’ and not less than 30 days’ prior written notice. In addition, the REIT LP will also be required to make a redemption offer to holders of the Debentures at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest thereon, in the event of a change of control and certain asset disposition transactions, as further described in the indenture.
The REIT LP intends to use the net proceeds from the Private Placement to fund the Qualifying Transaction and future acquisitions, as well as general purposes.
The Debentures and Debenture Units have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, (the “1933 Act”) and may not be offered, sold or delivered, directly or indirectly, in the United States , or to, or for the account or benefit of, “U.S. persons” (as defined in Regulation S under the 1933 Act), except pursuant to an exemption from the registration requirements of the 1933 Act. This press release does not constitute an offer to sell or a solicitation of an offer to buy any Units in the United States or to, or for the account or benefit of, U.S. persons.
Timing and Additional Information
It is anticipated that the Qualifying Transaction will be completed by the end of October 2020 .
Canaccord Genuity Corp. and Compass Point Research & Trading, LLC are acting as financial advisors to the REIT LP and as the Agents on the Private Placement.
Goodmans LLP, Paul Hastings LLP and VGC LLP are legal counsel to the REIT LP, Blake, Cassels & Graydon LLP is legal counsel to the Agents.
Pursuant to the First Amended and Restated Limited Partnership Agreement of the REIT LP, holders of Restricted Voting Units have the right to redeem all or a portion of their Restricted Voting Units in connection with the Qualifying Transaction. The deadline for electing to redeem is October 29, 2020 . Subject to applicable law, effective immediately prior to the Closing, all Restricted Voting Units validly deposited for redemption shall be redeemed for an estimated price per Restricted Voting Unit of US$10.04 , payable in cash. Upon payment of such cash consideration, the holders of the Restricted Voting Units so redeemed will have no further rights in respect of the Restricted Voting Units.
The REIT LP expects to file its final long form non-offering prospectus (the ” Final Prospectus “) on SEDAR no later than October 15, 2020 , and to mail it to holders of Restricted Voting Units shortly thereafter, but no later than 14 days prior to the redemption election deadline. If the Final Prospectus is not filed byOctober 15, 2020 , the redemption election deadline may be required to be extended. The REIT LP will provide notice of any such extension via news release. The REIT LP will issue a news release upon the filing of the Final Prospectus.
In the event that any of the acquisitions comprising the Qualifying Transaction cannot be completed for any reason, the REIT LP may decide to proceed with its acquisition of the others assets comprising the Initial Portfolio in whole or in part. In the event that all applicable regulatory requirements are not met or waived, the REIT LP will not proceed with the Qualifying Transaction.
Further details are set out in the Agreements, which will each be filed on SEDAR shortly. The REIT LP will also file on SEDAR and with the Canadian securities regulatory authorities in each of the provinces and territories of Canada (other than Quebec ) the Final Prospectus containing disclosure regarding the Qualifying Transaction and the Private Placement. The Final Prospectus will be available on SEDAR and www.subversivecapital.com/reit .
About Subversive Real Estate Acquisition REIT LP
Subversive Real Estate Acquisition REIT LP is a limited partnership established under the Limited Partnerships Act ( Ontario ) formed for the purpose of effecting, directly or indirectly, an acquisition of one or more businesses or assets, by way of a merger, amalgamation, arrangement, equity exchange, asset acquisition, equity purchase, reorganization, or any other similar business combination involving the REIT LP that will qualify as its qualifying transaction for the purposes of the rules of the Exchange. The REIT LP is a special purpose acquisition corporation for the purposes of the rules of the Exchange. The REIT LP’s Restricted Voting Units and Rights are listed on the Exchange under the symbols “SVX.U” and “SVX.RT.U”, respectively.
Certain statements contained in this news release constitute “forward-looking information” for the purpose of applicable Canadian securities legislation (“forward-looking statements “). These statements reflect the General Partner’s management’s expectations with respect to future events, the REIT LP’s financial performance and business prospects. Forward-looking statements include, but are not limited to, statements concerning the REIT LP’s ability to complete the Qualifying Transaction and Private Placement; the use of proceeds from the Private Placement; the REIT LP’s ability to acquire the additional two properties; the REIT LP’s ability to pay interest on, and to repay the principal amount of, the Debentures; the continued listing of the Limited Partnership Units (including the Limited Partnership Units issuable upon redemption of the Exchangeable Units; the Debenture Units; and the Limited Partnership Units underlying the Debentures) and Rights and the listing of the Debentures, and the expected timing and potential success of such listings; the expected benefits of the Qualifying Transaction to, and resulting treatment of, investors in, and unitholders of, the REIT LP, including holders of Limited Partnership Units, Rights and Debentures; the anticipated effects of the Qualifying Transaction; the REIT LP’s financial performance following the Qualifying Transaction; the growth of the cannabis industry and growth of the REIT LP; and the management of the REIT LP. All statements other than statements of historical fact are forward-looking statements. The use of the words “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intends”, “may”, “might”, “plan”, “possible”, “potential”, “predict”, “project”, “should”, “would”, and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not a forward-looking statement. These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results or events to differ materially from those anticipated or implied in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. Unless otherwise indicated, these statements speak only as of the date of this prospectus.
Such forward-looking statements are qualified in their entirety by the inherent risks, uncertainties and changes in circumstances surrounding future expectations which are difficult to predict and many of which are beyond the control of the REIT LP, including with respect to the Qualifying Transaction.
Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable by management of the REIT LP as of the date of this news release, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The REIT LP’s estimates, beliefs and assumptions, which may prove to be incorrect, include various assumptions, including, but not limited to, the anticipated receipt of any required regulatory approvals and consents (including the final approval of the Exchange); the expectation that each counterparty will comply with the terms and conditions of the applicable Definitive Agreement; the expectation that no event, change or other circumstance will occur that could give rise to the termination of one or more of the Definitive Agreements; the REIT LP’s future growth potential, results of operations, future prospects and opportunities, demographic and industry trends, no change in legislative or regulatory matters, future levels of indebtedness, the tax laws as currently in effect, the continuing availability of capital and current economic conditions.
When relying on forward-looking statements to make decisions, the REIT LP cautions readers not to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties. Forward-looking statements should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be achieved. A number of factors could cause actual results to differ, possibly materially, from the results discussed in the forward-looking statements, including, but not limited to the factors that will be discussed under “Risk Factors” in the REIT LP’s final non-offering prospectus once available on SEDAR.
Although management has attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known that management believes are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information.
All forward–looking statements included in and incorporated into this news release are qualified by these cautionary statements. Unless otherwise indicated, the forward–looking statements contained herein are made as of the date of this news release, and except as required by applicable law, the REIT LP nor its Sponsors do not undertake any obligation to publicly update or revise any forward–looking statement, whether as a result of new information, future events or otherwise.
Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.
Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.
Average residential home price in B.C.: $938,500
Average price in greater Vancouver (2024 year to date): $1,304,438
Average price in greater Victoria (2024 year to date): $979,103
Average price in the Okanagan (2024 year to date): $748,015
Average two-bedroom purpose-built rental in Vancouver: $2,181
Average two-bedroom purpose-built rental in Victoria: $1,839
Average two-bedroom purpose-built rental in Canada: $1,359
Rental vacancy rate in Vancouver: 0.9 per cent
How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent
This report by The Canadian Press was first published Oct. 17, 2024.
VANCOUVER – Voters along the south coast of British Columbia who have not cast their ballots yet will have to contend with heavy rain and high winds from an incoming atmospheric river weather system on election day.
Environment Canada says the weather system will bring prolonged heavy rain to Metro Vancouver, the Sunshine Coast, Fraser Valley, Howe Sound, Whistler and Vancouver Island starting Friday.
The agency says strong winds with gusts up to 80 kilometres an hour will also develop on Saturday — the day thousands are expected to go to the polls across B.C. — in parts of Vancouver Island and Metro Vancouver.
Wednesday was the last day for advance voting, which started on Oct. 10.
More than 180,000 voters cast their votes Wednesday — the most ever on an advance voting day in B.C., beating the record set just days earlier on Oct. 10 of more than 170,000 votes.
Environment Canada says voters in the area of the atmospheric river can expect around 70 millimetres of precipitation generally and up to 100 millimetres along the coastal mountains, while parts of Vancouver Island could see as much as 200 millimetres of rainfall for the weekend.
An atmospheric river system in November 2021 created severe flooding and landslides that at one point severed most rail links between Vancouver’s port and the rest of Canada while inundating communities in the Fraser Valley and B.C. Interior.
This report by The Canadian Press was first published Oct. 17, 2024.
British Columbia voters face no shortage of policies when it comes to tackling the province’s housing woes in the run-up to Saturday’s election, with a clear choice for the next government’s approach.
David Eby’s New Democrats say the housing market on its own will not deliver the homes people need, while B.C. Conservative Leader John Rustad saysgovernment is part of the problem and B.C. needs to “unleash” the potential of the private sector.
But Andy Yan, director of the City Program at Simon Fraser University, said the “punchline” was that neither would have a hand in regulating interest rates, the “giant X-factor” in housing affordability.
“The one policy that controls it all just happens to be a policy that the province, whoever wins, has absolutely no control over,” said Yan, who made a name for himself scrutinizing B.C.’s chronic affordability problems.
Some metrics have shown those problems easing, with Eby pointing to what he said was a seven per cent drop in rent prices in Vancouver.
But Statistics Canada says 2021 census data shows that 25.5 per cent of B.C. households were paying at least 30 per cent of their income on shelter costs, the worst for any province or territory.
Yan said government had “access to a few levers” aimed at boosting housing affordability, and Eby has been pulling several.
Yet a host of other factors are at play, rates in particular, Yan said.
“This is what makes housing so frustrating, right? It takes time. It takes decades through which solutions and policies play out,” Yan said.
Rustad, meanwhile, is running on a “deregulation” platform.
He has pledged to scrap key NDP housing initiatives, including the speculation and vacancy tax, restrictions on short-term rentals,and legislation aimed at boosting small-scale density in single-family neighbourhoods.
Green Leader Sonia Furstenau, meanwhile, says “commodification” of housing by large investors is a major factor driving up costs, and her party would prioritize people most vulnerable in the housing market.
Yan said it was too soon to fully assess the impact of the NDP government’s housing measures, but there was a risk housing challenges could get worse if certain safeguards were removed, such as policies that preserve existing rental homes.
If interest rates were to drop, spurring a surge of redevelopment, Yan said the new homes with higher rents could wipe the older, cheaper units off the map.
“There is this element of change and redevelopment that needs to occur as a city grows, yet the loss of that stock is part of really, the ongoing challenges,” Yan said.
Given the external forces buffeting the housing market, Yan said the question before voters this month was more about “narrative” than numbers.
“Who do you believe will deliver a better tomorrow?”
Yan said the market has limits, and governments play an important role in providing safeguards for those most vulnerable.
The market “won’t by itself deal with their housing needs,” Yan said, especially given what he described as B.C.’s “30-year deficit of non-market housing.”
IS HOUSING THE ‘GOVERNMENT’S JOB’?
Craig Jones, associate director of the Housing Research Collaborative at the University of British Columbia, echoed Yan, saying people are in “housing distress” and in urgent need of help in the form of social or non-market housing.
“The amount of housing that it’s going to take through straight-up supply to arrive at affordability, it’s more than the system can actually produce,” he said.
Among the three leaders, Yan said it was Furstenau who had focused on the role of the “financialization” of housing, or large investors using housing for profit.
“It really squeezes renters,” he said of the trend. “It captures those units that would ordinarily become affordable and moves (them) into an investment product.”
The Greens’ platform includes a pledge to advocate for federal legislation banning the sale of residential units toreal estate investment trusts, known as REITs.
The party has also proposed a two per cent tax on homes valued at $3 million or higher, while committing $1.5 billion to build 26,000 non-market units each year.
Eby’s NDP government has enacted a suite of policies aimed at speeding up the development and availability of middle-income housing and affordable rentals.
They include the Rental Protection Fund, which Jones described as a “cutting-edge” policy. The $500-million fund enables non-profit organizations to purchase and manage existing rental buildings with the goal of preserving their affordability.
Another flagship NDP housing initiative, dubbed BC Builds, uses $2 billion in government financingto offer low-interest loans for the development of rental buildings on low-cost, underutilized land. Under the program, operators must offer at least 20 per cent of their units at 20 per cent below the market value.
Ravi Kahlon, the NDP candidate for Delta North who serves as Eby’s housing minister,said BC Builds was designed to navigate “huge headwinds” in housing development, including high interest rates, global inflation and the cost of land.
Boosting supply is one piece of the larger housing puzzle, Kahlon said in an interview before the start of the election campaign.
“We also need governments to invest and … come up with innovative programs to be able to get more affordability than the market can deliver,” he said.
The NDP is also pledging to help more middle-class, first-time buyers into the housing market with a plan to finance 40 per cent of the price on certain projects, with the money repayable as a loan and carrying an interest rate of 1.5 per cent. The government’s contribution would have to be repaid upon resale, plus 40 per cent of any increase in value.
The Canadian Press reached out several times requesting a housing-focused interview with Rustad or another Conservative representative, but received no followup.
At a press conference officially launching the Conservatives’ campaign, Rustad said Eby “seems to think that (housing) is government’s job.”
A key element of the Conservatives’ housing plans is a provincial tax exemption dubbed the “Rustad Rebate.” It would start in 2026 with residents able to deduct up to $1,500 per month for rent and mortgage costs, increasing to $3,000 in 2029.
Rustad also wants Ottawa to reintroduce a 1970s federal program that offered tax incentives to spur multi-unit residential building construction.
“It’s critical to bring that back and get the rental stock that we need built,” Rustad said of the so-called MURB program during the recent televised leaders’ debate.
Rustad also wants to axe B.C.’s speculation and vacancy tax, which Eby says has added 20,000 units to the long-term rental market, and repeal rules restricting short-term rentals on platforms such as Airbnb and Vrbo to an operator’s principal residence or one secondary suite.
“(First) of all it was foreigners, and then it was speculators, and then it was vacant properties, and then it was Airbnbs, instead of pointing at the real problem, which is government, and government is getting in the way,” Rustad said during the televised leaders’ debate.
Rustad has also promised to speed up approvals for rezoning and development applications, and to step in if a city fails to meet the six-month target.
Eby’s approach to clearing zoning and regulatory hurdles includes legislation passed last fall that requires municipalities with more than 5,000 residents to allow small-scale, multi-unit housing on lots previously zoned for single family homes.
The New Democrats have also recently announced a series of free, standardized building designs and a plan to fast-track prefabricated homes in the province.
A statement from B.C.’s Housing Ministry said more than 90 per cent of 188 local governments had adopted the New Democrats’ small-scale, multi-unit housing legislation as of last month, while 21 had received extensions allowing more time.
Rustad has pledged to repeal that law too, describing Eby’s approach as “authoritarian.”
The Greens are meanwhile pledging to spend $650 million in annual infrastructure funding for communities, increase subsidies for elderly renters, and bring in vacancy control measures to prevent landlords from drastically raising rents for new tenants.
Yan likened the Oct. 19 election to a “referendum about the course that David Eby has set” for housing, with Rustad “offering a completely different direction.”
Regardless of which party and leader emerges victorious, Yan said B.C.’s next government will be working against the clock, as well as cost pressures.
Yan said failing to deliver affordable homes for everyone, particularly people living on B.C. streets and young, working families, came at a cost to the whole province.
“It diminishes us as a society, but then also as an economy.”
This report by The Canadian Press was first published Oct. 17, 2024.
