(Bloomberg) — Hines, a real estate company with nearly $96 billion in assets under management, is pitching international investors on a Canadian apartment building deal as a way to bet on the country’s tight housing market.
The US firm is seeking to sell a 462-unit rental building in Calgary after completing construction nearly three years ago, with the expectation it will fetch around C$200 million ($147 million), according to Avi Tesciuba, head of Canadian operations at Hines.
Rents in Canada climbed last year as a longstanding shortage of housing was met with a record amount of immigration. Meanwhile, in the for-sale market, higher mortgage rates and a lack of homes being listed are squeezing buyers, exacerbating the housing crunch.
“We believe long term in Canada and it starts with population,” Tesciuba said in an interview. “The housing supply has frankly been very slow to respond to this population change, and therefore, the housing shortage that we’re seeing now is expected to intensify in the coming years.”
The oil-producing province of Alberta in the western part of Canada has been a particular draw for migrants both from abroad and within the country. Forecasts for gains in oil prices may help support the prospect of stronger economic growth in the area compared to other regions.
Calgary, the center of Alberta’s oil industry, saw a record migration to the area last year, helping push the rental vacancy rate down to 2.7%, the lowest since 2014, according to Canada Mortgage and Housing Corp.
Hines is selling the 32-story One Park Central building in Calgary to return profit to investors at a time when it believes the market is favorable. The aim is to secure a deal by the early fall. The company expects to finish construction on the second phase of the Park Central project, a 40-story tower, next year.
Despite Canada’s population growth, new apartments are relatively rare. Most efforts have been focused on condominium buildings, which are perceived as less risky to construct since developers can line up financing from buyers in advance.
Finding more buyers for apartment buildings could provide more of an incentive for developers to pursue these types of projects.
“You’re taking a major risk,” Tesciuba said, referring to a developer such as Hines starting on an apartment project. “Knowing that capital will be available and interested on the exit gives you more comfort in making that big bet.”
The sale is being managed by brokerages RBC Capital Markets Real Estate Group and Avison Young.
A massive Silver Hills estate on Old Colony Road (a short walk from Bayview), with its own cellular antenna and underground filtration system. Nestled on a one-acre lot surrounded by greenery, this fortress—designed for a wealthy buyer who loves both entertaining and privacy—has so far piqued the interest of business moguls, celebrities and members of the Toronto Raptors. The mansion is loaded with over-the-top amenities: a family room the size of a dance hall, a Cineplex-grade home theatre, a 360-degree camera system, built-in face-recognition technology and voice-activated locks. In total, the place has over 15 kilometres of wiring within its walls.
Architect and designer Lisa McCann considers this state-of-the-art marvel her magnum opus. She spent the past six and a half years on the project, collaborating with her husband, Michael McCann, as well as more than 100 tradespeople. “I didn’t want this to be a subdivision on steroids,” she says. “I wanted to bring as much functionality as possible so that residents would never want to leave.”
Digital mortgage lender Better.com is exiting the real estate business.
The struggling fintech startup laid off its real estate team on June 7, multiple sources confirmed to TechCrunch. The company is said to be shifting from an in-house agent model to a partnership agent model.
One person who was impacted by the move told TechCrunch that the agents had received “little to no severance…after getting a more than 50% salary cut in November in order to ‘ensure’ our jobs to come.”
TechCrunch reached out to Better.com, which declined to comment on the record. It is not clear how many people were impacted.
The news is not shocking considering that rumors of Better.com’s plans to exit the real estate business have swirled for some time as the housing market has experienced a major slowdown driven by rising mortgage interest rates. As early as April of 2022, TechCrunch reported that it was suspected that all of Better Real Estate could be scrapped. The unit was at one time the “baby” of the company, sources said, and where a big chunk of investment dollars were going to go toward in 2022.
Better had been vocal about its desire to build out its purchase experience and move beyond digital lending to help people find and purchase homes — hence changing its name from Better Mortgage to just Better. It was also working to expand value-added offerings like title and homeowner’s insurance as part of its product suite.
“They wanted to touch every part of home ownership,” a source close to the company who preferred to remain anonymous told TechCrunch at the time. “The company invested resources in building out consumer experiences and agent-facing tools for the Better Real Estate business, including its first native mobile app, not all of which came to fruition, given the trajectory of the business.”
Better Real Estate aimed to be competitive with the likes of Zillow and Redfin, and the company had reportedly followed the same salaried-agent model.
In March, TechCrunch reported Better.com’s SPAC deal with Aurora Acquisition Corp. got a new lease on life, extending its timeframe to close the transaction through the end of Q3 2023.
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Listing agent: Connie Buna, Keller Williams Realty
Buyer’s agent: Noam Dolgin, Heller Murch Realty
What they got
This heritage house built in 1912 is in the desirable Grandview-Woodland neighbourhood on Vancouver’s east side, within walking distance to Trout Lake and schools.
The 2,867-square-foot house is situated on a standard 33- by 122-foot lot, with four bedrooms on the main floor and upper floor, and two bathrooms. There’s a legal two-bedroom suite in the basement, as well as a mature garden.
The purchasers were two couples that entered into a 50/50 co-ownership agreement with a shared mortgage. One couple will live in the basement and half of the main floor, and the other will live on the third level and the other half of the main floor, says realtor Noam Dolgin, who specializes in co-ownership deals.
“They are taking this large heritage house in a great location and turning it into two solid livable suites, and taking advantage of that to bring their price point down instead of paying $1,100 per square foot for half a duplex or a townhouse,” Mr. Dolgin says.
The agent’s take
Mr. Dolgin said the couples met while attending one of his East Vancouver co-ownership property tours. He said the majority of his business is bringing like-minded buyers together to purchase houses and divide them, but with shared yard space. It’s the equivalent of strata ownership, but without the added cost.
“They connected, the timing was right. They wanted the same location, the budgets were similar,” he says. “There was some negotiation around the price.”