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Vancouver Developer Acquires Reputable Alberta Business for 200 Million

VANCOUVER, BRITISH COLUMBIA, Mar 7, 2014 (Menafn – Marketwired via COMTEX) –Anthem Properties Group has acquired Calgary based United Communities. United Communities is a leading residential land developer that entitles, develops and sells finished lots to home builders in Calgary, Edmonton and Sacramento, California. In addition, the company operates a home building division in Sacramento. United employs about 40 people, has completed over 20 major communities and has developed over 23,000 serviced lots in the last two decades.

Anthem Properties Group is a 175 person real estate investment, development and management company operating in Western Canada. Noteworthy Alberta projects undertaken by Anthem include Waterfront, a series of luxury high rise towers in Eau Clair on the Bow River; Erlton Village, a TOD mixed use project at 25th Ave. and MacLeod Trail; the recently remediated Molson Brewery site in Edmonton, a brown field project; and the completely rebuilt North Town Centre at 137th Ave. and 97th St. in North Edmonton.

Anthem pursued the investment in United to:

–Increase its exposure to Alberta
–Instantly secure a strong Alberta talent pool
–Add residential land development as a core strategic asset
–Return to its roots as a land developer
–Gain a foothold in the U.S. market through the Sacramento operation

Anthem’s plans for United include:

–Operating it as a sister business to Anthem under the name United
Communities
–Retaining the management team as is, with the exception of CEO Don
Douglas, who is stepping down and assuming the role of Chairman Emeritus
–Maintaining the same strategy followed by the former owners
–Rigorously pursuing growth opportunities together with existing joint
venture and financial partners
–The addition of the United Communities business with its separate
management organization complements Anthem’s existing asset base and
management platform without duplication or redundancy.

Said Don Douglas, “I am happy to transfer ownership of United to Anthem and look forward to supporting Eric, who will be taking over as CEO, and who will be working with the same great United team that I had the privilege of working with all these years.”

Eric Carlson, incoming CEO of United and existing CEO of Anthem said, “Anthem is delighted with its investment in United Communities. I am eager to work with the United team and its partners in pursuit of United’s existing successful development strategy.”

Anthem pursued the investment with assistance from Kingsett Capital of Toronto, DBB Investments of Vancouver, and parent company Anthem Capital, also of Vancouver.

The Anthem portfolio, located throughout Alberta and British Columbia, is currently comprised of over 3.5 million square feet of commercial space, 40 acres of urban and suburban land held for future development, and approximately 3,500 residential condominium units either in the design development stage or under construction. Anthem has invested in, developed, and or managed, alone or in partnership, over 210 projects, in virtually all asset classes, with a cumulative historical value of approximately 2.5 billion.

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The Bank of Canada announced this morning that it is maintaining its target for the overnight rate at 1 per cent. In its accompanying statement, the Bank noted that the economy is preceding largely on the path the Bank projected in its January Monetary Policy Report. While inflation and growth were slightly higher than expected in the fourth quarter of 2013, the Bank expects slack in the economy to keep inflation below the Bank’s 2 per cent target this year. The Bank does not view the risks associated with elevated household imbalances as materially changed and judges the current stance of monetary policy, with the overnight rate at 1 per cent, as appropriate.

Speculation of an impending rate cut by the Bank of Canada has receded in recent weeks following a modest acceleration of inflation and stronger than expected economic growth. The uptick in inflation and growth is in part due to a sharply lower Canadian dollar and, while not explicitly targeting a lower value of the loonie, policymakers at the Bank have welcomed the decline in the dollar. A depreciation in the currency tends to be inflationary and impacts consumer prices in fairly short order while traditional monetary policy, through adjusting the overnight interest rate, impacts inflation only with a significant lag of 12 to 18 months. With the lower loonie helping to pull inflation higher, we expect the Bank will likely maintain its target rate at 1 per cent until 2015 when economic conditions may require a gradual increase in the overnight rate.

Mike Howell
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The Downtown Eastside is expected to get a massive facelift over the next 30 years that will see thousands of new social housing units, more business spaces and a tree-lined East Hastings Street.

But the $1 billion cost of revitalizing the area that includes Chinatown, Gastown and Strathcona relies heavily on senior levels of government to buck up in a big way.

The city’s proposed new community plan for the Downtown Eastside, which goes before city council March 12, calls for $530 million from the provincial and federal governments.

City manager Penny Ballem told the Courier after a media briefing Thursday that she recognizes the plan will only work with buy-in from Victoria and Ottawa.

“We have to remember it’s over 30 years; we’re not asking for that tomorrow,” Ballem said. “Are we absolutely confident that we’re going to get [the money]? No, but I think we feel much more comfortable that we actually have a very robust and coherent plan. We have very good evidence and justification of why the need is there and it’s very much quantifiable.”

The city has had some success in recent years in working with the provincial government which provided more than $200 million to build 14 social housing buildings on city property.

The federal government has contributed money to projects in the Downtown Eastside but no longer has a national housing strategy.

“But I think it’s fair to say that over the past five years, the prime minister is starting to signal that he understands,” Ballem said. “I would say we’re very hopeful but we certainly at this point have no guarantees. But we think we’re in a much better position with a great plan.”

Of the $1 billion cost of the plan, the biggest expense is $820 million for housing. At least $50 million would come from the city and $245 million from developers, leaving senior levels of government to cover $525 million.

In 2005, the city produced a housing plan for the Downtown Eastside that Vision Vancouver Coun. Andrea Reimer said will deliver “significant numbers of housing units in the next 10 years, even if there is no further investment from the federal government or the province.”

Reimer said “fierce advocacy” is really the only pathway the city has to convince senior levels of government of the need to invest in Vancouver.

“That’s what it took to get the province to the table and I expect it’ll be the same thing that gets the federal government to the table,” she said.

The plan calls for 1,300 new social housing units, another 3,100 units to replace single-room occupancy hotels and new housing for families.

The realities driving the plan are found in the Downtown Eastside’s well-documented poverty statistics: Of the 18,500 residents, up to 67 per cent are considered low income, with a median household income of $13,691.

Unemployment is at 12 per cent with more than 6,300 people on social assistance. The plan also calls for affordable childcare, access to nutritious affordable and culturally appropriate food, increase access to quality health, social and community services, improved arts and culture facilities and upgrades to cycling and pedestrian routes.

©  2014  Copyright   Black Press

TARA PERKINS
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Sales of existing homes in the Greater Toronto Area nudged up 2.1 per cent in February compared with a year earlier, while prices continued to climb.

The latest data from the country’s most populous city, as well as other urban centres such as Calgary and Vancouver, suggest Canadian home sales fared better than some experts thought they would in February, and prices maintained their sturdy upward trajectory.

The average selling price on Toronto’s Multiple Listing Service last month was $553,193 – an increase of 8.6 per cent from a year earlier – the local real estate board said on Wednesday. The MLS Home Price Index, which seeks to create a more apples-to-apples comparison of prices over time by accounting for changes in the type and location of homes that are selling, was up 7.3 per cent.

“While the strong price growth experienced over the past year should prompt an improvement in the supply of listings, sellers’ market conditions will continue to prevail this year,” Jason Mercer, senior manager of market analysis at the Toronto Real Estate Board, said in a press release.

Canadian home prices are being watched closely, amid concern that they are overvalued. In an interview this week, Ed Devlin, the head of Canadian portfolio management at bond giant Pimco, said he expects to see prices start to dip later this year and then fall by 10 to 20 per cent in real terms over the next three to five years. He expects that mortgage rates will rise this year, and will be one of the catalysts for softer prices.

Deutsche Bank said in December that it thinks Canadian home prices are 60 per cent too high, and declared that it believes Canada is the most overvalued housing market in the world. Other observers, including Canadian bank economists and the Organization for Economic Co-operation and Development, see a much smaller degree of overvaluation but nonetheless agree that prices are too high.

In recent years, Finance Minister Jim Flaherty has been trying to take some steam out of the market to reduce the growth of house prices as well as the amount of mortgage debt that consumers are racking up. His actions precipitated a steep slump in house sales that began in the summer of 2012 and lasted through the spring of 2013. But the slump did not appear to have a major impact on prices.

Vancouver, the city that was hardest hit by the sales downturn and the least affordable market in the country, is now seeing record average selling prices for detached houses. On Tuesday, the city’s real estate board said the benchmark price for all types of residential properties rose 3.2 per cent from a year earlier, to $609,100 in February, as sales increased by 40.8 per cent.

Calgary’s real estate board said on Monday that the benchmark price of a single-family house was $482,800, up 9.1 per cent from a year earlier. Overall sales in the city rose 8.7 per cent from February 2013, and according to Bank of Montreal economists overall median prices in Calgary were up 7.6 per cent.

Real estate industry players in many major cities say that a lack of supply is buttressing prices.

“Consumers who are in the market for single family homes priced below $300,000 do not have many options, and when product does become available, it typically does not stay on the market for long,” Bill Kirk, the president of the Calgary Real Estate Board, stated in a press release.

The full national picture for February won’t be available until the Canadian Real Estate Board releases data later this month, but Bank of Montreal economist Sal Guatieri suggested in a research note that he thinks February’s market shows some momentum.

“February existing home sales in several major cities suggest the market is warming up after cooling a bit recently,” he wrote. “Wrapped up in a parka lined with cushy low interest rates, hardy Canadian home buyers have mostly shrugged at the chilly weather and high prices.” But Mr. Guatieri added in a note on Wednesday that home buyers “have yet to face the test of a meaningful climb in interest rates.”

© Copyright 2014 The Globe and Mail Inc

Garry Marr
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Sales in Canada’s most expensive housing market were up sharply from a year ago and prices also continue to rise.

The Real Estate Board of Greater Vancouver said 2,530 homes were sold in February, a 40.8% increase from a year ago and a 43.8% increase from January. The board’s benchmark composite index reached $609,100 last month, a 3.2% increase from a year ago.

“Home buyer demand picked up in February, which is consistent with typical seasonal patterns in our housing market,” said Sandra Wyant, president of REBGV, in statement. “We typically see home buyers become more active in and around the spring months.”

February sales were close to the 10-year average for the month, while new listings were down 2.8% from a year ago and 12.1% from January, 2014.

There were 13,412 homes listed for sale in Greater Vancouver last month, a 9.3% decline from a year ago but a 6.4% increase from January.

Meanwhile in Calgary, the local board said that sales growth slowed in February from January but the total amount of activity was still up 8.68% from a year ago.

“Demand growth in the single family sector has been restricted by the availability of product,” says Ann-Marie Lurie, chief economist with the Calgary Real Estate Board, in a release. “New listings in this sector fell for the second consecutive month, causing further tightening in an already undersupplied market.”

The unadjusted single family benchmark price reached $482,800 in Calgary last month, a 1.28% increase from January and 9.1% jump from a year ago.

© 2014 National Post

Garry Marr
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Consumers facing record housing prices are probably increasingly tempted to go with a floating rate mortgage and all the risks that come with an interest rate linked to prime.

The qualifying rate is based on an average of the six big banks’ posted rate for a five-year closed mortgage. Declining bond yields have lowered that qualifying rate to 4.99%.

The decline may not sound like much but Rob McLister, editor of Canadian Mortgage Trends, says it means a consumer with a $300,000 home and 5% down needs 2% less income than they did just a few months ago.

Ottawa changed the rules about four years ago to tilt the playing field in favour of locking in your mortgage. When you lock in your mortgage for a term of five years or longer, you are able to use the rate on your contract for determining how much you can borrow. Go variable and you must use qualifying rate which is still almost 50% higher.

“There has been talk of changing it, speculation that the [Office of the Superintendent of Financial Institutions] will mandate the banks use the qualifying rate for five years terms and longer,” said Mr. McLister, noting nothing has happened yet.

The federal government tends to like the idea of consumers locking in their mortgages because it offers protection from a sudden jolt in the prime rate — even as the Bank of Canada looks poised to go a record five years without moving its overnight lending rate.

Consumers are probably lured more by deals than anything else and the past year saw well-advertised rate wars over five-year fixed rate mortgages with the rate dropping to 2.99% for the term.

The Canadian Association of Accredited Mortgage Professionals said in a recent study that 82% of purchasers in 2013 went with a fixed rate product. The tide clearly turned last year because CAAMP says 67% of  consumers with a mortgage are in fixed. The percentages are climbing for locking in.

Mr. McLister says the general rule is when the gap between the five-year fixed and variables reaches 100 basis points or one percentage point, people start to shift to a floating rate.

“You’re talking about somebody who lent money at 21%,” said Laura Parsons, a Calgary-based mortgage specialist with Bank of Montreal, about the difference in rates. “We don’t know what a good interest rate is anymore, we really don’t.”

Ms. Parsons says fixed remains as popular as ever because the rate is still very low by historical perspectives. She suggests if you do pick a variable mortgage, take the savings compared to fixed rate and apply it to the principle.

“You set your payment higher in case the interest rate does change,” says Ms. Parsons.

There is a fair bit of money to be saved, as long as the variable rate is at 2.35%. Consider a $500,000 mortgage with a 25-year amortization.

Based on monthly payments, you pay $54,333.66 in interest over the five years of your mortgage at 2.35%. Raise that rate to 3.09% and the interest comes to $71,472.09. That savings could be pumped back into your mortgage, lowering the principle owed and further reducing interest costs.

Jim Murphy, chief executive of CAAMP, says the easier qualification and low rate might push a few people back into variable but a fixed rate of 3% is tempting to lock down.

“You look at the news and it just seems the Bank of Canada is unlikely to raise rates,” said Mr. Murphy, who doesn’t think overnight rates will go up this year or possibly next year.

“That’s a year where you can have these rates,” he says, referring to savings from a variable rate product.

With house prices still at all-time highs, it’s easy to see why consumers would be tempted by the savings.

© 2014 National Post

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