BCBusiness

27 B C B U S I N E S S . C A J A N U A R Y/ F E B R U A R Y 2 0 2 5 S h u t t e r s t o c k The Rental Protection Fund Half a billion dollars, provided by the NDP government starting last year, is being granted to nonprofit housing organizations to allow them to buy private apartment buildings to come onto the market. And that investment appears to be going gangbusters. In the first six months of 2024, 24 percent of all apartment transactions in B.C., by dollar volume, have been sales to nonprofits. In some suburban areas, the proportion is up to 50 percent. That's in contrast to previous years, when perhaps 3 percent of all apartment sales were to nonprofits. This fund, the first of its kind in Canada, has been hailed by housing activ- ists as a welcome new strategy for getting more apartments out of the private and speculative market. Mark Goodman, whose company, Goodman Commercial Inc., has been involved in many sales to nonprofits over the years, is less positive, saying it's an inefficient way to provide affordable hous- ing and is taking market housing out of an already tight rental pool. Impact investment capital There are people in the world who have money and are willing to invest it in socially meaningful projects while accepting a slightly lower return than they would get elsewhere. A fund called Sacha Investments Ltd. has been putting money into mostly nonprofit housing projects in B.C. for the last two years. It has US$150 million ready to invest in B.C. and Alberta and has com- mitted C$45 million already. It's been surprisingly challenging work to get money to projects because BC Housing's system doesn't make it easy to place private capital, says the fund's local chief real estate investment officer, Kira Gerwing, who was formerly with Vancity. But Sacha has been successful in work- ing with nonprofits who are being given money through the Rental Protection Fund, because there's more leeway there since the apartments they buy are supposed to run on a break-even basis with no subsidy from BC Housing. While it seems almost unbelievable that people in the current world are willing to accept lower returns on their investment money, Gerwing says there are many out there. Her fund's sponsor, who has asked to remain anonymous, says: "If we keep extracting profits at a high level, it's coming at the cost of our communities." Investing through a development IPO You've heard of initial public offerings on the stock market for everything from Facebook to Visa to, perhaps, Reddit. This September, one of B.C.'s biggest developers launched a precedent-setting $82-million IPO for a single tower it is building in Burnaby, the Citizen on Kingsway near Metrotown. The Anthem Citizen Real Estate Devel- opment Trust, the first of its kind in Canada, is the latest from founder Eric Carlson. "Policy changes, increased costs, shifting market cycles and more create an ongoing challenge for developers hunting for capital, which requires innovative and creative thinking to get projects off the ground," said Carlson in the news release announcing the new venture. "This IPO is a great way to continue to push the boundar- ies of what is possible and take a new approach to making housing happen." INVESTORS AND INVESTMENTS IN RESIDENTIAL REAL ESTATE YOU DIDN'T KNOW EXISTED somewhere between 6 and 12 percent of the whole rental market as they strike a chord with small investors who don't want to get into buying and managing an indi- vidual condo or building themselves—as a good vehicle for helping to provide sup- ply. (That's more true in B.C., where REIT principals say they haven't been able to find much desirable product so they are partnering with local developers to build new apartments.) REITs have taken heavy shelling in aca- demic and political circles recently, seen as part of the "financialization" of housing that many believe is more a cause of astro- nomical sale and rent prices than a lack of supply. They're viewed as entities that pay higher prices than people just looking for a home might, shutting those people out of the market, and then, the narrative goes, they embark on deliberate campaigns to evict long-time, low-paying tenants in order to do minimal fix-ups and re-rent at much higher prices. In a sign of the current times, federal NDP leader Jagmeet Singh recently tweeted that Canada needs to get corporate inves- tors out of the housing market. In late Sep- tember, he thundered: "Today, the biggest financial firms collectively own close to 400,000 homes—nearly 20 percent of the rental units in Canada. In the mid-1990s that number was 0. New Democrats will introduce a bill that will ban corporations from buying homes people can afford." (Word of warning: it's not clear where Singh's stats come from. As previously noted, the last census said there are about five million rental homes in the country. So, 400,000—a number that seems to be loosely related to the 350,000 apartments that are owned by real-estate investment trusts—is 8 percent of that, not 20.) Singh does have a point that corpo- rate investors have been playing a bigger part in both the Canadian and U.S. hous- ing markets since the late '90s and early '00s, particularly after the 2008 recession when entire subdivisions ended up vacant. In the U.S., those bulk buys set off alarm

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