Edmonton Construction 13 (November 2015) - Page 603

Coldrsx · #**12041** Posted **Oct 16, 2018, 4:42 PM**

I REALLY like the Strathearn project. Complicated ownership issues and I am sure some other behind the scenes bits and pieces delaying it by them or a future owner.

https://mxddevelopment.com/wp-content/uploads/2016/04/Strathearn1.jpg

kcantor · #**12042** Posted **Oct 16, 2018, 4:46 PM**

Quote:

Originally Posted by Kevin_foster

Is there that much demand for this? Would be a stretch, even downtown.

no, there isn't.

but there will be.

and it's about time we started to plan for what will be and not what was.

if you want a reasonable comparable to how quickly these things happen - which is what we should be planning for - you don't need to look at downtown vancouver but on what's happened in richmond and burnaby and surrey as their lrt expanded and how much of happened on and around existing shopping centre sites.

s211 · #**12043** Posted **Oct 16, 2018, 5:25 PM**

Quote:

Originally Posted by MichaelC

Some night-time renders courtesy of Daveography on skrise cities.

I would honestly love for something positive to happen with the old mall there; BDCHS was my haunt far too many years ago.

I just don't believe that Morguard has the chops to pull it off. They've recently lost a couple of major development projects in the BC region, mid-predevelopment. The actual property owners cancelled the investment management contracts with Morguard and have handed them over to other management groups that have been able to move seemingly-stalled projects forward. Not hearing happy comments about Morguard these days.

I do wish them well but from what I'm seeing, I have my doubts about Morguard's execution abilities these days. They do have a good book of past development experience but the wheels have suddenly become very wobbly on their bus, and it's going beyond just their development management group.

Who's the actual owner of the mall? Just curious.

s211 · #**12044** Posted **Oct 16, 2018, 5:27 PM**

Quote:

Originally Posted by Coldrsx

I REALLY like the Strathearn project. Complicated ownership issues and I am sure some other behind the scenes bits and pieces delaying it by them or a future owner.

I'm a fan too. I wonder if the ownership group would consider selling out to a unified ownership group with deep pockets and long-term perspective.

feepa · #**12045** Posted **Oct 16, 2018, 6:16 PM**

What do you think WEM will do when the LRT finally arrives there? Do you think we will see some of their parking lots turn into towers, especially on the southern flank?

Hardhatdan · #**12046** Posted **Oct 16, 2018, 6:25 PM**

Quote:

Originally Posted by s211

I'm a fan too. I wonder if the ownership group would consider selling out to a unified ownership group with deep pockets and long-term perspective.

That place is a money factory.
There is something like 450 units that rent likely on average over $800 a month with near full occupancy.

Credit due to the owners, they have kept up the property and buildings and despite their age appear to be performing reasonably well.

So unless something major changes and the demand shoots up, the buildings start to fail or incur major capital requirements, there isn't much motivation to sell or even develop...noted by the over decade long delay in doing anything.

kcantor · #**12047** Posted **Oct 16, 2018, 7:50 PM**

Quote:

Originally Posted by Hardhatdan

That place is a money factory.
There is something like 450 units that rent likely on average over $800 a month with near full occupancy.

Credit due to the owners, they have kept up the property and buildings and despite their age appear to be performing reasonably well.

So unless something major changes and the demand shoots up, the buildings start to fail or incur major capital requirements, there isn't much motivation to sell or even develop...noted by the over decade long delay in doing anything.

no disagreement from me other than pointing out that of that $800 it's likely that $400 or more is going to taxes and utilities and operating/maintenance costs before incurring any capital expenses (including project costs relating to the proposed redevelopment) and the remaining $400 is taxable. it might be a "money factory" but the amount being printed is probably a pretty nominal return on the capital value invested in the project.

s211 · #**12048** Posted **Oct 16, 2018, 9:14 PM**

Quote:

Originally Posted by kcantor

it might be a "money factory" but the amount being printed is probably a pretty nominal return on the capital value invested in the project.

There's certainly a way to depopulate and redevelop the lands over time, yes. One potential kicker that could tilt the balance would be a hefty roof membrane replacement curve ball coming their way. Those things are so expensive to redo these days, and with capex being a non-recoverable cost at multi-res buildings, the capex factor that Ken alludes to could be a trigger.

Also, the uptick from densification could be such that what's in place right now could constitute just land value, a surefire sign that the the lands, as improved, are not at their highest and best use.

Hardhatdan · #**12049** Posted **Oct 16, 2018, 9:39 PM**

Quote:

Originally Posted by kcantor

no disagreement from me other than pointing out that of that $800 it's likely that $400 or more is going to taxes and utilities and operating/maintenance costs before incurring any capital expenses (including project costs relating to the proposed redevelopment) and the remaining $400 is taxable. it might be a "money factory" but the amount being printed is probably a pretty nominal return on the capital value invested in the project.

Sorry what capital? Are you talking initial construction...that were paid off 50 years ago? Or on-going maintenance or...

Even on your numbers, its returning over a $1million dollars a year on buildings that are going on 60-70 years old.

In the 10 years of deferral of the Strathearn Rejuvenation that property has conservatively returned $10 million dollars to the owners. Pretty good.

CMD UW · #**12050** Posted **Oct 16, 2018, 10:21 PM**

Quote:

Originally Posted by kcantor

no, there isn't.

but there will be.

and it's about time we started to plan for what will be and not what was.

if you want a reasonable comparable to how quickly these things happen - which is what we should be planning for - you don't need to look at downtown vancouver but on what's happened in richmond and burnaby and surrey as their lrt expanded and how much of happened on and around existing shopping centre sites.

From another developer that hopefully is around the biz for another 25-30 years I wholeheartedly agree.

MichaelC · #**12051** Posted **Oct 16, 2018, 10:49 PM**

https://edmonton.skyrisecities.com/forum...rd-corporation.26290/page-4#post-1386248

kcantor · #**12052** Posted **Oct 16, 2018, 11:15 PM**

Quote:

Originally Posted by Hardhatdan

Sorry what capital? Are you talking initial construction...that were paid off 50 years ago? Or on-going maintenance or...

Even on your numbers, its returning over a $1million dollars a year on buildings that are going on 60-70 years old.

In the 10 years of deferral of the Strathearn Rejuvenation that property has conservatively returned $10 million dollars to the owners. Pretty good.

if you know the initial construction costs "were paid off 50 years ago" and not a penny more invested in the 50 years since in appliances and flooring and roofs and furnaces and kitchens and plumbing fixtures, you are certainly party to more information than i am.

but putting that aside, it might be $1 million dollars a year today but it certainly wasn't doing that when rents for those units were $250 instead of $800 and it certainly wasn't $1 million dollars a year when occupancy rates in edmonton were a lot less than 100%.

but lets say that it is returning $1 million dollars a year today - or even for the last 10 years - and lets say those 450 units only have a book cost of $25,000 each, that still means there is $11.25 million invested that is earning less than 9% a year.

yes, that's a reasonable return - at least in today's market - but it's still a return on the capital, not a return of that capital which remains invested even if just in the underlying raw land value today (which at $500,000 an acre is still approx. $12 million of invested capital).

Urban recluse · #**12053** Posted **Oct 17, 2018, 1:07 AM**

https://twitter.com/Daveography/status/1052343040134660096

Coldrsx · #**12054** Posted **Oct 17, 2018, 1:23 AM**

Quote:

Originally Posted by feepa

What do you think WEM will do when the LRT finally arrives there? Do you think we will see some of their parking lots turn into towers, especially on the southern flank?

They have to evolve and have space to add a significant residential/comm/medical base.