Howard is based in Burnaby and covers real estate, housing policy, and the development industry.
Hart Buck and Jennifer Darling of Colliers have handled numerous court-ordered sales in Metro Vancouver, especially in the past year.Real estate developers are often perceived as corporate entities who are always – and only – after more savings and higher profits.
And things like first mortgages that have post-default interest rates that kick to 18%, which is not uncommon, means that anybody on the debt stack behind the first get pushed off the back of the chain pretty quickly, whereas in previous cycles, a national bank would have the first mortgage and the post-default rate would be the same as the pre-default rate.
You mentioned the new Canadians aspect. Have you guys seen any other commonalities across the foreclosures and receiverships? On the note of the market slowing down, has that made finding prospective buyers for these properties more difficult?JD: Low-rise and medium density sites that are a bit more scalable, that are more bite-sized, have more traction. This is a larger buyer pool and there's less risk on the end sales or end lease-up for a slightly smaller or mid-sized development.
We're really in the process right now, through foreclosures of not, of redefining market values. The market used to be X and now it's Y. It always changes, but we're in a process of redefining it to the lower end. With these court-ordered sales, obviously the debts are known and the final sale prices are usually known, but there are all the closing adjustments and interest. At the end of the day, how often do lenders recover the full debt they are owed? Are they still taking some losses?
they're able to control the process, hire the broker that they want, be in control of the offering and negotiation processes. In theory, the court believes they'll be motivated to maximize value. At the end of the day, the market is going to speak as to where value is, and every stakeholder should be trying to maximize value, but that is the rationale behind it — that there's more motivation the further down the debt stack you get.
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