Radio-Canada site flipped fast for profit
The site of the Maison Radio-Canada was sold off for $42 million in 2017. Now the new owner has gone on to sell off a quarter of the site for $114 million. Story explains why this might be so (it’s not quite alleged to have been shady).
Incidentally, I can’t make out why it’s considered an improvement for Radio-Canada to move from a building it owned, to a new expensive building it does not own and has to rent for $22 million a year.
walkerp 10:49 on 2020-07-08 Permalink
Even if it costs more over time, many orgs choose not to own property because it creates an entirely new and large amount of responsibilities, often which are not part of the core business. You basically have to create a real estate department, with responsbilities for maintenance, insurance, buying and selling, etc. Owned properties are also assets against whose value damages can be levied in civil suit, taxes etc.
Renting is sort of like outsourcing in this view.
Just speaking generally. CBC is so large and part of the government, so it seems to me that it would be preferable to own as well.
Spi 11:28 on 2020-07-08 Permalink
In what meaningful way is te CBC part of the government? That’s a very meaningful statement to make.
Of course QMI, bury’s the part about also getting a new building/studios on top of the $42M and being of a fixed lease for the new offices for decades to come.
Blork 12:08 on 2020-07-08 Permalink
CBC is a crown corporation, meaning it is funded by the government, and is ultimately accountable to it, but operates independently of it.
Douglas 17:39 on 2020-07-08 Permalink
Radio Canada got a crappy price because they mandated any developer to wait 3-4 years and continue renting the old building while the new building is being built and the zoning was still commercial. So the developer had to take the risk of going to the city and get the zoning changed.
Groupe Mach waited and went through the projet particulier process with the city to transform the zoning into residential. Meanwhile condo prices jumped 20% during those few years Groupe Mach waited. Once the zoning was granted the value skyrocketed. I think the zoning change alone would give that entire lot a 200-300M dollar value.
They could have retrofitted and moved into another existing office building. Sell the old building once its vacant.
Again… we see governments have no idea what they are doing real estate wise and get into bad deals.
Phil M 08:50 on 2020-07-09 Permalink
Owning a building is not without its own costs. Maybe not $20 million a year, but maintenance, security, property taxes add up. Not to mention that upgrading the old facilities to modern standards would have been incredibly expensive; easily $200+ million. In that respect, leasing might not be such a bad idea, and of course leasing an entire office building that was built to your specifications is gonna cost a premium.
As to the sale price, and it’s current value, as stated by Douglas, the site went from being commercially zoned to residential, and there is a housing crunch, so yes, it will appreciate in value. The developers are also putting in a ton of money to build these properties. It’s exactly the same as renovating houses for a profit. You buy something no one wants, put a lot of cash and work into it, and create something that people will pay top dollar for. It’s perfectly logical.
JaneyB 10:38 on 2020-07-09 Permalink
Maybe the govt needs an aggressive real estate arm to avoid getting suckered like this? (And yes, I’m thinking of UQAM’s insane real estate projects too eg Ilot Voyageur). A good example would be the Ontario Teacher’s Pension Fund, which hired the best, most enterprising money managers from the private sector to manage its assets. As a result it is one of the most successful pension funds in the world. Private enterprise thinking can be smart and lucrative, provided it has public oversight and regulation. Civil servants, though often wonderful, are out of their element in the world of real estate, imo.