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Monday, July 30, 2007
Thursday, July 19, 2007
Ottawa's Real Estate Deal Is Bad For Taxpayers
Stupid Canadians
The Canadian Federal Government has almost completed their harebrained scheme of selling of hundreds of millions in real estate, so they can lease it back from the new owners. This sounds like a hell of a plan doesn't it. On top of selling, then leasing back, the government is going to pay for any maintenance that is required is the dilapidated building. I need to own one of these buildings. Free money from the government, 25 year lease, better than the lottery. Full article below from the Globe and Mail.
Ottawa's real-estate deal is bad for taxpayers
JOHN GORDON
Globe and Mail Update
July 17, 2007 at 11:12 PM EDT
Most homeowners would consider it absurd to sell their property and rent it back in order to pay for a new roof or other maintenance. Moving from ownership to being a tenant just doesn't make sense.
Yet that's what the federal government is planning for a handful of prime real-estate assets owned by Canadians.
By the end of the summer, the federal government will pick a new owner or owners for nine of the best federal office buildings located in major cities across the country.
The plan is to sell these buildings and the land on which they are located, which taxpayers currently own outright, then guarantee the new owners that the federal government will lease back 100 per cent of the space for 25 years.
In addition, the government promises the new owners that taxpayers will foot the bill for all maintenance and upgrades to the buildings' interiors. Tax dollars will ensure that heating systems, windows, elevators, plumbing and electrical systems in these soon-to-be-private buildings are kept in top shape.
Sounds like a sweet deal for the new owners, but is this a good deal for taxpayers? On the surface, the answer would seem to be no. And a more detailed examination of the transaction isn't possible because most every important detail is secret.
All documents, studies, valuations, and advice about the sale and leaseback are being withheld from the public. The federal government has established a cloak of secrecy so dense that even members of Parliament are being kept in the dark. In fact, a parliamentary committee recently called for the sale to be put on ice until these details are made available to the public.
The public is not allowed to see the study conducted by the real-estate wings of two banks (Bank of Montreal and Royal Bank of Canada) that recommended the sale and leaseback plan for these nine buildings. These same two banks are now acting as real-estate agents in the sale of the buildings — for a commission fee — creating the strong appearance of a conflict of interest.
The identities of the bidders are secret, as are the details of their bids. And taxpayers will pay Deutsche Bank almost $2-million to review the transaction before it's final. This, too, will be kept secret.
With so much information being withheld, it's reasonable to ask: What is the government trying to hide? And can taxpayers expect to be treated in this manner by the new owners?
Some details have leaked out. The Globe reported last month that taxpayers could lose up to $600-million if the deal goes wrong and there are irregularities in the valuation of the properties, including one building that was valued at $120-million in excess of the market price.
According to the man in charge of the sale, Public Works Minister Michael Fortier, successive governments have failed over the years to properly maintain the buildings.
Taxpayers, who ultimately own these assets, are faced with a multibillion-dollar maintenance bill to bring the federal real-estate portfolio up to scratch.
This is a reasonable assessment of the situation. But offering the buildings at fire-sale conditions is penny wise and pound foolish in the long run. According to James McKellar of the Schulich School of Business at York University: "it looks like the government's doing the right thing today, but it is really short-term gain for long-term pain."
It's also important to note that Mr. Fortier has been silent when it comes to making a commitment that money from the sale will be used to fix up the buildings in need of repairs.
This is a bad idea for taxpayers. According to our calculations, Canadians could pay as much as $2 in rent for every $1 received in proceeds from the sale.
Locking taxpayers into 25-year leases removes the flexibility the government requires to manage its real property needs, which go up and down according to the number of public service workers it employs, as well as other factors.
If the government gets out of real estate today, what happens 25 years down the road when it may wish to resume ownership? After 25 years, its expertise in building-asset management will be long gone.
Ottawa should scrap this sale and leaseback plan and come back with an alternative that makes economic sense for taxpayers and can be proudly shared in all its detail.
The Canadian Federal Government has almost completed their harebrained scheme of selling of hundreds of millions in real estate, so they can lease it back from the new owners. This sounds like a hell of a plan doesn't it. On top of selling, then leasing back, the government is going to pay for any maintenance that is required is the dilapidated building. I need to own one of these buildings. Free money from the government, 25 year lease, better than the lottery. Full article below from the Globe and Mail.
Ottawa's real-estate deal is bad for taxpayers
JOHN GORDON
Globe and Mail Update
July 17, 2007 at 11:12 PM EDT
Most homeowners would consider it absurd to sell their property and rent it back in order to pay for a new roof or other maintenance. Moving from ownership to being a tenant just doesn't make sense.
Yet that's what the federal government is planning for a handful of prime real-estate assets owned by Canadians.
By the end of the summer, the federal government will pick a new owner or owners for nine of the best federal office buildings located in major cities across the country.
The plan is to sell these buildings and the land on which they are located, which taxpayers currently own outright, then guarantee the new owners that the federal government will lease back 100 per cent of the space for 25 years.
In addition, the government promises the new owners that taxpayers will foot the bill for all maintenance and upgrades to the buildings' interiors. Tax dollars will ensure that heating systems, windows, elevators, plumbing and electrical systems in these soon-to-be-private buildings are kept in top shape.
Sounds like a sweet deal for the new owners, but is this a good deal for taxpayers? On the surface, the answer would seem to be no. And a more detailed examination of the transaction isn't possible because most every important detail is secret.
All documents, studies, valuations, and advice about the sale and leaseback are being withheld from the public. The federal government has established a cloak of secrecy so dense that even members of Parliament are being kept in the dark. In fact, a parliamentary committee recently called for the sale to be put on ice until these details are made available to the public.
The public is not allowed to see the study conducted by the real-estate wings of two banks (Bank of Montreal and Royal Bank of Canada) that recommended the sale and leaseback plan for these nine buildings. These same two banks are now acting as real-estate agents in the sale of the buildings — for a commission fee — creating the strong appearance of a conflict of interest.
The identities of the bidders are secret, as are the details of their bids. And taxpayers will pay Deutsche Bank almost $2-million to review the transaction before it's final. This, too, will be kept secret.
With so much information being withheld, it's reasonable to ask: What is the government trying to hide? And can taxpayers expect to be treated in this manner by the new owners?
Some details have leaked out. The Globe reported last month that taxpayers could lose up to $600-million if the deal goes wrong and there are irregularities in the valuation of the properties, including one building that was valued at $120-million in excess of the market price.
According to the man in charge of the sale, Public Works Minister Michael Fortier, successive governments have failed over the years to properly maintain the buildings.
Taxpayers, who ultimately own these assets, are faced with a multibillion-dollar maintenance bill to bring the federal real-estate portfolio up to scratch.
This is a reasonable assessment of the situation. But offering the buildings at fire-sale conditions is penny wise and pound foolish in the long run. According to James McKellar of the Schulich School of Business at York University: "it looks like the government's doing the right thing today, but it is really short-term gain for long-term pain."
It's also important to note that Mr. Fortier has been silent when it comes to making a commitment that money from the sale will be used to fix up the buildings in need of repairs.
This is a bad idea for taxpayers. According to our calculations, Canadians could pay as much as $2 in rent for every $1 received in proceeds from the sale.
Locking taxpayers into 25-year leases removes the flexibility the government requires to manage its real property needs, which go up and down according to the number of public service workers it employs, as well as other factors.
If the government gets out of real estate today, what happens 25 years down the road when it may wish to resume ownership? After 25 years, its expertise in building-asset management will be long gone.
Ottawa should scrap this sale and leaseback plan and come back with an alternative that makes economic sense for taxpayers and can be proudly shared in all its detail.
Friday, July 13, 2007
Real Estate Prices In Canada Are Up, Again
Home prices in Canada are up, again. Huge price jumps occurred in Alberta and Saskatchewan, near 30 percent in both cases. Ontario and Quebec took a bit of a hit on the housing front due to the rising Canadian dollar. All in all Canadian real estate is healthy and growing. Full Yahoo! News article.
Labels:
Canada,
Home Prices,
Real Estate
Tuesday, July 10, 2007
Real Estate Lawyers Go Paperless
Lawyers are usually a bunch that enjoy tradition and are somewhat resistant to change. This is not the case with real estate lawyers. The Canadian Bar Association has entered into an agreement to have a paperless transaction for mortgages. Read the article below.
Real estate lawyers going paperless
By: Vawn HimmelsbachIT World Canada (09 Jul 2007)
The Canadian Bar Association has entered into a preferred supplier agreement with Emergis to make the mortgage application process a lot less painstaking.
The service, called Assyst Real Estate, electronically links lenders and lawyers. Once the lender approves a mortgage loan, instructions are sent to the lawyer or notary (depending on the province) on what must be done to close the mortgage. This is a fairly long process involving multiple forms to be signed by the client, which are typically sent back and forth several times.
Using the electronic service, the lender sends a file to Emergis as soon as the mortgage is approved, and that information is sent through Emergis to the lawyer.
“We present a summary of the mortgage instructions that contains all the financial data,” said Pierre Bisson, vice-president of Assyst Real Estate with Emergis Inc. The lawyer receives the information on the Web through a secure portal, and whenever a status or an event is confirmed, the lender is informed electronically.
“We eliminate the paper between the lawyer and the lender, so when the lawyer receives the information electronically, he can start working on the file,” said Bisson.
The banks want a seamless way of providing instructions and receiving reports when they’re advancing mortgage money to clients, said John Hoyles, CEO of the Canadian Bar Association.
“The difficulty for them is that there are many different report styles,” he said. “With this kind of program, it will all be the same, [and] it can all be done online.”
After selecting Emergis in an RFP process, the CBA negotiated an arrangement to provide this service to its members at a reduced cost. However, this does not mean every lawyer that practices real estate law is required to use the service – it’s up to them.
Lawyers tend to be quite conservative, said Hoyles, and some people embrace new approaches more than others. “But the reality is, if you’ve got a high-volume real estate practice it would be helpful,” he said.
The manual method involves going to the bank with a requisition letter for the funds. “If you look at the real estate fees charged by lawyers, they’ve virtually been unchanged for 20 years,” he said.
“If you can lessen the steps in the process and your cost to do the transaction, then it makes business sense to have something that’s as simple as possible.”
The CBA provides a link on its Web site to Emergis, and will be working with the vendor to provide seminars for members as it rolls out the service in each province.
While the process is paperless between the lawyer and the lender, the purchaser still needs to sign the documents. Lawyers, however, use a digital signature through the use of a certification authority.
Emergis has operated in Quebec for the past five years and some 80 per cent of notaries in the province use the service, according to Emergis.
The vendor has an agreement in place with the Royal Bank of Canada and Desjardins Bank in Quebec. It recently signed an agreement with Laurentian Bank, and the service should be operational this fall in Quebec.
“The agreement that we have with the Canadian Bar Association enables us to have better coverage with the lawyers because the CBA represents all the lawyers across Canada,” said Bisson.
Emergis is currently rolling out the service in B.C. and Ontario, while the Western provinces are expected to be onboard by the end of this year and the Maritimes in 2008.
In some cases the mortgage process involves 16 to 20 different forms, and those forms can be quite different from one province to another, so Emergis is integrating the service with the provinces while providing a common interface for lawyers and lenders.
It’s also in discussions with other financial institutions to expand the service.
Real estate lawyers going paperless
By: Vawn HimmelsbachIT World Canada (09 Jul 2007)
The Canadian Bar Association has entered into a preferred supplier agreement with Emergis to make the mortgage application process a lot less painstaking.
The service, called Assyst Real Estate, electronically links lenders and lawyers. Once the lender approves a mortgage loan, instructions are sent to the lawyer or notary (depending on the province) on what must be done to close the mortgage. This is a fairly long process involving multiple forms to be signed by the client, which are typically sent back and forth several times.
Using the electronic service, the lender sends a file to Emergis as soon as the mortgage is approved, and that information is sent through Emergis to the lawyer.
“We present a summary of the mortgage instructions that contains all the financial data,” said Pierre Bisson, vice-president of Assyst Real Estate with Emergis Inc. The lawyer receives the information on the Web through a secure portal, and whenever a status or an event is confirmed, the lender is informed electronically.
“We eliminate the paper between the lawyer and the lender, so when the lawyer receives the information electronically, he can start working on the file,” said Bisson.
The banks want a seamless way of providing instructions and receiving reports when they’re advancing mortgage money to clients, said John Hoyles, CEO of the Canadian Bar Association.
“The difficulty for them is that there are many different report styles,” he said. “With this kind of program, it will all be the same, [and] it can all be done online.”
After selecting Emergis in an RFP process, the CBA negotiated an arrangement to provide this service to its members at a reduced cost. However, this does not mean every lawyer that practices real estate law is required to use the service – it’s up to them.
Lawyers tend to be quite conservative, said Hoyles, and some people embrace new approaches more than others. “But the reality is, if you’ve got a high-volume real estate practice it would be helpful,” he said.
The manual method involves going to the bank with a requisition letter for the funds. “If you look at the real estate fees charged by lawyers, they’ve virtually been unchanged for 20 years,” he said.
“If you can lessen the steps in the process and your cost to do the transaction, then it makes business sense to have something that’s as simple as possible.”
The CBA provides a link on its Web site to Emergis, and will be working with the vendor to provide seminars for members as it rolls out the service in each province.
While the process is paperless between the lawyer and the lender, the purchaser still needs to sign the documents. Lawyers, however, use a digital signature through the use of a certification authority.
Emergis has operated in Quebec for the past five years and some 80 per cent of notaries in the province use the service, according to Emergis.
The vendor has an agreement in place with the Royal Bank of Canada and Desjardins Bank in Quebec. It recently signed an agreement with Laurentian Bank, and the service should be operational this fall in Quebec.
“The agreement that we have with the Canadian Bar Association enables us to have better coverage with the lawyers because the CBA represents all the lawyers across Canada,” said Bisson.
Emergis is currently rolling out the service in B.C. and Ontario, while the Western provinces are expected to be onboard by the end of this year and the Maritimes in 2008.
In some cases the mortgage process involves 16 to 20 different forms, and those forms can be quite different from one province to another, so Emergis is integrating the service with the provinces while providing a common interface for lawyers and lenders.
It’s also in discussions with other financial institutions to expand the service.
Labels:
innovation,
Lawyers,
Real Estate
Tuesday, July 03, 2007
Real Estate Can Be A Blood Thirsty Business
Famed castle to Dracula, Bran Castle, is now up for sale in Romania. The castle along with the surrounding fields, perhaps up to 40+ acres, is expected to sell in the nine figure euro range. Dracula must be turning in his coffin. Read the full article below.
Dracula's castle at stake in real estate deal
Reuters
Friday, June 29, 2007
NEW YORK (Reuters) -- In the cutthroat business of real estate, U.S.-based firm Baytree Capital Associates has been chosen to market Dracula's Castle.
Archduke Dominic Habsburg, who lives in New York State, and his family retained the private investment firm to market Bran Castle and the surrounding property in the Transylvanian region of Romania.
"They're looking to flat out sell the entire project, but they are particular about who they sell it to," said Michael Gardner, Baytree chair.
"While they are amenable to someone building a resort that continues the castle and such, they're not amenable to blood dripping on swords. This is not going to be Vampire Land."
While he would not say how much the property would go for, he suspects it would be in the nine-figure euro range. He expects to start marketing the property in about 60 days.
The castle and ancillary buildings are located on 22 acres and additional acres also may be attached to the sale. The property is about 20 minutes away from an international airport that is under construction and near the Brasov ski area.
The association of Bran Castle as Dracula's Castle can be traced back to Irish author Bram Stoker, who used the castle as his inspiration for the settings of his 1897 novel, Dracula. The Romanian government has about two years left to operate the castle as a museum, which plays host to about 450,000 visitors a year, Gardner said.
The castle originally was built as a fortress in 1377 and was given to the Romanian royal family in 1920. The castle became a possession of the state in 1947 and was transformed into a museum in 1957. The Romanian government returned the property to the Habsburg faimly in 2006.
Gardner said the property will probably be marketed to private equity firms and hotel real estate investment trusts, but the buyer will probably be European.
© The StarPhoenix (Saskatoon) 2007
Dracula's castle at stake in real estate deal
Reuters
Friday, June 29, 2007
NEW YORK (Reuters) -- In the cutthroat business of real estate, U.S.-based firm Baytree Capital Associates has been chosen to market Dracula's Castle.
Archduke Dominic Habsburg, who lives in New York State, and his family retained the private investment firm to market Bran Castle and the surrounding property in the Transylvanian region of Romania.
"They're looking to flat out sell the entire project, but they are particular about who they sell it to," said Michael Gardner, Baytree chair.
"While they are amenable to someone building a resort that continues the castle and such, they're not amenable to blood dripping on swords. This is not going to be Vampire Land."
While he would not say how much the property would go for, he suspects it would be in the nine-figure euro range. He expects to start marketing the property in about 60 days.
The castle and ancillary buildings are located on 22 acres and additional acres also may be attached to the sale. The property is about 20 minutes away from an international airport that is under construction and near the Brasov ski area.
The association of Bran Castle as Dracula's Castle can be traced back to Irish author Bram Stoker, who used the castle as his inspiration for the settings of his 1897 novel, Dracula. The Romanian government has about two years left to operate the castle as a museum, which plays host to about 450,000 visitors a year, Gardner said.
The castle originally was built as a fortress in 1377 and was given to the Romanian royal family in 1920. The castle became a possession of the state in 1947 and was transformed into a museum in 1957. The Romanian government returned the property to the Habsburg faimly in 2006.
Gardner said the property will probably be marketed to private equity firms and hotel real estate investment trusts, but the buyer will probably be European.
© The StarPhoenix (Saskatoon) 2007
Labels:
Castles,
Oddities,
Real Estate
Northwest Territories Real Estate News
Real Estate in Canada's north is experiencing a bit of a crunch do to the energy boom. Some prime housing is sitting empty in Yellowknife, and local officials feel the government owned property could be put to better use. Northwest Territories Real Estate has been on the rise for the last three or four years do to an expanding resource sector.
As a housing crunch escalates in Yellowknife, questions are being raised about some government-owned houses that are sitting empty on prime real estate.
The five houses on 55th Street, which were used as federal government housing, are located close to schools and the downtown.
"You'd probably put it on the market, and probably that day or that evening … you'd probably have six, seven people putting in offers," real estate agent James Clarke told CBC News.
But the federal government has no plans to put them on the market any time soon, even though they've been sitting empty for years.
The houses are part of a large inventory of federal government housing that dates back to the 1960s and was used for RCMP officers and other employees.
In 2003, when they were declared surplus by the federal Public Works Department, Indian and Northern Affairs Canada (INAC) purchased them as potential offerings in future aboriginal land claims negotiations. From CBC.ca
Full Article
As a housing crunch escalates in Yellowknife, questions are being raised about some government-owned houses that are sitting empty on prime real estate.
The five houses on 55th Street, which were used as federal government housing, are located close to schools and the downtown.
"You'd probably put it on the market, and probably that day or that evening … you'd probably have six, seven people putting in offers," real estate agent James Clarke told CBC News.
But the federal government has no plans to put them on the market any time soon, even though they've been sitting empty for years.
The houses are part of a large inventory of federal government housing that dates back to the 1960s and was used for RCMP officers and other employees.
In 2003, when they were declared surplus by the federal Public Works Department, Indian and Northern Affairs Canada (INAC) purchased them as potential offerings in future aboriginal land claims negotiations. From CBC.ca
Full Article
Labels:
Housing Crunch,
Real Estate,
Vacation Rentals
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