New Westminster strata windup and sale finds solution in a bumpy market

Just as strata owners at Kinnaird Place decided to sell their building because they couldn’t afford to take on major repairs, the market cooled, developers disappeared, the building’s land value slumped and a burst water main flooded units.

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Kinnaird Place, an older residential building near New Westminster‘s downtown with 61 units recently sold for $22.7 million. The years-long saga leading to its strata winding up and sale of its building should be noted by anyone in units with major deficiencies to fix amidst rising costs and a volatile real estate market.


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“That was a roller-coaster,” said Crystal Hunt, who bought her unit in 2015. “Things fluctuated so much, up and down, up and down.”

About a third of the owners were, like Hunt, first-time homebuyers with young families, getting into a rising market. Another third were owners who had been there for decades, dating back to when the building was built in 1984, with many on low and fixed incomes. The last group were renters, with the bulk paying grand-fathered, more affordable rates.

“There weren’t many who wanted to sell,” said Hunt, citing the building’s prime location in between the Pattullo and Alex Fraser bridges, with views of Mount Baker and overlooking the Fraser River, near downtown New Westminster, a park and transit.


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But around 2016, it became apparent that the building needed some significant repairs and upgrades in the millions of dollars. The calculations were starting in the steep ballpark of a special levy of $80,000 for each unit, said Hunt.

“Is it reasonable to ask a 75-year-old woman (in this building) to cough up a hundred grand for a special levy?” said Gianmario Mameli, another owner, who bought his unit in 2016.

“Often, it’s a developer coming to the building,” said Hunt. “Ours was the other way around. We were trying to get ahead of things.”

“The strata council realized, ‘We can’t get the money we need to do the minimal work. How are we going to get more money?’” said Matt Nugent, a real estate broker with Macdonald Commercial.


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So the strata engaged Nugent and three other brokers at Macdonald in August 2017 to find a buyer.

But, in March 2018, the B.C. government announced a new speculation and vacancy tax and an increase in its foreign buyers tax just as Ottawa’s new stress test was making it harder to get mortgages. All this threw a quick chill on the market.

“In the first quarter of 2018, (presale condo) sales were amazing,” said Nugent. “And then, in the second quarter, sales just dropped completely.”

Two developers with contracts signed to buy the building abruptly dropped out of their deals.

Then, in March 2019, as developers evaporated and the building’s land value was slumping, a nearby city water main burst.

“I had a bunch of people knock on my door: ‘You know, water is pouring in,” said Mameli. “I go downstairs and there’s a foot of water. I’m in my house coat, trying to help people get their stuff out.”


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Residents in about 14 units had to move out for months because of the damage. A few tried to list their units for sale on their own, “and get out faster,” said Mameli, but a group of owners also appealed to city council and staff for help, explaining their bind.

In the end, the city presented an agreement that facilitated Merchant House Capital, a Victoria-based asset management group, being interested in buying the property through the process of the strata ending. It made provisions for renters to continue with Merchant, and for owners to stay if they wish to rent for a period of time after a sale.

In return, Merchant got some nuanced concessions from the city for its future development plans, exempting it from having to exclusively build rental in perpetuity on the prime site, according to CEO David Fullbrook.


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“The strata was going to be caught in this limbo for several years,” said New Westminster mayor Jonathan Cote. “The city saw an opportunity to keep the affordable rental housing going as opposed to have the building be vacant or torn down until it can be re-developed.”

The only thing left to get through was seeing the process through the pandemic lockdown, starting in March 2020. At first, the strata couldn’t meet in person to vote on dissolving. It took until September for the Kinnaird Place strata to become the first-ever strata to wind up online. More than the needed 80 per cent of owners agreed and, eventually, all came on board. At the end of March, the sale completed.

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