What will you do?

[angelapeng]

Hi, Experienced rein members,

Need your thoughts regarding the following situation.

We have a few rental properties in a building in downtown Vancouver. Early this year, the council proposed to seek the possibility to sell the building at land value to potential buyers. (Cases like this happened in the neighbourhood, as long as the Strata gets 80% voting). Council has been working with a brokerage firm to market the building to international and local buyers (The building is valued between 200-280million). We are informed that in December, offer will be presented.

At the same time, another brokerage firm sent the letters to all home owners individually trying to purchase the property, their goal is to purchase up to 80%, so that they can develop themselves.

Council has advised us that it will maximize the value by working together to sell the land to a buyer instead of individually selling off. We are not in the position wanting to sell the assets, but with 160 owners, we don't have much choice. My question is whether you are interested in even talking to the second brokerage firm or just wait for the December offer from the council side?

By the way, the second brokerage firm presents the offer with the term like this:

-Signing a contract with the buyer for two months to allow them to do due diligence with no option fee, if they don't close, the deposit will be fully refunded.
-the offering price is 3 times of government assessed value, which is possibly 10-20% from the council's buyer.
-the closing date is 6 months after all the subjects removed.
-allow them to assign to third party without written consent of the seller
-the buyer is a no name company with an address in a law firm in Vancouver, hence, don't know the background info.
-they are open for counteroffer though

What will you do?

 

[Thomas Beyer]

Would you get more than if you sold the condo on the open market today ? If not, what is the problem here ?

Generally speaking talking to a second group makes total sense to me as two offers are better than one usually. You are the owner of the condo so YOU decide what is best for you. If you can get more $s from another buyer I would do that.

Keep in mind that most of these offers are slanted in favour of the buyer, as they have to do a lot of work, and the deal may collapse as has happened to an acquaintance of mine on a condo project near Cambie @ 41st.

 

[angelapeng]

Thomas, the problem is we only receiving one offer from the second buyer, the first one or few potential buyers will present offer in mid-December, if we accept the offer from the second buyer, we will not be able to talk to any buyers within 60 days after signing the contract. Therefore, it is a time issue here.

 

[Thomas Beyer]

Getting an offer does not mean you have to accept it. Get the offer, but don't sign it. Then decide in January after a period of reflection and discussion with other owners.

Not signing any offer is an option too, but then the court may force a decision upon you if 80%+ vote for a sale.

So three options for you to ponder here.

In a slightly falling Vancouver market in an older building why not sell ? The price to rent ratio is out of whack in Vancouver and the only way to make money is equity upside anyway.

 

[angelapeng]

Yes, lots of moving parts here to think about. Will see how it goes with other potential buyers, stay put for now. Thanks, Thomas, for sharing your thoughts, as always.