Cross Border Pro

Reverse Flow

Typically we think of Canadians investing and buying investment real estate in the United States.  In a reverse flow of capital First Industrial Realty Trust Inc. has announced that they have formed a joint venture with the California State Teachers' Retirement System.  The new venture has opened offices in Toronto and Calgary to further the investment in industrial real estate in Canada. This is a sign of the continuing strong market in Canada and shows that other countries recognize this stong market.

Buying Presale in Seattle

While we are hearing about the doom and gloom happening in the US right now, many are missing the fact that the Pacific Northwest areas of the US are remaining relatively stable.  Areas like Portland, Oregon and Seattle, Washington are not experiencing the huge market downturn seen in other areas of the US.  Washington and Oregon maintained a more rational market upturn when other areas were booming.  Therefore, they experienced less exposure to sub-prime mortgages.  Washington reportedly has one of the lowest mortgage default rates in the US. Given the strength of the Canadian dollar and the fact that even in these markets there has been some slowing, it might be an opportune time to by in the US.  I have been contacted by phone and email by developers in Portland and the Southwestern US looking to lure Canadian investors to their projects.

A recent article in Western Investor indicated that Washington developers are changing the way they do business and it makes it more attractive to Canadian investors.  This includes allowing assignments of contracts and allowing more investors.  In addition, in Washington when you buy a presale condo it is not a firm contract, it is more like a reservation.  This means that you can walk away from your reservation if the market goes sideways. You give up your non-refundable deposit, but sometimes this can be as low as 5%. This is different from BC where an investor actually creates a firm contract on a presale unit and deposits are at least 10% and sometimes as high as 20%. 

Huge investing Opportunity in the U.S.

Canadians have a huge investing opportunity in the U.S. right now.  Many Canadians think about owning a second home in the U.S. or perhaps an investment property.  It is very possible that there has never been a better time for a Canadian to buy in the States then right now. Many markets that Canadians tend to gravitate towards like the Southwestern U.S. or Florida are really struggling right now and prices have come down significantly on real estate in those areas.  I have heard of price drops of 20% or greater.  Combine slumping prices with a strengthening Canadian dollar and Canadians are in a very good position to invest.  Canadians actually have greater buying power right now in the U.S. then Americans do in their own market. If you figure that the U.S. real estate market will recover at some point and if you believe that the U.S. dollar will at some point return to being stronger than the Canadian dollar, a Canadian could be looking at huge returns on an investment made in the U.S. right now. There have been recent articles talking about builders in the U.S. throwing in pools and leases on luxury cars just to sell some of their inventory.  In some new communities builders have rows of finished houses sitting unsold and you can negotiate very favourable pricing.  So why aren't more Canadians looking to invest in the U.S?  There are some factors like increased hassle at the border.  I think the main factor right now is that the Canadian market is booming and there are so many current opportunities in the Canadian market that most investors just simply don't have the time to look at longer-term opportunistic buying in the U.S.  Another factor is that the commercial market in the U.S. has remained relatively strong so those opportunistic buys are not in larger investment properties.  But, for a Canadian looking for a vacation home or maybe a couple of rental houses there are huge opportunities right now.

Bill Introduced That Would Require SSN For Real Estate Purchase

A Bill introduced by Rep. John Doolittle to Congress would require that mortgage providers obtain a Social Security Number (SSN)  from purchasers of a primary residence in the U.S before providing a residential mortgage.  The mortgage industry has developed programs that allow non-resident and immigrant purchasers to use a Individual Tax Identification Number (ITIN) instead of a SSN to purchase a home. This bill is obviously aimed at illegal immigrants.  While I will not comment on the protectionist action I will comment on the potential unintended effects of this Bill.  Areas of the South in the U.S. including Florida, Arizona, and California have large populations of Canadian home owners.  These "snowbirds" spend significant time in the U.S. and for some, they do not own a home in Canada.  Some rent and some live with relatives when they return to Canada.  These Canadians need to ensure that they are not spending more than the allowed time in the U.S. as visitors and effectively becoming "illegal immigrants."  However, assuming that they are following the rules, this Bill would require that they prove the home purchase in the U.S. is not their primary residence.  Much depends on how stringent the rules are related to this proposed Bill.  If to onerous it could significantly decrease the number of Canadians purchasing vacation properties in the U.S.  This is definitely one to watch.

Canadian Developers in the United States

The Canadian real estate market has been booming for several years now in most market areas of Canada. Many large developers in Canada also are active developers and investors in the States.  Komenda Capital located in Vancouver, BC has several land development deals in Washington State and the Southwestern U.S. along with their development projects in British Columbia.  One of their larger U.S. projects is the Centre Point Condominiums located in Bellingham, Washington.  This is a 132 unit multi-phase project.

Mosaic Homes located in Vancouver, BC is a multifamily developer with several past multifamily projects thoughout the Greater Vancouver area.  They are currently developing a 97 unit townhouse project called KEW in the Clayton area of Surrey.  Mosaic also maintains a Seattle office and they have two multifamily projects currently under development in the Seattle area.

Pinnacle International is a high rise developer located in Vancouver, BC.  They have build over 4,000 residential and hotel units. They have developed and currently manage over 1,000,000 square feet of industrial, office, and retail space.  They develop high rises in Vancouver and also develop and have an office in Toronto.  Pinnacle has an office in San Diego and currently has at least one high rise project in San Diego under developement.

WestStone Properties is a multifamily developer located in Abbotsford, BC.  They have developed several multifamily developments across the lower mainland of British Columbia.  They are currenlty leading the way into the Walley area of Surrey, BC, which has historically been a run-down area with crime and drug problems.  They, and other developers, are attempting to turn this area around and several pre-sale projects have sold out in a day or two.  WestStone is also an active developer in the Southwestern U.S., specifically Phoenix.  They are reportedly the 3rd largest multifamily builder in Phoenix.

Deecorp Ventures is primarily a real estate investment firm investing in landmark buildings and potential redevelopment / value-added commercial buildings. Deecorp owns or has redeveloped several landmark commercial buildings in downtown Vancouver, BC.  Deecorp is also an active investor in Texas, Colorado, California, and Arizona. Deecorp appears to specialize in working with foreign investors and specifically investing in landmark commercial buildings.

Couche-Tard Makes Major Acquisition In The U.S.

"Convenience store giant Alimentation Couche-Tard Inc. has made its second- biggest acquisition in the United States since entering the market five years ago, buying 236 gas stations in four U.S. states.

Analysts hailed the deal as a positive move for Couche-Tard, North America's second-largest convenience store operator, with more than 5,200 stores. It will increase its density in some of its top US markets - Orlando and Tampa in Florida, Baton Rouge, La. and Memphis, Tenn. - and give it 71 stores in Denver, Colo., a new market for the Laval, Qc.-based firm."

Read more at National Post

Trizec Properties

Trizec Properties, Inc. and Trizec Canada, Inc. have agreed to merge with Brookfield Properties Corp. and The Blackstone Group LP in the U.S.  Trizec is a cross border real estate company and I think it's structure can best be described from it's own website:

"Trizec Canada Inc. is a Canadian corporation primarily engaged in the U.S. real estate business through its 38% interest in Trizec Properties, Inc., a publicly-traded U.S. Real Estate Investment Trust. Trizec Properties has ownership interests in and manages a high-quality portfolio of 61 office properties totaling approximately 40 million square feet concentrated in the metropolitan areas of seven major U.S. cities. Trizec Canada is listed on the Toronto Stock Exchange under the symbol "TZC" and Trizec Properties is listed on the New York Stock Exchange under the symbol "TRZ". Trizec Canada is a mutual fund corporation, which provides Canadian investors the opportunity to invest indirectly in Trizec Properties. Trizec Canada owns one share of Trizec Properties common stock for each outstanding Trizec Canada share and expects to pay the same quarterly dividend per share as Trizec Properties. A share of Trizec Canada is intended to be economically equivalent to a share of Trizec Properties common stock."

What an interesting structure.  This provides a means for the average Canadian investor to invest in the U.S. real estate market without having to directly own U.S. real estate or buy a U.S. based REIT. No word yet on how the merger will affect the cross border aspect of this business.

Canadian Real Estate Investors Looking to the U.S.

The real estate market in British Columbia has been so strong that many real estate buyers looking for a second home or a real estate investment are looking to the U.S. for good buys.  Even vacation homes in the interior of B.C. easily cost over $500,000.  Given the high cost of real estate in B.C. and the favorable exchange rate, many investors are looking just across the border in Washington to places like Blaine, Birch Bay, and Bellinghamfor second homes.  Mike Kent a Realtor in Birch Bay recently commented in the Bellingham Herald that he has recently been working with just as many Canadian buyers as American.

Sunrise REIT to Expand Beyond Ontario and B.C

  "Sunrise Senior Living REIT is looking to expand its Canadian property holdings beyond Ontario and British Columbia, with Montreal as its first target, its chief executive said Wednesday.

Doug MacLatchy said he believes the Canadian market for independent-living senior homes is underdeveloped, largely because "Canadians have tended to believe their health care story. "They don't think that they should go outside" existing government services, the CEO said in an interview after the company's inaugural annual general meeting.

Toronto-based Sunrise Real Estate Investment Trust completed its $220-million initial public offering in December, when it held 24 senior living centres across North America.

It was created by Sunrise Senior Living Inc., which is based in a suburb of Washington, D.C., but chose to form the REIT in Canada because of more favourable tax laws."

via:  CBC News

Cross Border Properties

Cross Border Mortgage Program

The RBC Mortgage Cross Border Mortgage Program helps non-U.S. citizens purchase or refinance a home in the United States. They have an experienced team of mortgage consultants dedicated to helping you obtain the right financing to meet your needs. Plus, they have streamlined the process to make it easier and faster for you to obtain a mortgage for a U.S. property.

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