How does a massive developer like Westbank even come close to bankruptcy? That would be a huge mismanagement or some shady sh*t going on.

One lawsuit in Toronto isn't going to take them down.

Of course, they would deny it even if it was true:

Vancouver developer Westbank denies ‘malicious rumours’ of financial trouble

https://biv.com/article/2023/11/vanc...ancial-trouble

I thought what they do is create a new company for each project so after it's done, they can't be sued cuz the company collapse. Like West Bank Oakridge, West Bank Metro Town, they are all individual companies with no relationship with each other.

But then it also doesn't take a genius to figure out why, you think your $3000 mtg going to $5000 is bad. What if you owe like $500 million. Plus every single cost goes up. Soft landing my ass. FeelsBadMan

It's all leverage my friend. If you're buying too much land, building and expanding too much, and the market turns, you are stuck with a whole lot of leverage on the books.

Single families are complaining that their monthly payments are going up, imagine for these developers.

If these guys can't refinance, they're fooked. And i'm assuming they can't refinance.

Lenders won't lend to a corporation money if they have nothing to back the loan up. Loan officers aren't dummies.

It would be like if you went to the bank to get a mortgage but you had no credit history, they're not going to lend to you.

The bank isn't going to take on all that risk so you can just walk away from the project if things don't go your way.

Why can't they be in trouble? They bought overpriced land, building costs have gone through the roof, and pre-sales are in freefall. Also,the imploding real estate market in China isn't going to help because good luck finding local buyers who can afford a $1m 450sq/ft shoebox.

It's about time local developers realize that Vancouver isn't Singapore, NYC, or London, and charging $3000sq/ft was never going to be sustainable.

I think that underlines just how deep they are in it, they likely don’t have the assets period to continue regardless of whether they are protected from creditors on a project or two

Their balance sheet must hurt if they're lending at 8-13% interest on all their loans.

Within another 2-3 years all the profits from development should be gonezo.
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Nots sure if price will be affected more than 10% from this though. I wanna say no, we're too cash rich will swoop the 450sq/ft shoeboxes at $700K

Not really, separating projects via holding co's is super common. In retail, we put all our leases under a individual holdcos, each retail store as well. If we buy offices / retail space, that will sit under it's own hold co. Pretty standard for risk mitigation unless someone else knows better? Every company I've been in shelters everything.

I think the shit is hitting the fan, lots of "professionals" in finance has been laid off recently. There goes all your buyers for $700k condos. I'm not sure how the banks have been surviving. They are throwing out 5%+ gics to anyone who comes in but no one is taking new loans, and people who have debt is aggressively paying it down.

Finance and Tech, they all blew up huge during the pandemic only to come crashing down.

And then there's the WSB stock and crypto bros.

Those two groups alone, imagine how many Teslas were leased/financed and how many Rolexes purchased during that period, where they thought it would always be this way and they were financial geniuses.

Big 5 Bank had their lay offs, big 4 accounting/consulting had it as well. I have 2 friends who's both subsidiary of tech companies fully axed out with notice Dec 31, 2023. I think we're slowly coming down, first time seeing 5%ish of my friends group consistently looking for work from layoffs in the last 6 months. I'm probably included soon based on economic outlook.


In regards to bank profitability,

They pay out the 5% GICs to obtain money but they're relending it out
- @ 5.3 - 6.3% for mortgages
- 8.75 - 9.75 for margin investing
- 9 - 13% Commercial loans
- 8 - 12% retail LOC

Banks make money from high and low interest environments. The only difference is potentially lower volume of loaners @ high interest but the margin spread has more flexibility when GICs @ 5% vs 1%. I'd argue high interest + strong economy is good for banks, bigger spread.

Our canadian banks are tight with cash, they always have been. I think our canadian banking system should be resilient.

People around me are calling for a major real estate crash.. I just don't see how that's possible. Imagine seeing a 25% decrease of a $1M townhouse... People would be lining up to buy up all those foreclosures.

Oh I know and I agree, that’s how ever defeloper works.

What I’m saying is that they are in rough enough shape that even those protections from creditors might not save them

They would, if they have jobs. At least they will be cheap for blackrock to buy and sell back to us at 1.25 million when we all get our jobs back.

A good friend of mine is a director of finance for a large developer. She had informed me that a new "EIFEL" tax rule is going to hurt for developers as the amount of interest on debt they're paying to hold properties can no longer be written off for the full amount or something. Not a tax guy but apparently some developers are losing their shit over it

No different than Evergrande in China, and no different than an irresponsible highschool graduate buying a brand new truck on minimum wage

My realtor friend sold their detached home to Blackrock, pretty interesting, we didn't find out till notary / paperwork.

Hot damn, the housing minister is not fucking around.

https://news.gov.bc.ca/files/TOD_Are...yFramework.pdf

Legislation around minimum density levels near rapid transit and bus exchanges.

https://i.imgur.com/AoIX4Es.png

The block I live on is between 600-800m away from Patterson and the lot sizes average around 8500 per lot and this legislation would transform our area by increasing minimum density by 500% (from .6 to 3.0). Wow. This is aggressive shit. This is great (even if it means I might end up living next to an 8 story tower (we need the housing).

Haha my wife's been on the team that has been working on this legislation.

Glad I don't live by a transit hub right now.

Wonder what's going to happen in neighborhoods that have designated heritage status within 800m of a rapid transit hub.

I've always wondered about this, will this drive up the price of detached houses outside of the main road? Like obviously if your house is right on Cambie it's gonna be worth like $10m but what if you're like 2 blocks in from these massive developments. Does it increase your value due to amenities and shopping near by? Or does it fuck you over with more crime, traffic, no street parking etc :considered:

If I were a low to medium density home owner living near any transit hub, I'd be thrilled about this news because it means density has to go up, so developers will be buying up my plot / property to re-develop it into high density properties.

Just hit the jackpot, baby~!

The government will buying and developing these properties (But you didn't hear it from me)

I doubt developers are throwing around top dollar right now to buy given the rates, let's see if they even survive this. But also I see prices going up since nothing is being built now.

I'd like to see these developers pivot more to low-rise more accessible buildings in this city.

As Harvey said, this isn't HK, or NY.

Enough with these "luxury" style buildings/towers with tons of amenities and all that crap.

We don't need it.