UPDATE: B.C. defends $63.8M price for Patricia Hotel

B.C. Housing says towering $327,000-per-door price for Downtown East Side hotel justified by appraisal of the site as a redevelopment play

By
Western Investor
April 2, 2021





Patricia Hotel: luxury price paid for DTES hotel. | Submitted
— Patricia Hotel bought to house the homeless. | Glacier Media

The British Columbia government is defending the eye-popping $63.8 million it paid to buy the century-old Patricia Hotel in Vancouver's notorious Downtown East Side.

On April 2, Western Investor noted that the price for the Patricia – which the TripAdvisor web page warns its clients to “stay away from this place at all costs” – is 4.5 times its 2020 BC Assessment value of $15.9 million – down from $19 millon a year earlier ­­– and the $327,000-per-room price is more than three times the average price of a hotel sold in Canada in the past year, based on industry data from Colliers International.

The Patricia was bought to house the homeless, according to B.C. Housing, which defended the purchase April 7 in an email to Western Investor.

"An independent appraisal of the Patricia Hotel in Vancouver was conducted on March 15, 2021, by LW Appraisers to provide the current market value of both the hotel and the neighboring parking lot, which the Province also purchased as a development site. The appraised value was $48,750,000 for the hotel and $14,340,000 for the parking lot, for a total value of $63,090,000, which supports the final purchase price," reads the statement from Matthew Borghese, senior communications advisor for BC Housing.

Even the appraisel, however, was about $800,000 less than the actual purchase price. 

"BC Housing secures independent appraisals by a third-party appraiser for all properties we are considering purchasing," the statement added. 

 

Housing Minister David Eby said in an earlier news release that the hotel will help the province meet its goal of providing “dignified inside spaces” by April 30 for everyone currently camping in Vancouver's Strathcona Park.

The Patricia Hotel will initially provide approximately 100 permanent homes with wraparound supports for people experiencing homelessness.

“BC Housing will work with current long-term tenants [in the Patricia] to ensure they have appropriate accommodation as the building transitions to supportive housing,” according to the government release.

The building will be managed by a housing operator who will be on site 24/7 to manage the building and provide support services to the residents.

“Daily meals, access to life-skills training, employment assistance and counselling, physical and mental health resources, and access to addiction recovery services, will be available to residents,”

The B.C government has been one of the largest buyers of hotel properties in Canada over the past year, based on the 2021 Canada Hotel Investment Report from Colliers International.

“Acquisitions by BC Housing saw Victoria and Vancouver among the only major markets to avoid double digit declines in annual transaction volume,” the report noted.

The average per-room price for a hotel sale in Canada over the past year was $97,300, according to Colliers, and the average per-room price in B.C was $128,000.

B.C. has been paying top dollars for hotels to house the homeless during what has been a devastating year for the hotel industry, with average occupancy falling to a record low of beow 30 per cent.  

BC Housing’s  purchase of the aging 110-room Howard Johnson hotel on Granville Street, Vancouver, last year, for $55 million, or $500,000 per door, was ranked by Colliers as the third biggest hotel deal in Canada in 2020.

In all, B.C. Housing was responsible for four of the 10 largest hotel sales in the country in 2020.

B.C. taxpayers also bought the 42-room American Hotel in Vancouver, for $17.9 million, the 63-room Buchan Hotel, Vancouver, for $19.4 million, and the 152-room Comfort Inn & Suites in Victoria, paying $18.5 million. BC Housing also purchased Paul’s Motor Inn in Victoria last June, paying $15 million, or nearly twice the BC Assessment value.

Daryl Nelson, whose family had owned the 108-year-old Patricia Hotel for more than 20 years, took his frustration to the Vancouver Police Board in July 2019 in an effort to get some action on the escalating mayhem in the neighbourhood .

In the past, Nelson said, service, cleanliness and pricing could overcome the negatives of the Downtown East Side neighbourhood. That was no longer the case, he said in 2019, when many unhoused people were living in tents in nearby Oppenheimer Park and crime in the neighbourhood had seen an uptick.

Strathcona Park, where an estimated 200 campers been living there for months, has replaced Oppenheimer as the biggest homeless encampment in the city.


Frank O'Brien is the editor of Western Canada's biggest commercial real estate newspaper, Western Investor, as well as a contributing editor at West Coast Condominium, real estate contributor to Business in Vancouver and a regular media commentator on real estate investment.
Copyright © Western Investor

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