This week’s top stories focus on the retail and franchising arenas of commercial real estate. With marijuana legalization coming into effect this year, big players in cannabis products are making movies to vie for the title of Canada’s biggest pot producer. Meanwhile, grocery giant Safeway announced it would be closing ten stores across the Lower Mainland amidst rumours of unprofitability. However, retail sales are up 14 per cent in Vancouver, followed by sales increases in New Brunswick and Alberta.
Here is Western Investor’s pick of the top real estate stories published this week.
The announcement that ten stores across the Lower Mainland would be closing came on the eve of negotiation between the company and its workers' union, the union states.
Ten Safeway stores across the Lower Mainland will be closing, parent company Sobeys has announced on the eve of negotiations with the union that represents Safeway workers.
The workers’ union, UFCW 1518, said on its website that it received notice from Sobeys this morning (January 23) abruptly announcing the closures, which affects stores from Vancouver to Mission.
“This is an insult and an outrage,” said Ivan Limpright, president of UFCW 1518, which represents about 4500 Safeway employees. “Hundreds of our members will lose their jobs. Hundreds more will be displaced through the transfer process. And Sobeys barely gave us a courtesy call,” he said.
The union sees the move as a scare tactic and plans to fight against the permanent store closures.
“Our members have rights. Sobeys has demonstrated they have little respect for the collective agreement but we’ll be there, contract in hand, every step of the way,” says Limpright.
Safeway has responded to the union's comments and say they are receptive to beginning respectful negotations. However, the company says the union was not open to conversations regarding the stores' profitability before the closure notice was issued.
"We’ve invited UFCW 1518 to the table to review stores that are under financial pressure in June and then again in October of last year, so that we could talk about ways to help our unprofitable stores turn the corner to protect jobs and continue to serve our customers," said Jacquelin Corrado, Sobeys communications director. "Unfortunately they declined to engage in the conversation both times."
Sobeys acquired the Canadian division of Safeway Inc. in 2013 as well other grocery brands such as FreshCo, Thrifty Foods, and IGA. Sobeys says it may open FreshCo stores at five of the closed Safeway locations, if “favourable terms and conditions” are reached.
The Ontario-based restaurant group will add 106 steakhouses to its portfolio of over 1,200 chain restaurants, continuing on in its Canadian restaurant consolidation efforts.
Ontario-based restaurant group Cara Operations is continuing its ownership expansion across North America by acquiring Canadian steakhouse chain The Keg for $200 million.
Cara Operations Ltd.’s struck the multi-million-dollar deal with Keg Resturants Ltd. on Tuesday, Janurary 23, adding 106 steakhouses to its portfolio of over 1,200 restaurants in North America.
Cara is the restaurant giant behind many well-known Canadian chains, including Swiss Chalet, Milestones and Original Joe’s.
The restaurant industry in Canada is dominated primarily by Cara, MTY Food Group Inc. and Restaurant Brands International Inc. The Keg purchase is Cara’s latest consolidation effort.
The $200 million sale price is comprised of $105 million in cash plus almost four million shares, payable to the Keg's two shareholders — Mr. Aisenstat, and Fairfax Financial Holdings Limited, which bought 51 per cent of The Keg in 2013.
Two of Canada's major marijuana producers have agreed to the biggest deal in the country's booming pot sector after months of negotiations that started with a hostile takeover bid, CBC reports.
Cremona, Alta.-based Aurora Cannabis will buy rival Saskatoon-based producer CanniMed Therapeutics Inc. for $1.1 billion in what the two companies are describing as a "friendly" deal.
"We are very pleased to have come to terms with CanniMed on this powerful strategic combination that will establish a best-in-class cannabis company with operations across Canada and around the world," said Terry Booth, chief executive officer of Aurora.
The deal comes months after Aurora made its first attempt to takeover CanniMed in mid-November with a bid that valued the company's shares for up to $24.
CanniMed argued that the offer was too low, considering the volatile jump in stock market valuations for marijuana producers in recent months.
The companies started a public row with executives from both sides exchanging harsh words.
Earlier this month, CanniMed even filed a lawsuit against Aurora, claiming it had conspired to injure the company's economic interests.
On Wednesday, the companies said the new deal would amount to about $43 per share based on an implied Aurora share price of $12.65 and a 3.40 exchange ratio.
The final value of the deal, however, could fluctuate before it closes due to the volatility of marijuana stocks.
The deal is the biggest of its kind in the Canadian industry since Canopy Growth, the country's largest marijuana producer, bought Mettrium Health for $430 million in 2016.
With the CanniMed acquisition, Aurora will become one of the country's biggest marijuana producers by market capitalization.
Vancouverites are upping their retail spending by more than twice the national increase, BIV reports.
Vancouverites spent 14% more on retail products in November than they did in the same month a year ago, according to new Statistics Canada data.
Across B.C., sales increased 11.5% over the same period, making it the province with the highest 12-month jump across the country. New Brunswick came in a distant second with 8.6%, followed by Alberta at 7.4%.
The Canadian average increase was 6.5% year-over-year. The growth was driven in part by higher sales at electronics and appliance stores and general merchandise stores, but the biggest increase was seen in at gas stations. Part of the rise was related to an increase in gas prices.
“Statistics Canada noted that the increase in electronics sales in particular looked to have been boosted by new product launches and promotions like ‘Black Friday’ sales,” RBC senior economist Nathan Janzen said in a note to investors. “That means some of the sales increase in November may prove to have been at the expense of sales in December and/or January.
“Nonetheless, with labour markets continuing to improve at a rapid pace through the end of the year, there are also good reasons to think current underlying trends in retail demand — and indeed, the rest of the economy — remain solid.”
Benjamin Reitzes, strategist at BMO Capital Markets, pointed out that part of the surge in Black Friday sales was due to the release of the latest iPhone. Overall, he said, the gain in volumes of sales across the board, combined with strong manufacturing and wholesale activity, mean GDP for November is on pace to reach the 0.4% increase that has been forecast.
“That would place the risks squarely on Q4 GDP growth coming in below the Bank of Canada’s 2.5% call and closer to 2%,” he said.