Several downtown properties that We Charity Inc. acquired in 2013 in a $46 million deal sold for a total of just $36 million this week, the Toronto-based real estate firm said.
WE had planned to renovate the buildings into office space to attract startups to the downtown core. The two main buildings it acquired were 37 and 42 St. Anthony St., as well as the neighboring Beech St. office tower. The developer also has two apartment buildings with about 190 units to go.
About 30 percent of the properties in the deal were rented prior to the deal.
Robert Tully, WE’s chairman and chief executive, said he had hoped to use proceeds from the buildings sales to invest in a technology hub in the area.
“We didn’t proceed as planed,” he said. “There weren’t enough jobs for the space we had on our books at this point.”
He said the future of the tech-related project was up in the air. “I’m committed to doing that, and I think the assets were representative of the technology pipeline here,” he said.
He did not have a specific timeline for deciding on the tech hub. “I need some time to sit down and think about it,” he said.
WE has five downtown properties that it holds as “contingent liens” for tax purposes.
It currently rents four of the five properties, according to marketing materials, and has had three defaults, according to Colliers International. It has been under construction on a fifth asset, the 75,000-square-foot Marine Street Tower, since 2014. The other four properties being marketed are to be built as office buildings.
Most of the properties that WE purchased downtown were long-established commercial buildings that would be worth little to nothing on the open market. The one exception is the Citigroup Building, a “pre-sold” property that was well on its way to receiving tenants before the We sale.
“We did a lot of foresight,” said Andrew Loebe, We’s regional president for Toronto. “It was key to keeping the scale.”
The midrise Citigroup building had an appraised value of $56 million, with the two other six-story office buildings that we purchased valued at $15 million and $12 million, respectively. The Beech St. building, which housed We Charity, had been valued at $27 million before we bought it.
“It turned out I didn’t buy them for $46 million,” Loebe said. “They were worth less.”