When Vancouver Realtor Stuart Morrison moved to a new firm in 2009, he’d been working for about a year with Michael Mahoney, a longtime colleague at his former company, on a complex deal to sell a Burnaby mill site.
Rather than cut ties with Morrison, however, Mahoney decided it would be in the client’s best interest to keep Morrison on the file — even though he was now working for a competitor.
“The point was that if we were to select another agent, that would have set us back six months because there was just too much information and background work that had been done,” Mahoney said.
That work laid the foundation for the $19.7 million sale of the Norampac Paper Inc. linerboard mill to Toronto-based Oxford Properties Group, which plans to developed a one million square foot business park on the 64 acres.
The sale, which closed in October 2011, also caught the attention of the Society of Industrial Office Realtors. The society honoured Mahoney and Morrison with a 2011 Member-to-Member Transaction Award at the society’s annual conference in Miami this spring. Their award was for the largest dollar volume transaction in the international category.
“The SIOR is really the best of the best,” said Morrison, 40, a specialist in industrial real estate who has been in the business for 17 years. “It’s really nice to get recognition from that organization.”
A newcomer to SIOR, Morrison joined the society in 2011, largely on the recommendation and sponsorship of Mahoney. The organization brings together select brokers from various firms in the industry.
“Stu does business the way I do business: he’s very attentive, very knowledgeable. I did not have to worry about anything falling between the cracks. And I think within SIOR, generally you can rely on that. So if I need something done in Kingman, Arizona, my first call is to the SIOR people,” said Mahoney, who is a past-president of the society’s central Canadian chapter.
The vice-president of industrial brokerage for Cushman & Wakefield Ltd. in Mississauga, Mahoney began working with Morrison on the Norampac deal while the latter was also a vice-president with Cushman & Wakefield, although on the other side of the country.
When Morrison decided to move to Colliers International, where he is a senior vice-president, the two decided to continue as co-brokers on the Norampac property.
Burnaby Mill Goes On Sale, Partnership Begins
The partnership began when they learned that Norampac’s parent company, the Cascades Group of Kingsley Falls, Que., was looking to sell the Burnaby mill. For about 20 years, Mahoney has been a service provider for the Cascades Group across the country as well as internationally, he said.
“First of all, I know what’s in their portfolio and I guess behind the scenes I’m continually asked for direction and advice,” Mahoney said. “In the majority of situations I am awarded the project. If I was with Colliers’ myself I’d still get it. They work with Mike Mahoney and not necessarily identifying Cushman & Wakefield.”
A feisty 67-year-old, who plays hockey three times a week, Mahoney has been in the real estate business since July 16, 1974 “approximately,” he quipped. He was once a partner in a small boutique firm, Picken Realty Corp., which merged in 1995 with Royal Lepage Commercial Inc., which Cushman & Wakefield acquired in 2005.
While Mahoney had the long-standing relationship with Norampac, Morrison uncovered, through his contacts in B.C., the company’s potential need to sell the site.
“It was my preference to work with somebody that had a strong relationship with their executives. So Mike and I decided to work together on the project,” Morrison said.
In the case of the 64-acre Norampac mill site, as with any the project, Mahoney created a competitive process at the outset “in order to maintain my validity,” he said.
Work On The Site Started In 2008
“So we were up against Colliers, and Avison and Young when we went in there,” he added. “That would be in May 2008. And we worked on the project, gathering information, analyzing situations, offering advice, and then the (real estate) market took a crash.”
During that lull, the mill returned temporarily to profitability, and efforts to market the property stalled. That coincided with Morrison’s transition to Colliers. Then, when the market rebounded, it raised the question of what to do next?
Before they could even put the property on the market, though, they had a lot of work to do.
“It’s a very complicated site,” said Morrison, who has handled the decommissioning of other fairly large mills. “It’s a riverfront site with contaminated soils, existing mill improvements that needed to be demolished, and with hazardous materials that had to be removed from the improvements. There was a landfill on the site as well.”
Once those issues were worked out, they then ran another competitive process in which they invited potential buyers to bid on the property.
“Norampac preferred to shift all the risk in terms of environmental liability, demolition costs, landfill closure-removal, to the purchaser,” Morrison said. “So we structured a deal whereby the purchase price was a fair bit lower because Norampac shifted all this liability to the purchaser. So the purchaser is responsible for all of those costs over and above the price they paid.”
In total, they received five offers. Morrison declined to name the other bidders or the amounts, although he noted that Oxford’s wasn’t the high bid. “But they provided Norampac (with) the best overall deal terms in terms of price, transfer of liability, timing and certainty,” Morrison said.
Morrison also declined to say what sort of commission the brokers earned on the project. Nor could he even estimate how many hours he had devoted to the cause.
“It was a lot,” he said. “It was one of the most involved projects I’ve ever worked on.”