Grosvenor announced on Tuesday a massive loan from the CMHC that will be used to construct two purpose-built rental towers at the Brentwood Block development in Burnaby.

The company said at the announcement event the nearly 1,300 rental homes tied to the project would not be viable without the $763-million loan, the second-largest loan of its kind in Canada. It will be used to develop two towers, including Western Canada's tallest rental residential tower, at Lougheed Highway and Alpha Ave. in the towering Brentwood town centre.

The funds are being channeled through the CHMC's Apartment Construction Loan Program (ACLP).

Steve O’Connell, CEO of Grosvenor’s North American Property business, said the rental towers would not be feasible without this loan from the government: "Frankly, no. If we were using traditional bank debt for this project, it wouldn't financially stack up."

He said the loan provides attractive rates but also a long-term repayment plan that allows Grosvenor to build large-scale. "We'll have time to get (the buildings) rented, stabilize them, and end up with a functioning community before the debt is due. So it's fairly clear that this project would not be viable if it weren't for this loan program."

Grosvenor acquired the site, located on the southern side of Lougheed Highway, in stages beginning in 2016.

The two rental towers, which are now being excavated at the site, are part of Grosvenor's Brentwood Block. It's a multi-phased, master-planned community located on a 7.9-acre site that encompasses an entire city block in central Brentwood. When completed, Phase 1 will provide 1,279 rental units, 451 condominiums, and 160,000 square feet of retail and commercial space. Additionally, the site will be home to a new City of Burnaby community centre, public plazas and outdoor amenity spaces through separate financing.

The initial phase of development is occurring as a joint venture between Grosvenor, a Canadian pension fund, and B.C.-based investment firm Westerkirk Capital Inc.

Program provides billions to rental developers

The ACLP provides fully repayable, low-interest loans to encourage the construction of more rentals for middle-class Canadians, said Randeep Sarai, secretary of state for international development and MP for Surrey Centre at the public announcement of the Grosvenor loan at the edge of the massive excavation pit. (Sarai was standing in for housing minister Gregor Robertson). 

"Everyone here understands the challenge we're facing," Sarai said. "Across Canada, there's just not enough homes. Supply simply hasn't been keeping up with demand of our growing communities."

He said developers need support from the government to make projects like this work. Across Canada, the loan program has committed $25 billion so far and is supporting the creation of 64,000 rental homes. "The program has been so successful that we enhanced it last year and extended it through 2031."

Burnaby City Councillor Pietro Calendino said at the event that Brentwood, one of the city's main high-density development hubs, will see 40,000 new residents by 2041 and the neighbourhood will need an additional 25,000 homes to sustain that growth.

Brentwood Block financing a "long process"

In an interview on the sidelines of the event, O'Connell told RENX the loan had been in the works since 2019. The master plan in the neighbourhood dates back to 2016.

"It's been a very long process. We started talking with CMHC as an option back in 2019, and we've just been in discussions with them in earnest over the last few years, as we got closer and closer to mobilizing."

He said the site will include a condo tower at 41 storeys and then the two rental towers climbing to 50 and 60 levels.

Overall, the ACLP aims to provide $55 billion in low-cost financing to support more than 131,000 new rental homes across Canada by 2031-2032. It provides a stable supply of purpose-built rental housing is essential for more people in Canada to have access to housing that meets their needs.

Grosvenor is a London, England-headquartered owner and developer that has operated in the Lower Mainland of B.C. for over seven decades. It is known for developing major projects, and has a development pipeline worth roughly $6.5-billion in North America.

"As a Canadian myself, I'm proud that we have a program like this, where the government is providing funding that enables the construction of housing," O'Connell said. "The government's earning a rate of return on the interest that we're paying them, so it seems like a win for us, a win for the government, and a win for the community in terms of the production of housing."