A number of apartment buildings in Sackville changed hands last week with multi-million dollar deals, and the new owners say no major changes are coming for tenants.
Sunset Investments purchased six buildings from Sackville landlord Charles Estabrooks for a total price of $13.3 million dollars. The purchase included four buildings on Main Street across from the Drew Nursing Home, as well as 55 Salem and 11 Lorne Street.
There’s a total of 82 rental units in all six buildings, according to investment marketing material produced by Sunset Investments before the deal was finalized.
Some residents have been concerned about the sale because of what happened to tenants in a neighbouring building at 15 King Street, which was purchased by Sunset this summer. In that case, tenants in all 16 units were evicted for the purposes of renovations, which included converting two-bedroom units to three-bedroom units by removing the living room. Months after the purchase and evictions, the units were up for rent, with converted three-bedroom units fetching $1600 per month, more than twice what some had been paying for two-bedroom units before the sale.
Sunset says it does not have a similar plan for the six Estabrooks buildings. In an emailed statement to CHMA, Sunset Investments says it, “aims to maintain the operation of these buildings as is.” The company says it has no plans to renovate the buildings, but for general maintenance and the addition of solar panels and low flow water fixtures. The company says it hopes to reduce energy consumption by approximately 40% with those initiatives.
So far residents have not reported receiving notices terminating their leases. Instead, tenants received information packets from a new property management company, K2 Property Management, based in Amherst.
Sunset’s statement to CHMA made no mention of rent increases, one thing that housing researcher Julia Woodhall-Melnik has warned can follow after a Real Estate Investment Trust, or REIT, takes over a building.
If Sunset plans to raise rents, they will be able to do so more easily as of January 1, 2023, when the province’s temporary 3.8% limit on rental increases expires. But in order to raise rents, Sunset will need to give tenants six months notice, and tenants will have 60 days to complain if the increase is unreasonably large.
New legislation expected to pass soon under a PC majority government will give the Residential Tenancies Tribunal the power to spread out rental increases over two to three years, if tenants make a complaint to the tribunal, and if the rental increase is larger than the increase in the Consumer Price Index (6.9% in October 2022, compared to the previous year.)
Lafford also expands rental portfolio
Just a few days before the six Estabrooks buildings sold, another apartment building around the corner at 7 King Street also changed hands. This time the sale was to local developer and property management company JN Lafford Realty Inc.
Lafford purchased 7 King Street from Drew Fraser for a sale price of $4.5 million, according to Service New Brunswick’s property online website, which describes it as a 16-unit apartment building.
John Lafford says the company has no specific plans for the building. “We bought it just to own and operate,” Lafford told CHMA. “We don’t see changing anything there.”
Lafford says he doesn’t expect any dramatic rent increases. “We’re not looking to get huge values by cranking up the rents, no,” he says.
Lafford Realty has been busy in Moncton in recent years, with a major tower development going up on Record Street downtown, and two more towers planned to follow. The company also recently purchased another downtown Moncton property across the street, for similar tower developments in future.
In Sackville, Lafford currently owns three properties with development potential: a large parcel at the end of Wright Street, a recently acquired historic building at 131 Main Street, and a vacant lot at 50 Main Street, beside the old fire hall and current Kookie Kutter.
Lafford says he doesn’t have a timeline for 50 Main, which up until this summer was home to an older apartment building which he demolished. He told CHMA at the time that the building had been “in distress for a lot of years,” and, “it’s going to be a great site for a mixed use apartment building, but just I don’t know when.”
Lafford told CHMA he is more focussed on the property at 131 Main Street, where there’s a piece of land behind the current building where he hopes to build something “significant” which would “maximize the site.” The only trouble with the property at 131 Main is that it’s not zoned for apartment buildings.
“We have to go to council to rezone,” says Lafford, “but it’s a great residential property that we want to develop.”
A previous owner, the now deceased Gordon Beal, tried to have the property rezoned in 2014 to make way for an apartment building, but was turned down by Sackville town council. In February 2021, Beal was ordered to evict a number of tenants in the historic building at 131 Main due to safety and zoning issues. Lafford says the building now has tenants again, staying in rooms, not apartments.
“Today it’s housing some students,” says Lafford. “We put a new sprinkler system in it. They’re not apartments, they’re individual rooms. That’s our immediate function, but eventually we’d like to turn that into a hotel, a boutique hotel.”
As for the development of Lafford’s other vacant property at the end of Wright Street and Fawcett Avenue, the issue there is a lack of road access, says Lafford. In the summer, Lafford told CHMA he was working with the town on a potential partnership to build a road.
