TransGlobe Apartment Real Estate Investment Trust (REIT) has reached a purchase agreement with Starlight Investments, owned by one of Canada’s biggest landlords, in a development that could affect tenants across the country.
Under the agreement, Daniel Drimmer will buy back many of the properties he originally held under TransGlobe Property Management, before he helped take the company public. The deal to privatize the REIT is reported to be worth $1 billion.
Several months ago, CBC's Marketplace uncovered a litany of complaints about TransGlobe Property Management from tenants across the country.
The eight-month Marketplace investigation documented serious health and safety violations in TransGlobe’s buildings, including leaking roofs, mould and structural problems.
Marketplace also found more than 200 charges that the company faced related to violations of housing standards and fire safety laws.
Michael Shapcott, who spoke with Marketplace for the investigation, is a rental housing expert and the director of the Toronto-based Wellesley Institute. For Shapcott, the news of TransGlobe’s privatization “set off alarm bells.”
He says that tenants may lose in this deal if they live in a province without rent-control legislation, as financing costs get passed down. If that happens, he says, “tenants can end up paying more for the same old crappy housing.”
TransGlobe REIT CEO Kelly Hanczyk could not be reached in time to comment on the news. Starlight Investments declined to comment.
Drimmer started TransGlobe Property Management in 1994, building it into one of Canada’s largest residential property companies with 26,000 units in more than 400 buildings in six provinces.
TransGlobe became an investment opportunity in 2010, when Drimmer sold the majority of his properties to a new venture called TransGlobe REIT, taking the company public on the Toronto Stock Exchange.
He made millions from the sale and retained 20 per cent ownership of the REIT, overseeing property management of the REIT’s portfolio and functioning as chairman of the board.
In September, 2011, Drimmer severed this relationship and began operating a new property management company called Starlight. Since September, Starlight had been aggressively buying buildings across the country, growing to more than 80 buildings and 6,300 units.
In the proposed TransGlobe REIT sale, Drimmer would acquire 63 of the REIT’s buildings in Ontario, Alberta, New Brunswick and Nova Scotia.
Starlight would also acquire an additional 72 buildings in partnership with a subsidiary of the Public Sector Pension Investment Board.
Watch CBC Marketplace’s Trouble for Rent.
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