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As I wrote earlier Chandler’s group H+H Yaletown project , along with Garden City, Richmond went into receivership in November of 2007. The appointed receiver is The Bowra Group. They have submitted to the court a report about the 2 projects. Here is some interesting information from that report regarding H&H Yaletown (Homer and Helmcken in Vancouver):

1. “Construction on floors 14, 15, and 16 of the H&H project has been delayed due to development issues. While we believe that floors 1 through 13 will be completed along the budgeted timeframe, it is likely that floors 14 through 16 will not be completed until the middle of September at the earliest”
2. “The South side of the H&H property used to be a gas station. The gas station completed the appropriate environmental remediation work when it shut down and obtained a clearance certificate under commercial zoning requirements. It has been determined that the gas station was leaching hydrocarbons under Helmcken Street. There is a risk that groundwater may flow from Helmcken into the H&H property discharging hydrocarbon fumes. Preliminary approval has been obtained from the City to trap ground water that may contain hydrocarbons and drain it to the City sanitary system. To obtain final approval of this process drawings need to be prepared and submitted to the City and Ministry of Environment along with a report from an environmental engineer with water sampling test results. The city will also require quarterly water sampling until they are satisfied that the ground water standards meet environmental standardsWe estimate the cost to trap and drain the water, environmental consultants and application fees are $85K plus an additional $10K per year for water sampling until such time as the water testing samples comply with environmental standards”
3. “We estimate the additional funding requirement over and above the bcIMC construction funding total …$3.9M for H&H” The additional funding will be financed at 24% interest - WOW!
4. ” We have received several marketing proposals from various firms in connection with the sale of the condominium units. These proposals include proposals from MAC, KLM Marketing, Regent Park Real Estate and Rob Boies & Associates. In addition we contacted two other parties including Rennie & Associates and the Platinum Group. Both these parties advised that they were not prepared to submit proposals. In one case the firm was too busy, and in the other case, they were not prepared to be involved in a competitive bid process.”
5. “…4 penthouse sales: 2 to Mark Chandler, 1 to Wendy Young and 1 to Daniel Scott. All contracts are assumed to be canceled and resold at market value as these are non-arms length transactions and below market value”

There are still 9 unsold units in the H&H project, even though the sign on the street has SOLD OUT pasted over it.  The receiver states:
“There are 9 unsold units at the H&H Project. Anyone interested in purchasing a unit should contact Kimberlee Robertson at MAC Realty at 604-629-1515 ext 544. “

A prime development property in the center of Yaletown, Vancouver’s most chic neighborhood has now fallen into receivership. We are talking about H+H Yaletown, located at Homer and Helmcken. That’s right ladies and gentlemen, looks like the bubble is experiencing some discomfort.

We will have to watch this issue to see how it plays out. But this is not good for downtown ‘flippers’ and I know there are a few of you out there. Back on November 28, 2007 The Bowra Group was appointed as the receiver. Read the report to the court for some juicy tidbits. Funny thing is there are still a few assignments on craigslist for that development. Who is going to buy them now? Bowra has indicated that they would like to proceed with finishing the project, and that all pre-sale contracts that were sold at fair market value will be honoured. The estimated cost of completion will be $3.7M. They did find a company willing to finance that, so now we will have to wait for the court to approve.

There still are 9 unsold units in that development, according to Bowra.

link to the report: reciever’s manager report to the court

I added some Revlon shares to my portfolio, at $0.91 they were a good deal and Mr. PERELMAN (Revlon’s majority shareholder) purchased a million shares on the 5th of March 2008 for $ 0.99 a share. He obviously must know something. Also i have read the 4th quarter 2007 earnings call, and I liked what the executives had to say. The company seems to have direction now, and a clear marketing plan in place. The loss was narrowed to only 3 cents a share, I see it as a sign of a turnaround.  Furthermore, there are a number of new product introductions planned, which in turn should increase revenue. My bet is that by Q3 2008 Revlon will turn a profit, which should be good for the stock price. The only downside is their long term debt ($1.4B after Q4).

Here are my current holdings:

The following is a list of stocks I’m researching in order to buy:

Blackstone (BX)
Loblaws (L.TO)
George Weston (WN.TO)
Bank of Montreal (BMO)

This article was guest authored by B.B.
Sophia development goes into receivership.

I’m sure by now everyone has head about the Sophia development at Sophia and 11th. The developer walked away citing too high constructions costs.
What will happen to all the people holding the contracts? That’s unsecured debt in the eyes of a bankruptcy court - right?

So, this is what was happening in the states about a year ago. Look at the states now, housing prices free falling with no end in sight.
I believe Canada will follow. The downtown market maybe safe, but watch out suburbia! The first sign of a price downturn is lower volume of sales, which was reported this week. More sellers are holding to their high prices and buyers are not bitting anymore. The erosion of equity in the stock markets is affecting people’s buying moods.
Perhaps BC is safer because of all the Olympics spending, but one that dries up, who knows whats going to happen.
My advice is calculate your risks twice when investing in real estate.

So apparently the Government of Canada wants its good citizens to save money. Any good citizen needs an incentive and the TFSA is it. however, one must wonder why the government would voluntarily forgo some revenue by not taxing the money earned within TFSAs. My dear amigos the answer is a preemptive strike on the credit crunch. Here in Canada the crunch is not evident just yet, but reading any financial paper in the USA it is plain obvious. Some journals are comparing the current scenario  with bank runs of the 30’s era. If the government foresees that, the TFSE is a genius solution.

If only 10 million people use it, that’s $50 billion injection into the banking system. Banks will have capital to lend and the economy should chug along nicely. I applaud. This is a clever way to fight any credit crunch. (Although i do realize that $50 billion on a grand scale is not a lot, but it is a start.) Furthermore, I applaud the  government for creating a way to earn income tax free. So go ahead deposit your hard earned dollars into the TFSA and collect the rewards.

As an aside in most cases and at least in the first few years of the TFSA it would only makes sense to save after maxing out the RRSP deduction limit. The money put into the TFSA is not tax deductible, while RRSP contributions are. So essentially each all deposits to TFSA are after tax dollars and therefore worth a bit less than RRSP dollars. However, this difference can be made up with the tax free benefit of the income created with the TFSA. Clever investing people - that’s what I’m talking about.

However, when a government gives incentives one should look if any one else or any other groups are benefiting.

During an interview with CNBC Warren Buffet stated “I would say, by any commonsense definition, we are in a recession,” However, it is difficult to predict how deep the recession will go he added. Buffet, who’s company is sitting on $44 billion in cash, said that stocks are still not cheap even though there was a significant correction:”At 1,300-plus on the S&P, stocks are not cheap,” the Standard & Poor’s 500 index is down 15% October.”I find more things to look at now than I did six months or a year ago, but I would say it’s changed more dramatically in the fixed-income market than it has in the equity market’ That may be where I find the opportunities.”

So here you go some investment advice from America’s greatest investor.

The entire details can be found here: http://www.budget.gc.ca/2008/plan/chap3b-eng.asp#tax-free

A summary taken from the above follows:

How the Tax-Free Savings Account Will Work

• Starting in 2009, Canadian residents age 18 or older will be eligible to contribute up to $5,000 annually to a TFSA, with unused room being carried forward.
• Contributions will not be deductible.
• Capital gains and other investment income earned in a TFSA will not be taxed.
• Withdrawals will be tax-free.
• Neither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits.
• Withdrawals will create contribution room for future savings.
• Contributions to a spouse’s or common-law partner’s TFSA will be allowed, and TFSA assets will be transferable to the TFSA of a spouse or common-law partner upon death.
• Qualified investments include all arm’s-length Registered Retirement Savings Plan (RRSP) qualified investments.
• The $5,000 annual contribution limit will be indexed to inflation in $500 increments.

The entire article can be read here:
http://www2.jurock.com/articles/columnist.asp?id=7817

In the last paragraph the author states that prices of real estate in Vancouver are “VERY high”. Then in the last sentence: “We would not be surprised to see a reversal some time this year,” (2008) “but remain convinced that 10 years from now we will see prices much higher yet. ”

I do not see how the prices can go much higher. Vancouver is already not affordable by any standards. A new condo downtown is at least $400K. Average income is only $40K -$50K. I don’t see how those incomes can support the current real estate pricing. I do understand that a lot of condos are owned by foreign buyers, but I’m guessing that they are too small of a group to make a large difference in the Vancouver market as a whole.

I see a big price correction starting shortly after the 2010 Olympics.
I would bet my money on recreational propety in the interior of BC as baby boomers start to retire. However, keep in mind that health care access is important to seniors, so invest in areas with clinics and hospitals. I will soon post a list of my favourite cities to invest in. Subscribe to my RSS feed (bottom of page) for updates.

The 2008 Canadian Budget introduced a Tax Free Savings Account. You are allowed to put away $5000 per year. The money earned from that account will be tax free, including withdrawals.

The following is taken from the budget’s summary (http://www.budget.gc.ca/2008)
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Tax-Free Savings Account (TFSA)Canadians need all the help they can get to save money.

The TFSA will allow Canadians to watch their savings grow tax-free throughout their lifetimes.

Canadians can contribute up to $5,000 every year to their TFSA and carry forward unused room to future years. There is no lifetime limit and no tax on investment income earned, including capital gains.

The TFSA can be used any way you like—for example, to buy a new car, pay for an emergency, finance a child’s wedding or bankroll a dream family vacation.
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As I understand this does not mean that the $5000 put away yearly will not be subject to income tax. Only the money earned with the yearly $5K will be not taxed. Now it remains to be seen how our banks will implement these accounts in practice. I would like a trading TFSE account, so all the money earned while trading securities will be not taxable.