$82M IPO goal to build one of Metro Vancouver's new tallest towers

First of its kind in Canada: $82 million IPO goal to build one of Metro Vancouver's new tallest buildings

2024 concept for Citizen at 4653 Kingsway, Burnaby. (Chris Dikeakos Architects/Anthem Properties)

A major Vancouver-based developer is diversifying its strategy of securing the significant construction financing it needs to get going on building one of Metro Vancouver’s future tallest buildings.

Anthem Properties has launched an initial public offering (IPO) for its future Citizen tower at 4653 Kingsway, which is a site located immediately north of Metropolis at Metrotown mall in Burnaby.

This Real Estate Development Trust (REDT) IPO is deemed to be the first of its kind in Canada. It is being attempted due to the current poor market conditions, which are burdened by escalating costs for construction materials, labour, and equipment and high borrowing costs from traditional financial sources due to high interest rates.

You might also like:

“Policy changes, increased costs, shifting market cycles, and more create an ongoing challenge for developers hunting for capital which requires innovative and creative thinking to get projects off the ground,” said Eric Carlson, core-founder and CEO of Anthem Properties, in a statement.

“Doing things differently is at the core of what we do at Anthem, and this IPO is a great way to continue to push the boundaries of what is possible and take a new approach to making housing happen.”

citizen anthem properties burnaby 4653 kingsway

2024 concept for Citizen at 4653 Kingsway, Burnaby. (Chris Dikeakos Architects/Anthem Properties)

Citizen will be a mixed-use tower reaching 692 ft in height with 66 storeys, which is taller than Vancouver’s tallest building of Living Shangri-La, but shorter than the region’s future tallest towers planned elsewhere and the region’s newly-built tallest building of Two Gilmore Place.

It will feature 372 strata market ownership condominium homes within the upper levels, 273 secured purpose-built rental homes (200 market and 73 non-market) within the middle levels, a hotel with 176 guest rooms within the eight-storey base podium, and nearly 5,000 sq ft of leasable retail/restaurant space on the ground level. The building’s entire usable floor area spans a total of 738,000 sq ft. Chris Dikeakos Architects is the project’s design firm.

Originally, Anthem sought to dedicate the eight-storey base podium for over 150,000 sq ft of office space. It received municipal approval in September 2024 to pivot this office use to 100% hotel use. This change of use is due to the sustained weakened office real estate market.

The municipal government’s recent final approval to enable hotel uses instead of office space appears to have nudged the project’s financial viability into an improved positive position, providing Anthem with the confidence to announce its IPO strategy the very next day.

This apparent confidence is also compounded by the strong pre-sales for the condominium component of the project, with 286 (77%) of the 372 units already sold to date.

2024 concept for Citizen at 4653 Kingsway, Burnaby. (Chris Dikeakos Architects/Anthem Properties)

On behalf of Anthem, CIBC Capital Markets is managing the IPO proceedings, which aim to raise up to $82 million towards the project’s construction financing requirements.

In order to partake in this IPO, a minimal investment of $10,000 is required.

The REDT estimates Citizen’s IPO investors will see a gross compounded annual return of about 18% over a term of five years, before taxes and fees, with these investors also receiving a priority investment return of 15% before any payment to the current owners or asset managers.

The project’s current owners will hold a 27.8% interest through $31.5 million of equity, while the IPO unitholders will hold a 72.2% indirect interest through $82 million of equity.

Through the marketing materials for the IPO process, Anthem has provided an exceptionally rare glimpse of the cost breakdown and pro forma for a major private sector-led, market-driven, for-profit building development project.

As of the launch of the IPO offering this fall, Citizen is expected to carry a total project cost of about $622 million, including $344 million for “hard costs” (typically construction materials, labour, and equipment), $87 million for “soft costs” (typically fees for architectural design, engineering, permitting, marketing, and equipment), $60 million for “financing costs” (particularly interest), and $64 million for land costs. Over $6 million is also being spent to conduct the IPO.

To fully cover these costs, the identified funding sources are $82 million from the REDT’s IPO, $456 million as a loan from a group led by CIBC, $40 million from deposit protection insurance, $12 million from reinvested closing proceeds, and $31.5 million from the current owners’ equity.

Citizen’s gross revenue is expected to reach $758.5 million over the term of five years, producing a projected profit of nearly $137 million.

This includes gross condominium sale revenue of nearly $361 million, with an average selling price of $1,424 per sq ft (up from the to-date pre-sale average of $1,363 per sq ft), as well as $217 million from rental housing revenue, with about $186 million from the market rental units, $26 million from the below-market rental housing units, and $6 million from rental fees for the vehicle parking stalls dedicated for rental residents.

Hotel revenue is projected to be about $172 million, based on an average hotel room occupancy rate of 82% and an average nightly rate of $350 per day, with $287.00 in hotel revenue per available room. Commercial retail/restaurant unit leases will also generate about $7 million.

2024 concept for Citizen at 4653 Kingsway, Burnaby. (Chris Dikeakos Architects/Anthem Properties)

Anthem asserts the project will bring value to investors based on conditions such as the sustained high demand in Metro Vancouver for both rental housing and hotel rooms.

There continues to be a shortfall of rental homes amid a worsening housing crunch in the region. As well, local tourism bureau Destination Vancouver estimates Metro Vancouver will need 20,000 additional hotel rooms over the coming decades due to rising tourism demand, including 10,000 hotel rooms in the region outside of Vancouver. Hotel room rates have already escalated in recent years due in large part to high demand and limited new hotel room supply, and a capacity shortage is expected to begin in 2026.

Moreover, the site is adjacent to British Columbia’s largest shopping mall and within close walking distance to SkyTrain Metrotown Station. The immediate area is also expected to see more high-density tall residential and commercial redevelopments in alignment with the City of Burnaby’s Metrotown Downtown Plan, including the redevelopment of the mall parcels by Concord Pacific and Ivanhoe Cambridge.

The Citizen development site is vacant; the former Cactus Club restaurant building was demolished in preparation for construction. According to BC Assessment’s July 2023 roll, the vacant site has an assessed value of $49.4 million.

Site for Citizen at 4653 Kingsway, Burnaby. (Google Maps)

The developer has received full rezoning and development permit approvals as well as the excavation permit. The full building permit issuance is expected by May 2025.

Excavation at the site is expected to begin in late 2024 upon the closing of the IPO.

Construction progress will ascend to and reach the ground level by early 2026. The building is targeted for completion by the middle of 2029.

According to Anthem, it has $7 billion worth of real estate assets under its management. Citizen is one of the developer’s largest projects within Burnaby’s Metrotown area, which also includes the recently completed Station Square mixed-use redevelopment and the future Telus Boot mixed-use redevelopment with five additional residential towers reaching up to 64 storeys with over 2,500 homes.

In Summer 2024, Anthem Properties and Crestpoint Real Estate Investments formed a partnership to take over and acquire the Telus Boot redevelopment project.

4653-4673 Kingsway 4638-4670 Hazel Street Surrey Metro King

Original artistic rendering of Citizen at 4653 Kingsway, Burnaby. (Chris Dikeakos Architects/Anthem Properties)

You might also like: