It could be difficult for Vancouver's reclusive Lalji family to shun the spotlight now that their land development firm, Larco Investments Ltd., has won the high-profile auction of nine federal government buildings.
The privately held company, owned by brothers Amin and Mansoor Lalji, will pay $1.644-billion for the buildings, located in Vancouver, Edmonton, Calgary, Toronto, Ottawa and Montreal.
Driven from Uganda along with other Ismaili Muslims in the 1970s by former dictator Idi Amin, the media-shy Laljis settled in Canada and went on to establish themselves as one of the pre-eminent property owners in British Columbia's Lower Mainland.
For more than 30 years, the company has bought and held assets that include hotels, storage facilities, apartment buildings and the Park Royal Shopping Centre in West Vancouver.
Though its assets are primarily in Western Canada, Larco also owns property in Ontario, executive director Thaddas Alston said Monday in an interview.
The total value of its holdings, excluding the new portfolio of federal office buildings, is "north of $1-billion," Mr. Alston said.
"They have a great tenant and they are a great long-term asset," Mr. Alston said of the Public Works buildings, emphasizing Larco's focus on management and tenant relationships.
"We are not a company that makes money by buying land and building buildings and making a profit by selling them," Mr. Alston said.
"We have been in the business a long time, and think that we do a good job of managing properties, keeping them in good condition and keeping our tenants happy.
"We are a company that believes in the long-term value of the real estate - we buy it because we like it and we keep it a very long time."
The company is always hunting for long-term investments and tends to buy assets that are already built and that provide stable management opportunities, he said.
It's a strategy shared by numerous other investors, including real estate companies and pension funds, from whom there was huge interest in the sale, an industry source said.
Royal Bank of Canada and Bank of Montreal, the investment banks which ran the process, initially contacted 91 potential bidders, all of whom were required to be majority Canadian-owned.
The plan has been criticized by the opposition and public service unions, which argue that Ottawa is getting a fat cheque for the buildings, but will be paying too much in rent and other costs over the next 25 years.
But those in the real estate industry said it's a smart idea that will have many benefits for taxpayers.
"I believe the process was fair and competitive, and their timing was excellent. There has been an unwarranted emotional tie to the buildings, but the main issue is that the buildings required an enormous amount of capital improvements, they were costly to run, and there was no strategic value through ownership," said Stan Krawitz of corporate real estate services firm Real Facilities Inc.
The transaction's long-term benefits include shifting the risk of major building costs to the private sector and ensuring the buildings will be properly maintained, the Ministry of Public Works and Government Services, which ran the process, said in a statement.
Of the $1.644-billion purchase price, $1.567-billion will go to the government. Of this, RBC and BMO will each receive commissions of $5.7-million, according to a government official. There will also be up to $500,000 in expenses for the sale. The remaining $77-million of the sale price will be used to undertake a 10-year capital repair program, while the government will be responsible for other expenses, including maintenance, repairs and other building improvements.
The government has agreed to lease back the nine buildings for 25 years, with payment amounts rising in five-year increments. Lease payments will total $505.3-million over the 25 years, rising from $82.2-million in the first five years, to $122.1-million in years 20 to 25.
Wendy Stueck