Burnaby housing project: Ottawa lends $763 million to build 1,300 rental units

A $763-million low-interest loan from the federal government is helping to fund the construction of two large rental towers in Burnaby, a key part of Grosvenor’s three-block Brentwood Block redevelopment. The developer says the financing makes the ambitious project more feasible amid challenging market conditions. Lohcated across from the Brentwood shopping mall and the Brentwood Town Centre SkyTrain station, the first phase of the project is already underway and will feature a 41-storey condominium tower, a community center, commercial space, and the two rental high-rises supported by the federal loan.

Once completed, the two towers will deliver nearly 1,300 new rental homes, with one of them — rising 60 storeys — set to become the tallest purpose-built rental building in Western Canada. The funding comes from Ottawa’s $55-billion Apartment Construction Loan Program, which was established to spur the creation of 131,000 new rental units by 2032. As of last June, the program has distributed $24.9 billion in loans, helping to build about 63,500 rental homes across the country.

Despite high interest rates and rising construction costs, Grosvenor remains optimistic about Metro Vancouver’s long-term housing outlook. Steve O’Connell, CEO of Grosvenor’s North American property division said that market conditions aren’t ideal right now. However, programs like this loan and confidence in the region’s future allow large-scale projects. The 10-year loan term will support the company through construction and the early leasing phase until the rental income stabilizes, said Marc Josephson, senior vice-president of development, noting that certainty in policy, costs, and financing is crucial for long-term housing investments.

In addition to the federal funding, Grosvenor and its partners are contributing $283.4 million of their own capital — including land and cash — to the project. The Apartment Construction Loan Program, part of Canada’s National Housing Strategy, allows developers to borrow up to 100 per cent of residential construction costs for qualifying projects. To participate, at least 20 per cent of the units must remain affordable for a decade, priced below 30 per cent of the area’s median family income or as part of an affordable housing program. Founded in 1677, Grosvenor is a London-based property company that still owns prime holdings in Mayfair and Belgravia and manages the estate of the 7th Duke of Westminster. The company has operated in North America since 1952, when it purchased Annacis Island in Delta.