Embattled WE Charity sells properties for $36 million
Some holdings go for a loss as charity says proceeds will fund schools, hospital in Kenya
WE Charity has sold almost all of its multimillion-dollar real estate holdings in downtown Toronto, and more than half of the properties went for a loss, the Star has learned.
The charity’s vision of a “campus for good” on Queen Street East was scrapped last year amid a federal government grant scandal that saw co-founders Craig and Marc Kielburger testify before a parliamentary committee and announce they would shut down WE’s operations in Canada and liquidate its assets.
Land registry records show WE Charity and two affiliated foundations sold eight properties on a block that was almost entirely owned by WE at Queen and Parliament Street, including WE’s headquarters, for a total of $36 million.
Overall, WE Charity sold the group of properties for more than it paid, driven by the sale of its flagship headquarters, which sold for a $10.1-million premium on its 2015 purchase price.
The charity spent millions extensively renovating the building.
Records show that five of the properties sold for less than the charity paid for them between 2015 and 2019, despite the city’s red hot real estate market. The transactions all took place Aug. 23.
A WE Charity spokesperson pointed to
the collective sales figure for the eight properties, noting that taken together the charity did not sell for less than it paid.
The charity’s board of directors contracted commercial real estate firm JLL to do an independent assessment of the purchase price before the sale closed and the “report found that the potential sale price was above current market conditions,” the spokesperson wrote in an email.
Me to We, the Charity’s forprofit arm, sold two more adjacent properties for $3.7 million.
WE confirmed the transactions and said Me to We also sold development rights for another building for nearly $1.4 million.
Three properties have not been sold — two owned by Me to We and one by WE Charity. The charity’s remaining property was purchased for $3.5 million in 2016. Last year, the charity valued all its property at $45.3 million.
Proceeds from the charity sales will go to WE Charity Foundation, which will continue to fund schools, colleges and a hospital WE set up in Kenya, WE said in a statement. Me to We, which will continue to operate in Canada, will use the money from its sales to pay down debt, the spokesperson said.
The buyers are holding companies that list Matthew G. Cribbins as sole director. Cribbins, the president of Generation Capital, a private wealth management firm, declined to comment on the purchase.
Agreements registered on the properties state that the buyers are planning on “constructing a mixed-use residential/commercial development containing the maximum amount of zoned gross floor area.”
WE Charity’s large real estate holdings came under scrutiny last summer after it landed a sole-sourced, $544-million government contract to run a student volunteering program and it emerged that the charity had previously paid Prime Minister
Justin Trudeau’s brother and mother to speak and covered part of an overseas trip for the family of former finance minister Bill Morneau. Morneau was later found to have contravened the Conflict of Interest Act, but the Ethics Commissioner cleared Trudeau of wrongdoing.
WE pulled out of the government contract, but continued to be dogged by questions about its complex structure and extensive property holdings.
A Star investigation published last year noted that in addition to the six properties owned by WE Charity, there were seven more in the Queen and Parliament area owned by related holding companies and foundations.
These included Me to We Asset Holdings Ltd., Me to We Foundation, Imagine 1 Day International Organization and 2569144 Ontario Ltd, which was registered to WE’s chief financial officer, Victor Li.
The Kielburgers’ parents own two more properties that were provided to the charity rent free. WE paid mortgage interest and property taxes.
Both the charity and its forprofit arm were involved in August’s
property sales.
The flagship WE building at the corner of Queen and Parliament streets sold for $24.6 million, $10.1 million more than the charity paid for the crumbling Marty Millionaire building in 2015.
After buying the building, WE undertook two years of extensive renovations before the grand opening of its Global Learning Centre (GLC) in 2017.
“The building (was) fully restored to its original 1908 and 1925 design intentions,” stated a press release announcing the opening. Workers created an “open ceiling brick and beam interior” and restored the original door. “Canadian suppliers were used widely and wherever possible.”
The renovation also added a 200-person theatre, two digital classrooms with “micro tile screens,” touchscreen walls on the main floor, and film and broadcast studios.
WE declined to put a price tag on the renovations of the GLC, but in documents it provided to the Star last year, the charity said it had received $25.5 million in targeted donations “for the WE GLC alone,” which financed both the $14.5 million
purchase and the renovation of the building.
WE also received $3 million in in-kind donations to outfit the building with technology to allow staff to deliver programs to remote communities in Canada and around the world.
The other properties did not attract a premium. WE Charity and its foundations sold five of the eight properties for less than their purchase price. Another property was sold for the same amount it was bought for in 2017. Collectively, WE Charity and the foundations lost more than $1 million on those six properties, land registry records show.
Since 2015, when WE Charity made its first purchase in Corktown, prices for all types of real estate in the GTA have gone up by 50 per cent, according to the Toronto Regional Real Estate Board.
In response to questions from the Star, a WE Charity spokesperson wrote that looking at the individual sale prices of properties “is not an accurate representation of the terms of the sale.”
“It is important to look at the aggregate sale price for the collective properties, not the individual sales price allocated per property. As part of the sale process, a general value was assigned to each building.”
Ontario law requires charity trustees to manage their charity’s assets responsibly, which includes diversifying investments “to an extent that is appropriate.”
On its website, WE explains its “real estate philosophy” by contrasting it with a traditional charitable endowment.
“Some organizations build their reserves with cash, equity investments, or revenues from endowment investments. But WE Charity does not have a traditional endowment and ... its reserve is established through the ownership of real estate.”
In documents provided by WE lawyers last year, the charity told the Star its large real estate holdings act as a reserve fund in case donations dry up — as they did when COVID-19 hit in March 2020. Property ownership is also a smart investment, the charity said.
“Real estate is critical to WE’s Charity model and is essential to the delivery of high quality and accessible programming while allowing it to operate efficiently and effectively,” the charity stated in a 500-page binder provided to the Star in 2020 in response to inquiries about its real estate.
By owning property, WE said it saved $1.2 million annually on leasing costs.
“Past real estate investments have yielded excellent returns for the organization, and on a risk-adjusted basis, they have outpaced investments in the stock or other financial markets,” the charity said at the time. “Since the time of purchase of the properties along Queen Street East, WE Charity has seen a conservative five per cent increase in the total property value.”
Other than the headquarters, the only property that sold for more than its purchase price was a second floor apartment used to house international staff visiting from abroad. It was bought in 2018 for $500,000 and sold in August for $650,000.