Purchase by former Olympic Village owners under review
East Van block valued at $ 5.77 million
Vancouver is reviewing the recent purchase of an East Hastings Street property by the Malek brothers to make sure they’ve complied with the terms of a settlement agreement involving the city taking over the troubled Olympic Village.
City manager Penny Ballem said the purchase of the entire block at 1500 East Hastings by Shahram and Peter Malek for $ 5.5 million doesn’t appear to violate the terms of a settlement the pair gave in November 2010 when the city forced their financially troubled Millennium Developments company into “voluntary” receivership.
At the time, Millennium owed more than $ 578 million in loans the city gave in an effort to get the project finished in time for the 2010 Winter Olympics. The city, which owned the land, eventually took over the development and is still selling units off to pay down the debt. Last fall, it wrote down $ 48 million in debts.
As part of the settlement, the Maleks turned over 32 other properties they owned around the province that had a net value of $ 45 million. The city declined to take a number of properties that were heavily mortgaged and had no equity.
But in December, the city became aware that the Maleks recently bought the East Hastings Street property between Woodland and Mclean drives for a potential development. The land had been used by the Morrey Mazda auto dealership and would need to be rezoned. News of the purchase immediately triggered a review to ensure the Maleks hadn’t broken their settlement agreement by hiding assets that the city could use, Ballem said.
“We’re tracking everything they do,” she said. “What we know is the property is heavily leveraged, mortgaged to nearly $ 2 million beyond what they actually paid for it. There is no equity in it.”
Ballem said her staff determined that the Maleks used assets from a family trust as collateral for the property, which was bought under a company called Woodland Hastings Property Corp. The city was aware of the family trusts at the time of the Olympic Village settlement, but was told it couldn’t legally seize them as part of the receivership agreement, she said.
Mortgage documents attached to the land titles show the Maleks and several others took out a $ 7.12- million mortgage from Realtech Capital Group in the name of Woodland Hastings Property. B. C. Assessment records show the Maleks purchased the property, in two parcels, for $ 5.5 million on Dec. 12. The most recent assessment values the land at $ 5.77 million.
Calls to both Shahram and Peter Malek for comment were not returned.
Ballem said the city is confident it obtained in the Olympic Village settlement every useful asset the Maleks had with one exception; it left them with a highrise development at Bidwell and Davie Streets that had some equity. The city also took out a mortgage on the property but the Maleks have since repaid it, she said.