UBC Properties Trust is Building Unique JV Partnerships and Delivering Billions in Value

UBC Properties Trust is celebrating 30 years of owning and operating real estate within arm’s length of the University of British Columbia – with massive success, unique JV partnerships, and state-of-the-art mixed-used buildings.

“We have made from our sale of pre-paid land leases over the years about 2 billion dollars,” according to Aubrey Kelly, President & CEO of UBC Properties Trust. The money made from the pre-paid leases went into the endowment for the university back into core university objectives.

“That’s billion with a B,” Kelly reiterated at SHURE-Vancouver on April 20. SHURE-Vancouver is the annual high-level event produced by The SHURE Initiative that convenes university stakeholders and commercial real estate developers. In 2023, SHURE-Vancouver was held at the University of British Columbia.

Since adopting the Property Trust model, about 15 million square feet have been built on UBC grounds, with a value approaching $5 billion in construction, including about 10,000 student housing beds. Today, the UBC campus is a thriving ecosystem of innovative academic, research, housing, retail, and athletic buildings. Every major Canadian retailer and innovative food store is available on campus.

UBC is the largest landlord in Vancouver, BC. The mission of UBC Properties Trust is to build a financial legacy and create innovative spaces for learning and living at UBC. UBC Properties Trust started in 1984 with the approval of the UBC Board of Governors, and the area now known as Hampton Place was designated the first residential neighbourhood. Due to the success of Hampton Place and its net gain to UBC of $81 million, the Board of Governors decided in 1994 that an additional 200 acres be transformed into neighbourhoods with a mix of housing, parks, shops, and amenities. Following Hampton Place, UBCPT followed with the development of Hawthorn Place, Chancellor Place, East Campus, and now Wesbrook Place.

UBC Properties Trust mandates the pre-service of the land and then sells it to developers, with parcels sold on 99-year leases. “The very earliest ones were being sold for about 70 dollars per buildable foot, and now we’re getting very close to 500 dollars, a buildable foot,” Kelly told the SHURE Audience.

Professional real estate executives operate UBC Properties Trust; some are active in their careers, and others are retired. UBC Properties Trust reports to an independent board with oversight from the university. A few members from the administration of the university sit on that board. Still, it primarily has an external board comprising industry professionals with real estate careers. “Some of them are retired but had long careers in our industry, and on purpose and by design to harvest the expertise in that governance model,” according to Kelly.

Post-secondary institutions in Canada that are publicly funded cannot borrow money because the debt rolls up to the provincial debt. Universities are not allowed to borrow, according to Kelly. Therefore, the UBC Properties Trust borrows from the university endowment to grow its real estate business, with dividends from rental properties and land leases sent back to the sole shareholder – the University of British Columbia.

The needs for housing on campus have changed in those thirty years. According to Kelly, in the early days, there were fewer issues with housing for faculty and staff. In addition, Kelly told the SHURE audience that UBC Properties Trust is not aiming to make the campus a destination for commercial landlords but to create “real value that adds to residential real estate and life on campus” and will turn down projects.

Kelly noted that UBC Properties Trust carefully selects developers for the land leases. “Sometimes we will say no to the highest bidder on a commercial property on a commercial tenancy because it’s not providing perhaps the service that we want for student life or campus life, including commercial, retail, and office on campus.”

Polygon Homes is one of the most active private developers on UBC lands, recently buying into a 99-year pre-paid lease with UBC Properties Trust. Polygon developed a combination of for-sale and for-rent properties through the pre-paid lease structure.

According to Kelly, UBC Properties Trust will get more value from a rental building than from selling a pre-paid lease, depending on various factors, including interest rates. “The advantage of having some pre-paid lease sites and mixing it up is it gives us access to that cash which balances our cash flow versus ultimate value, and we can borrow from the endowment.”

Kelly described his role at UBC Properties Trust: “As president and CEO, I report to an independent board. A few members from the university administration sit on that board; still, it is primarily populated with an external board of industry professionals with real estate careers.”

Building mixed-used was not the initial focus of the UBC Properties Trust, but it became a priority in the early 2000s, according to Kelly.

“Let me reiterate - two billion dollars of value that have been added to the university by these activities,” Kelly told the SHURE-Vancouver audience as he concluded his remarks.