Bill Kennedy WFN Land Use Anthem Properties Group Ltd. #LGEDC2016 - First Nations National Land Governance & Economic Development

1. First Nations National Land
Governance and Economic
Development Conference
October 13, 2016
Property Development
Anthem Properties Group Ltd.

2. Anthem Properties Group
• Established 25 years ago in Vancouver.
• A real estate development, investment and management
company that operates in Alberta, British Columbia and
California.
• A dedicated team of approximately 200 people
• Has been involved in more than 150 projects, amounting to a
cumulative value of $4 billion.
• Current portfolio is comprised of four million square feet of
commercial space, more than 7,000 homes in various stages
of design and development, and 60 acres of land held for
future development
• Anthem’s sister company, United Communities, has operated
in Alberta for more than 28 years.

3. Westbank, BC
• On “the other side” of Lake Okanagan from Kelowna
• District (City) of West Kelowna (123.5 square kilometres =
30,518 acres; 35,000 residents;
• Westbank First Nation (6,000 acres; 10,000 residents; 800
members; 1.35 million square feet of commercial space)
• District of Peachland (5,200 residents; 3,900 acres)

4. Relative Land Holdings
Land Holdings
West Kelowna
WFN
Peachland

5. WFN IRs and Community Land vs. Locatees

6. WFN Land Use

7. Why did Anthem develop on WFN Land?
• Adjacent to Highway 97 with great frontage
• Major national retailers wanted to be there
• Residential growth in immediate area
• Locational challenges on the area’s freehold lands
• Existence of the First Nations Land Management Act, WFN
Self-Government Agreement and Land Code

8. What were the challenges?
• Ignorance of how things work
• Accepting the inviolability of the pre-paid 99 year lease
• Over-abundance of retail development at the same time
• 2008 “financial crisis”
• Volatility of the $Cdn
• Being in the shadow of Kelowna

9. What were the pleasant/unexpected surprises?
• Land registration system is simple
• Development process is straightforward
• Commercial lenders are comfortable
• (most) Retail tenants are comfortable
• “On reserve” conduct of business is almost the same
as it is on freehold land
• Often almost seamless relationship between
properties on WFN land and West Kelowna

10. Who are our partners?
• Governors Landing: Crestpoint Real Estate Investments Ltd.
• Governors Market: N/A
• Snyatan: Westbank First Nation

12. What we developed?
• Governors Landing:
– 140,000 sq. ft. retail and office space
– Real Canadian Superstore
– Liquor Depot
– Original Joe’s
– Value Village
– Benjamin Moore
– Many local independent retailers

13. Governors Landing
Aerial

14. What we developed (continued)
• Governors Market
– 28,700 sq. ft. of retail space
– Rexall Drugs
– Starbucks
– Medical, dental & fitness
– Independent local retailers

15. Governors Market
Aerial

16. Governors Market
Rexall

17. Governors Market
Strip

18. What we developed (continued)
• Snyatan
– Two phases, one of which has been completed
– 94,150 sq. ft. of retail space (Phase 1 only)
– Wholesale Sports
– Winners
– Bulk Barn
– Peace Hills Trust
– Bosley’s Pet store
– Five Guys
– National, regional and local retailers

20. How did Snyatan happen?
• WFN held title to one strip of land parallel to the highway
• Anthem had 99 year lease with a locatee of a similarly shaped
strip between the highway and the WFN strip.
• Two strips combined were much more easily and efficiently
developable together than separately.
• WFN could participate in potential increase in values and long
term cash flow from a development.
• Anthem could act as developer and enjoy the same benefits
as WFN as “owner”

21. How did Snyatan happen (continued)?
• Anthem and WFN entered into agreement in principle,
subject to community approvals
• WFN council obtained community approvals
• WFN and Anthem entered into:
– Limited Partnership Agreement
– Long term lease between WFN and the Limited
Partnership for the WFN strip and an assignment of the
Anthem strip lease to the Limited Partnership
– Management agreements between the Limited
Partnership and Anthem

22. How did Snyatan happen (continued)?
• WFN and Anthem have representatives on a board that meets
regularly and makes all decisions on behalf of the Limited
Partnership
• The board reviewed and approved all design, development,
construction, leasing and financing arrangements for the
project.
• The board reviews, monitors and adjusts as necessary the
development and operational plans for the development.
• Anthem, as manager, prepares and makes recommendations,
through a systematic process that includes a vision, 5 year
strategic plan, annual business plan and detailed budget for
the property

23. How did Snyatan happen (continued)?
• WFN contributed its land to the Limited Partnership.
• Anthem contributed its land to the Limited Partnership
• Anthem provides whatever additional capital is necessary to
complete or sustain the project.
• The Limited Partnership can borrow as much debt as is
available subject to the condition that WFN is not required to
contribute any additional capital or provide and sort of
financial guarantee

24. How did Snyatan happen (continued)?
• The Limited Partnership obtained lease commitments
sufficient to satisfy lenders who would put up construction
financing for Phase 1
• Construction financing for Phase 1 was obtained from a
Schedule 1 bank on market terms
• Appropriate development approvals were obtained from WFN
and other regulatory authorities (BC Dept. of Transportation,
MOE, DFO, etc.)
• Phase 1 was completed.

25. Snyatan
Rider and Horse by Smoker Marchand

26. Snyatan
Pad Building

27. Who are our tenants and why?
• National anchors and national retailers
• Local entrepreneurs and franchisees
• Location
• Site layout
• Catchment area
• Belief in the future of the area
• The bridge

28. Snyatan
Winners Opening

29. Snyatan
Wholesale Sports

30. Looking down Highway 97

31. Snyatan
Pad Building

32. What were the unpleasant/unexpected surprises?
• 2008 “financial crisis” had a big impact on the area
– Many tenant failures at Governors Landing, among others
– Overbuilt retail sector that anticipated population growth
that did not materialize
– Best Buy/Future Shop store closures
– Kelowna-centric retail bias among some operators

33. Snyatan
LED Lighting

34. What works and what needs work
from our perspective?
 Land registration system
 Development approval process
 Governance structure and operations
 Communications
X Locatee leases need work (almost there now)
X Employment opportunities (works sporadically but needs
to be explored more systematically from both sides)

35. Horse and Rider
well seasoned

36. The 99 year Lease
• Locatee on Designated Land eliminates the developer dealing
with the Federal Government
• The Lease has to work for the developer, its lenders and its
sub-tenants (retailers, office tenants, industrial tenants,
others) as well as the Locatee
• The Lease has to be assignable without commercially
unreasonable complications or steps
• Defaults under the Lease need to be absolutely minimal
• The Lease needs to provide for operational flexibility
• What happens near and at the end?

37. Employment Opportunities
• Public policy objective is sound and reasonable
• Business objectives of the developer/operator
• Supply/demand realities, particularly in the development
stages of any project
• Rigid vs. flexible solutions
• More thought/dialogue

38. Conclusions
• Real estate really is about location and demand.
• Development on WFN lands is not materially different from
development in freehold based municipalities.
• Partnership with WFN is consistent with other similar
arrangements other than the limitation on capital
contributions.
• Opportunities to differentiate FN projects can and should
be a plus.
• Play to your strengths.
• No unresolved issues to date.
• A good relationship.

39. WFN Highway 97 Retail Hub