Unrealistic expectations of sale value contributed to delays in the disposal of surplus properties held by the Okanagan Tree Fruit Cooperative, says Alan Tyabji, who was appointed chief executive officer of the British Columbia, Canada, cooperative in November 2012.
The co-op came into being in June 2008, months before the credit crisis that roiled financial markets and stalled real estate sales and development across North America. Sales in the Okanagan stalled, and many owners had to revise expectations of what their properties were worth. Some resort property owners sold at 30 percent discounts, while developers slashed prices on new residential units by up to 40 percent.
But the former management team at the co-op stubbornly stuck to existing appraisals, hoping buyers would pay. The former packing house in Naramata was listed as late as last year for $10 million, while its Summerland property was advertised at $4 million.
“The previous management had come from an environment where real estate prices had been very high,” Tyabji said. “Rather than market properties at market value, they retained the vision that the properties were worth more.”
The co-op continues to entertain queries from serious buyers, but pricing will be based on existing market conditions rather than historic pricing. Tyabji is optimistic that deals will be done, yielding cash for the co-op and relieving it of the significant carrying costs the vacant properties incurred.
“If I can execute my plan with current market values, we will have a very strong surplus of capital,” he says. “I’m not worried.”
The cash will eliminate a small amount of debt the co-op carries, as well as fund upgrades to its remaining properties.
Those upgrades include:
—a $7 million improvement to make the coop’s controlled atmosphere (CA) facility in Winfield more efficient and environmentally friendly
—a $3 million upgrade to its packing line in Winfield, including the installation of the latest defect sorting and sizing technologies
—expansion of its cherry packing line in Oliver, increasing capacity by 66 percent
All told, the cooperative hopes to undertake $44 million in infrastructure upgrades in the coming years.