PROJECT SHERBROOK

LONGFORM CASE STUDY

Opening

Here’s a story about a project that had every reason to die on the table… until we stepped in and turned two tired old buildings into one of the strongest value-add wins of the year.

This is Project Sherbrook — a perfect example of what Arete does best: find opportunity where most people only see problems.

PROJECT SHERBROOK

THE FULL STORY

PROBLEM

Most investors walk past deals like this because they only see what’s in front of them: aging buildings, dated layouts, low unit counts, and numbers that don’t pencil out.

Sherbrook was exactly that.

Two neighboring buildings.
Each originally only 4 units.
Basements undeveloped.
Roof issues.
Deferred maintenance.
Cashflow that made zero sense on paper.
And no lender excited about the deal.

Worse — the seller of one building was heading toward foreclosure, and nobody realized it until late in the game.

For most investors?
That’s the end of the story.

For Arete?
That’s where the story starts.

The Discovery

When our client first brought Sherbrook to us, the plan was simple: review one building and see if it was financeable.

Right away, we noticed something important:

The basement was completely undeveloped
The floor plan layout allowed for additional suites
The neighboring building was an identical twin

And that’s where the lightbulb went on.

Most people analyze buildings one at a time.
We think bigger.
We zoom out.
We ask: “What’s the real highest and best use here?”

So we dug deeper.

Through title pulls, conversations, and a little bit of relational digging, we discovered:

The neighboring building was also quietly available.

Not on MLS.
Not public.
Not clean.
But available.

And better yet — the lender involved in one of the two buildings was motivated.

This opened the door to a strategy that transformed everything.

The Strategy

1. Secure Both Buildings

We negotiated directly with the lender for the building heading toward foreclosure.
We structured timelines, terms, and communication so our client could acquire both assets safely and quickly.

2. Convert Each Building from 4 Units to 6 Units

The basements were clean, open, and already configured in a way that made adding units realistic.
We conducted:
- Feasibility assessments
- Parking requirement analysis
- Design checks
- Zoning validation
- Projections
- Budgeting
- Risk assessments
The numbers became clear:
The buildings only made sense financially as 6-plexes.

3. Coordinate with the RM of Headingley

This was the key differentiator.
Instead of submitting two separate projects with higher risk and weaker viability, we combined both buildings into one coherent redevelopment vision:
- Shared courtyard
- Shared parking plan
- Shared site layout
- Shared infrastructure strategy
- Unified municipal planning approach
This allowed us to pursue:

4. CMHC Financing

Converting from 4 units to 6 units changed the entire lending landscape.
- Suddenly, these buildings became:
  - Eligible for CMHC
  - Eligible for lower interest rates
  - Eligible for longer amortization
  - Eligible for higher loan-to-value
  - Eligible for better debt coverage
  Low interest.
  High stability.
  High leverage.
  Better cashflow.
  Exactly what every investor wants.