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Vancouver’s Grouse Mountain Resorts expected to be sold to Chinese investor with state ties

People walk at the top of Grouse Mountain in North Vancouver, B.C. China Minsheng Investment Group (CMIG) is expected to pay approximately $200-million for Grouse Mountain.

DARRYL DYCK/THE GLOBE AND MAIL

Vancouver's landmark Grouse Mountain Resorts is expected to be sold as early as next week to a Shanghai-based investor, the latest in a series of Canadian commercial property acquisitions by Chinese entities.

China Minsheng Investment Group (CMIG), the country's largest privately owned investment manager, is expected to pay approximately $200-million for Grouse Mountain, which is owned by the McLaughlin family, according to sources familiar with the transaction.

The year-round recreation destination, which dominates the Vancouver skyline from the North Shore Mountains, includes close to 500 hectares of private land that attract more than 1.3-million visitors annually. Grouse Mountain went up for sale last September, shortly after the Whistler Blackcomb ski resort sold for $1.4-billion.

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A spokesperson for CMIG declined to comment on a potential transaction, as did spokespersons for Grouse Mountain and its real-estate agent, CBRE Ltd.

CMIG was launched in 2014 by Chinese Premier Li Keqiang with approximately $9-billion of capital and is designed to function as Beijing's version of New York-based asset manager Blackstone Group, investing in sectors such as real estate, hospitality, health care, technology and finance.

Minsheng means "the people's welfare" in Chinese, and the fund manager has close ties to China's government. The group's chairman and its vice-chairman are Communist Party insiders who sit on a body that advises Beijing.

A sale to CMIG would demonstrate China's growing appetite for Canadian property acquisitions. The China Institute at the University of Alberta found Chinese investment in Canadian commercial real estate totalled $3.4-billion in 2016, up sharply from $32-million in 2013. Many of the recent property purchases were made by financial institutions. Over the past year, Beijing-based insurer Anbang acquired a stake in Vancouver-based retirement-home chain Retirement Concepts for an estimated $1-billion and an office tower in Toronto for $110-million.

The sale of such an important and notable B.C. landmark to a Chinese investment firm could spark controversy in an area of the country where the sale of real estate to foreign interests has prompted a heated and divisive debate.

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Offshore buyers, mostly from Mainland China, were fingered as one of the main culprits behind the wild and rapid escalation in home prices in Metro Vancouver over the past few years. A public outcry prompted the provincial government in 2016 to bring in a 15-per-cent foreign-buyers tax on all residential real estate transactions – a levy that did cool the market for a period of time.

Grouse would not fall under provisions of the tax because it is considered commercial land, which is excluded from the tariff's reach.

In May, CMIG reportedly teamed up with South Korean hotel and golf resort developer Emerson Pacific in a venture that will develop leisure facilities around the world. The company launched a joint venture in April with hotel chain Marriott International Inc. to build a Ritz-Carlton in Shanghai.

The McLaughlin family, which made its fortune as real estate developers in the Toronto suburbs, acquired Grouse Mountain in the early 1980s when the resort was in receivership. In recent years, the clan installed zip lines, a theatre and an "Eye of the Wind" turbine and observation deck.

Marketing materials that CBRE sent to prospective buyers highlight the potential to add a mountain-top hotel, spa facilities and lift-serviced mountain biking to the property. CBRE also said Grouse Mountain's ski hill, with four chairlifts servicing 26 runs, could be expanded.

The sale doesn't include the famous Grouse Grind, a gruelling hiking trail up the side of Grouse Mountain that is publicly owned.

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U.S. ski resort operators have snapped up two iconic B.C. mountains in the past year, with Whistler Blackcomb going to Colorado-based Vail Resorts for $1.4-billion and Vancouver Island's Mount Washington acquired by Utah-based Pacific Group Resorts for an undisclosed price.

A foreign takeover of Grouse is unlikely to trigger a review by the federal government because the projected dollar value is well less than regulatory limits. The federal Liberals raised the threshold for a review to $1-billion; transactions valued at less than this level are not typically scrutinized.

All foreign investments are subject to a cursory security screening and it would be up to the Trudeau government to determine whether a Chinese investment group's acquisition of the Vancouver-area resort warrants elevating this to a national-security review. The federal government recently signed off on the sale of Vancouver-based satellite technology company Norsat International Inc. without conducting a national-security review.

With files from Xiao Xu in Vancouver

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