Councillor, MPP slam private sale of former OCDSB school

The provincially appointed supervisor of the Ottawa-Carleton District School Board has listed the former Grant Alternative School at 2625 Draper Ave. for private sale via Avison Young, part of a push to divest unused facilities identified in a consultant report that includes three vacant schools and two parcels. The move, enabled by a regulation effective last June that increases Minister of Education control over surplus-school dispositions, has drawn criticism from local elected officials over lack of community consultation and concerns municipalities cannot competitively bid; any sale proceeds are to be placed into capital reserves for reinvestment in schools.

Analysis

Market structure: The province-led push to fast-track disposal of vacant school sites is a small but scalable supply shock to local development pipelines — winners are well-capitalized developers and owners of development services (engineering, remediation, materials) who can buy and re-zone quickly; losers are municipalities, small builders and trustees who lose optionality. If Ontario disposes of tens (not just single digits) of sites over 12–36 months, expect modest downward pressure on land-infill premiums in suburban nodes (5–15% localized repricing) while enhancing scale advantages for national asset managers.

Risk assessment: Tail risks include a regulatory moratorium or legal injunctions from community groups (low probability but high impact, could delay projects 12–36 months), and an adverse rate shock that makes conversion NPV-negative (sensitivity: +200bp mortgage cost can cut IRR by ~3–6ppt on typical townhouse projects). Immediate timeline (days–weeks) is political noise; transaction window (weeks–months) is when assets trade; realized value depends on rezoning and remediation over 1–3 years.

Trade implications: Tactical winners: diversified real-asset managers and engineering/consulting firms that execute conversions quickly; defensive winners: building-material distributors. Structures that favor optionality (large-cap developers and 6–12 month call spreads) outperform small-cap homebuilders or municipal-bond proxies which lose competitive access. Watch two catalysts: provincial housing policy announcements and municipal zoning decisions in next 30–90 days.

Contrarian angle: The market underestimates execution friction — many parcels will require remediation, infrastructure upgrades and community approvals, creating idiosyncratic returns for patient buyers rather than a rapid supply glut. If disposals are sold in portfolios to private capital, expect consolidation opportunities; conversely, strong community pushback could create short-term dislocations where skilled buyers can acquire at 10–30% discounts to replacement land cost within 6–18 months.

Key Decisions for Investors

• Establish a 1–2% position in Brookfield Asset Management (BAM, NYSE) within 30 days—large balance sheet and operating platforms can buy and develop portfolios; consider 12-month call spreads (buy 12-month ATM call, sell 20% OTM) to cap cost and target ~+15–25% payoff if disposals accelerate.
• Buy 1–2% exposure to Stantec Inc. (STN.TO) as a direct play on engineering/consulting work for conversions; use outright equity or buy 9–12 month calls if you expect zoning approvals within 3–9 months. Exit if Ontario announces a formal moratorium or if Stantec’s forward backlog growth misses by >10%.
• Allocate 0.5–1% to CRH plc (CRH, NYSE) or Home Depot (HD) as defensive material suppliers; hold 6–18 months to capture incremental retrofit demand. Trim if 10-year Canada yield rises >75bp from current levels (developer financing stress signal).
• Short (or underweight) municipally-exposed long-duration provincial/municipal bond ETFs or funds if you hold them: reduce duration by 0.5–1 year in fixed income sleeves within 30 days — rationale: potential for municipal balance-sheet stress and slower asset-redeployment increases funding needs. Reassess after 60–90 days when sale cadence and provincial policy clarity emerge.