CBRE Limited

CANADIAN APARTMENT INVESTMENT CONFERENCE 2015

Ross Moore

September 10th 2015

2

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Q2 2015 10-Yr Avg.

Vacancy

Source: Canada Mortgage and Housing Corporation, 2015.

WELCOME TO CANADA’S MOST DULL/STABLE MARKET!

3

(2%)

(1%)

0%

1%

2%

3%

4%

5%

6%

(80)

(40)

0

40

80

120

160

200

240

Calgary Edmonton Montreal Winnipeg London Halifax Toronto Vancouver Ottawa Waterloo

Va

can

cy R

ate

(%

)

Y-o

-Y C

ha

ng

e (

bp

s)

Y-o-Y Vacancy Rate Change Vacancy Rate

MULTI-FAMILY VACANCY, MID-YEAR 2015

Source: CBRE Research, Canada Mortgage and Housing Corporation, 2015.

4

Source: RealNet, Q2 2015.

Boardwalk Windsor Portfolio

Skyline Apartment REIT

Market: Windsor

Price: $136,200,000

Number of Units: 1,625

Price Per Unit: $83,815

Projected

Transaction Date: September 10, 2015

High Park Village Buildings 1, 3, 5 & 7

GWL Realty Advisors (50%)

Market: Toronto

Price: $124,654,198

Number of Units: 990

Price Per Unit: $251,826

Transaction Date: April 30, 2015

High Park Village Buildings 2, 4 & 6

CPPIB (60%)

Market: Toronto

Price: $104,574,797

Number of Units: 750

Price Per Unit: $232,388

Transaction Date: June 30, 2015

5

Source: RealNet, Q2 2015.

Langara Gardens

Concert Properties Ltd.

Market: Vancouver

Price: $101,857,500

Number of Units: 621

Price Per Unit: $328,043

Transaction Date: Jan. 9, 2015

Airdrie Place Apartments

Private Investor

Market: Calgary

Price: $64,285,000

Number of Units: 300

Price Per Unit: $214,283

Transaction Date: Jan. 6, 2015

Kingsclub (33%)

CAPREIT

Market: Toronto

Price: $60,300,000

Number of Units: 506

Price Per Unit: $322,978

Announced Date: July 2015

6

Source: RealNet, Q2 2015.

50 Spadina Rd. & 35 Walmer Rd.

Starlight Properties

Market: Toronto

Price: $59,000,000

Number of Units: 229

Price Per Unit: $257,642

Transaction Date: Jan. 12, 2015

The Laurier

Minto Inc.

Market: Calgary

Price: $50,000,000

Number of Units: 144

Price Per Unit: $347,222

Transaction Date: March 25, 2015

111 Lawton Boulevard

Akelius Canada Ltd.

Market: Toronto

Price: $46,000,000

Number of Units: 152

Price Per Unit: $302,961

Transaction Date: August 10, 2015

7

Source: RealNet, Q2 2015.

King’s Heights Apartments

Skyline Apartment REIT

Market: Calgary

Price: $41,000,000

Number of Units: 192

Price Per Unit: $213,542

Transaction Date: Feb. 17, 2015

Hamilton House

InterRent REIT

Market: Montreal

Price: $32,400,000

Number of Units: 280

Price Per Unit: $116,129

Transaction Date: March 11, 2015

The Brock

Homestead Land Holdings Ltd.

Market: Burlington

Price: $39,850,000

Number of Units: 115

Price Per Unit: $346,552

Transaction Date: June 11, 2015

8

Market 2007 2008 2009 2010 2011 2012 2013 2014 H1 2015

Vancouver

640.3

288.6

647.0

414.5

450.1

815.1

440.9

533.0 361.0

Calgary

556.0

269.3

90.5

112.1

125.8

486.3

184.4

202.4 137.5

Edmonton

659.0

202.0

139.0

160.4

157.0

121.7

317.8

269.5 191.6

Toronto

832.0

873.9

453.1

774.0

1,066.8

1,563.3

1,585.2

1,176.5 847.2

Ottawa

240.0

163.0

228.0

154.0

226.2

768.3

397.5

397.3 183.3

Montreal

846.2

946.0

605.0

836.1

900.0

1,354.9

829.1

813.4 341.2

Halifax

161.0

41.0

44.0

50.2

210.1

161.3

44.3

121.0 6.3

National

4,404.3

3,178.8

2,430.6

2,887.3

3,569.9

6,023.3

4,166.8

3,666.8 2,173.7

CANADIAN MULTI-RESIDENTIAL INVESTMENT VOLUME ($M) – BY MARKET

Source: CBRE Limited, RealNet Canada, Collette Plante, JLR Land Titles Solutions, Q2 2015.

9

Source: CBRE Limited, RealNet Canada, Collette Plante, JLR Land Titles Solutions, Q2 2015.

CANADIAN MULTI-RESIDENTIAL PURCHASER PROFILE – ALL TRANSACTIONS

0%

20%

40%

60%

80%

100%

2009 2010 2011 2012 2013 2014 H1 2015

Private Investor – Canadian REIT/REOC Foreign Investor Pension Fund Institution Private Equity

10

CANADA’S ACTIVE PENSION FUNDS IN REAL ESTATE

Select Canadian Pension Funds

Source: Various Annual Reports, 2015.

Pension Fund Net Assets CAD (Billion) Real Estate Assets CAD (Billion)

CPPIB - Canadian Pension Plan Investment Board $264.6 $30.3

Caisse de Dépôt et Placement du Québec /Ivanhoe Cambridge $225.9 $22.9

Ontario Teachers’ Pension Plan/Cadillac Fairview Corp. $154.5 $26.6

bcIMC - British Columbia Investment Management Corporation $114.0 $16.3

PSP - Public Sector Pension Investment Board $93.7 $12.8

OMERS/Oxford Properties Group $72.1 $12.0

AIMco - Alberta Investment Management Corporation $74.7 $9.2

HOOPP - Healthcare of Ontario Pension Plan $60.8 $7.7

11

• Demand drivers

- Immigration

- “We’re becoming a multi-housing society”

- And we’re becoming more urban

- Housing affordability

- Demographics

• Make-up of the Canadian Apartment market

- Where and what

• And now for some construction

• And rents

FOR CONSIDERATION……….

12

0

20

40

60

80

100

120

140

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

(000’s

)

Calgary Vancouver Toronto Montreal

IMMIGRATION: FUELS DEMAND

Source: Conference Board of Canada, Q2 2015.

Forecast*

13

CANADA MOVING TOWARDS MULTI-RESIDENTIAL LIVING

Source: The Conference Board of Canada, Q2 2015.

30

50

70

90

110

130

150

Q2

20

01

Q4

20

01

Q2

20

02

Q4

20

02

Q2

20

03

Q4

20

03

Q2

20

04

Q4

20

04

Q2

20

05

Q4

20

05

Q2

20

06

Q4

20

06

Q2

20

07

Q4

20

07

Q2

20

08

Q4

20

08

Q2

20

09

Q4

20

09

Q2

20

10

Q4

20

10

Q2

20

11

Q4

20

11

Q2

20

12

Q4

20

12

Q2

20

13

Q4

20

13

Q2

20

14

Q4

20

14

Q2

20

15

(00

0’s

)

Housing Starts, Multiples Housing Starts, Singles

14

22.1%

17.7%

13.0%

11.6%

7.0%

15.2%

5.5%

6.6%

0%

5%

10%

15%

20%

25%

Toronto Calgary Montreal Vancouver

Urban Suburban

2010-2015 Population Change

URBAN & SUBURBAN GROWTH

Source: Environics Analytics, 2015. * Urban defined as 2 km radius from city centre.

15

50

100

150

200

250

300

350

1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Q2 2015

Ind

ex =

100 (

1992)

National Avg. Home Price National Avg. 2-Bdrm Monthly Rent Personal Income Per Capita

Source: Canadian Real Estate Association, Canadian Mortgage and Housing Corporation, Conference Board of Canada, Q2 2015.

AFFORDABILITY GAP CONTINUES TO WIDEN

$453,560

$1,107

$41,944

16

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2010 2011 2012 2013 2014 2015 2016 2021 2026 2031 2036

Age 20 - 34 Age 65+

DEMOGRAPHIC TRENDS IN CANADA

Population Growth (000’s)

Source: CBRE Research, Statistics Canada, 2015.

17

CANADIAN APARTMENT DISTRIBUTION (UNITS)

Source: Canadian Mortgage and Housing Corporation, Conference Board of Canada, 2015.

0.0

1.5

3.0

4.5

6.0

7.5

9.0

0

100,000

200,000

300,000

400,000

500,000

600,000

Montreal Toronto Vancouver Edmonton Ottawa Winnipeg Halifax Calgary

Millions

Inventory (L) Population (R)

18

PERCENTAGE OF UNITS RENTED – CMA’S

Source: Canadian Mortgage and Housing Corporation, Statistics Canada, 2015.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Montreal Vancouver London Ottawa Winnipeg Toronto Edmonton Waterloo

Region

Halifax Calgary

Total Units Rented Apartment Units Rented

19

7%

14%

51%

28%

Less than 15 Years 15 - 35 Years 36 - 55 Years Greater than 55 Years

1960/1979

1980/2000

2001/2015

CANADIAN APARTMENT INVENTORY BY AGE

Source: Canadian Mortgage and Housing Corporation, June 2015.

Pre - 1960

20

21

7%

14%

51%

28%

Less than 15 Years 15 - 35 Years 36 - 55 Years Greater than 55 Years

1960/1979

1980/2000

2001/2015

CANADIAN APARTMENT INVENTORY BY AGE

Source: Canadian Mortgage and Housing Corporation, June 2015.

Pre - 1960

22

Toronto Vancouver Montreal Edmonton Calgary Ottawa

Rental 875 1,571 2,155 1,329 300 121

Condominium 11,269 4,764 2,681 2,607 2,577 620

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Source: Canada Mortgage and Housing Corporation, June 2015.

MULTI-FAMILY UNIT STARTS 2015-YTD JUNE

23

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Vancouver Calgary GTA Edmonton Ottawa Montreal

Condo Rental Universe as % of Purpose Built Rentals

Source: Canada Mortgage and Housing Corporation, 2015.

JUST HOW BIG IS THE CONDO RENTAL UNIVERSE?

24

PURPOSE-BUILT RENTAL CONSTRUCTION

Source: Canadian Mortgage and Housing Corporation, H1 2015.

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

0

500

1,000

1,500

2,000

2,500

Montreal Vancouver Edmonton Toronto Calgary Ottawa

% of Inventory Units Started

H1 2014 Starts H1 2015 Starts % of Inventory H1 2014 % of Inventory H1 2015

25

APARTMENT RENTS

(2%)

0%

2%

4%

6%

8%

10%

12%

-$400

-$200

$0

$200

$400

$600

$800

$1,000

$1,200

Toronto Vancouver Calgary Edmonton Ottawa CANADA Halifax Waterloo London Winnipeg Montreal

Composite Rental Rate (L) Y-o-Y Rental Growth Rate (R)

Source: CBRE Research, Canada Mortgage and Housing Corporation, H1 2015.

26

$600

$700

$800

$900

$1,000

$1,100

$1,200

$1,300

Bachelor One-Bdr Two-Bdr Three-Bdr Overall Avg.

Monthly Rental Rate

Mid-year 2013 Mid-year 2014 Mid-year 2015

RENTAL RATE BY UNIT TYPE

Source: CBRE Research, H1 2015.

27

MULTI-FAMILY RENTAL RATES

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Q2

2015

Bachelor 1 bed 2 bed 3 bed Average

Source: Canada Mortgage and Housing Corporation, CBRE Research, Q2 2015.

28

AVERAGE RENTAL RATE GROWTH - TORONTO

80

90

100

110

120

130

140

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

Q2

20

15

Ind

ex =

100 (

2000)

Class A Office (Downtown) Class A Office (Suburban) Industrial Multifamily

Source: CBRE Research, Q2 2015.

29

75

100

125

150

175

200

2007 2008 2009 2010 2011 2012 2013 2014 2015

Ind

ex =

100 (

2007)

Toronto - 2 Bdrm Monthly Rent Ontario Energy Mid-Peak Prices (¢/kWh)

ELECTRICITY PRICES (¢/KWH) VS. 2 BEDROOM MONTHLY RENT

Source: Ontario Energy Board, Canadian Mortgage and Housing Corporation, & CBRE Research, 2015.

30

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

Toronto Vancouver Ottawa Calgary Edmonton Montreal

Composite Monthly Rate

Rental Condo

RENTAL RATE: CONDO VS. RENTAL

Source: Canada Mortgage and Housing Corporation, CBRE Research, H1 2015.

31

$4,285

$3,399

$3,133 $3,059

$2,769

$2,591

$2,355

$1,895

$1,670

$1,540

$1,300

London Singapore New York Dubai Hong Kong Sydney Paris Toronto Frankfurt Manchester Milan

AVERAGE MONTHLY RENT PER CITY (CAD)

Source: CBRE Research, Q2 2015.

32

NEW CONSTRUCTION - DOES IT MAKE SENSE?

LAND CONSTRUCTION SOFT TOTAL

$75.00/

$100.00

+ $250.00 + $50.00 = $375.00

NOI $1.60/SF/MO

= 4.6% CAP RATE?

COST $415.00

33

0%

2%

4%

6%

8%

10%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Q2 2015

10-Yr Bond Yield Office - CBD A Industrial - A & B Retail - Neighbourhood Multi-Res - High Rise A

273 bps

NATIONAL CAP RATES VS. 10-YR BOND YIELD

Source: CBRE Research, Bank of Canada, Q2 2015.

34

0%

2%

3%

5%

6%

8%

Vancouver Calgary Edmonton Toronto Ottawa Montreal Halifax

Cap Rate - 2010 Cap Rate - Q2 2015

MULTI-FAMILY CAP RATES* BY MARKET

Source: CBRE Research, Q2 2015. *High Rise B

35

CONCLUDING COMMENTS

• Demand going forward will be

more nuanced

• Construction is far from a

permanent feature, but…

• Record setting pricing will

drive new construction

• The yin and yang relationship

with the ownership market

CBRE Limited

THANK YOU

Ross Moore, Director, CBRE Canada Research