multi-residential market and investment trends...canadian apartment investment conference | 2017...

CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 1

Multi-ResidentialMarket and Investment Trends

Canadian Apartment Investment Conference I 2017


Rental Market UniverseTotal Rental Units, October 2016

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Vancouver Edmonton Calgary Toronto Ottawa Montreal

Condo Rental

Purpose-Built Rental

Source: CMHC


Condominium Rental Market UniverseRental Condo Units as Share of Total Condo Units, October 2016

25.4%

32.1% 31.1%32.6%

28.7%

15.7%

0%

5%

10%

15%

20%

25%

30%

35%

Vancouver Edmonton Calgary Toronto Ottawa Montreal

Source: CMHC


Housing StartsBy Tenure and Type, Canada

42%45%

42%37% 39%

56%49%

61%65%63%65%

26%

15%

5%10% 13% 15%

20% 20%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

Share that are multiples

Share that are purpose-built rental

Source: CMHC


Rental Market PerformanceAverage Vacancy, 2015-2016

0.8%

4.2%

5.3%

1.6%

3.4%

4.0%

3.5%

0.7%

7.1% 7.0%

1.3%

3.0%

3.9% 3.7%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

Vancouver Edmonton Calgary Toronto Ottawa Montreal Canada

2015 2016

Source: CMHC


Rental Market PerformanceAnnual Average Rent Growth, 2 Bdrm, 2015-2016

4.3%

2.6%

0.8%

3.0%3.7% 2.8% 3.5%

6.0%

-2.4%

-5.6%

3.0%2.3%

4.1% 3.7%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

Vancouver Edmonton Calgary Toronto Ottawa Montreal Canada

2015 2016

Source: CMHC


Property Returns by Asset Type12-Month Return for Standing Investments, Canada

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2010 2011 2012 2013 2014 2015 2016 Jun-17

RetailOfficeIndustrialResidential

8.3%6.9%6.0%4.9%

Source: MSCI REALpac/IPD Canada


Multi-Residential Property Returns12-Month Return, Capital vs. Income Growth, Canada

-5%

0%

5%

10%

15%

20%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Jun-17

Income Growth

Capital Growth

Source: MSCI REALpac/IPD Canada


Capitalization RatesToronto

0%

1%

2%

3%

4%

5%

6%

7%

8%

Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017

Regional Mall

Apartment

Class AA Office

Single Tenant Industrial

10-Yr Bond

3.9%

Source: Altus Investment Survey and Bank of Canada


Capitalization RatesColliers Cap Rate Survey, 2017 Q2

Source: Colliers International


Rental Apartment DevelopmentRough Proforma Project Specs

Land Area (Acres) 1.48 1.48 1.48Density (FAR) 7 7 7Gross Building Area (GBA SF) 450,275 450,275 450,275Net Rentable Area (SF) 382,734 382,734 382,734Potential RevenuesGross Potential Rental Revenue/SF $2.50 $2.75 $3.00Gross Potential Rental Revenue $11,482,013 $12,630,214 $13,778,415Less 30% operating expenses -$3,444,604 -$3,789,064 -$4,133,525Net Operating Income $8,037,409 $8,841,150 $9,644,891Potential Value CreationCap Rate 4.50% 4.50% 4.50%Potential End Value $178,609,083 $196,469,992 $214,330,900Development CostsTotal Hard Costs (PSF) $270.00 $270.00 $270.00Soft Costs inc Financing (PSF) $54.00 $54.00 $54.00Total Development Costs $145,889,100 $145,889,100 $145,889,100Land ResidualLand Residual Before Profit $32,719,983 $50,580,892 $68,441,800Developer Profit (12%) $17,506,692 $17,506,692 $17,506,692Net Land Residual $15,213,291 $33,074,200 $50,935,108PSF Buildable $34 $73 $113


Condo Apartment RentsAverage Toronto (through MLS)

$2.00

$2.10

$2.20

$2.30

$2.40

$2.50

$2.60

$2.70

$2.80

$2.90

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q12017

Source: Urbanation and TREB


Multi-Residential Transaction VolumeCanada ($ Billions)

$4.13

$2.55

$1.67

$2.29

$4.40

$3.86$3.63 $3.73

$4.41$4.13

$1.87

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

$5.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD

Source: Real Capital Analytics


Purchaser Profile

1% 0% 0% 2% 0%

46% 44% 40%52% 53%

24%17%

34%17%

11%

6%

8%

7% 9%10%

23%31%

19% 20% 26%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

2013 2014 2015 2016 2017 YTD

Apartment Transactions, Canada

Institutional

Cross-Border

REITs/REOCs

Private

User/Other



Purchaser ProfileTop 10 Buyers, Past 24 Months, Canada

Buyer Acquisitions Over 24 Months ($millions)

Average Acquisition ($millions)

1 CAPREIT (Canada) $786 $142 Starlight Investments $650 $203 Northview Apartment REIT $414 $114 Skyline Apartment REIT $395 $95 Timbercreek Asset Management $224 $226 Killam Apartment REIT $176 $187 Akelius Residential AB $166 $178 Minto Group $157 $109 Greystone $145 $14510 InterRent REIT $133 $22



Select TransactionsWestern Canada

Name/Address: Edgewater on Jasper

Buyer: Greystone

Market: Edmonton

Price: $191,000,000

Units: 694

Price/Unit: $275,216

Year Built: 2013

Date Sold: Oct-2016

Name/Address: Parkview Village

Buyer: Private

Market: Calgary (Midnapore)

Price: $35,700,000

Units: 204


Year Built: 1982

Date Sold: Jun-2017

Name/Address: Barafield Apartments

Buyer: Hollyburn Properties

Market: Vancouver

Price: $42,000,000

Units: 109


Year Built: 1958

Date Sold: Apr-2017

Source: Real Capital Analytics and RealNet


Select Transactions

Name/Address: Regency Suites

Buyer: Starlight Investments

Market: Hamilton

Price: $80,692,478

Units: 321


Year Built: 2017

Date Sold: Apr-2017

Eastern Canada

Name/Address: 180-190 Clark

Buyer: Realstar Group

Market: Brampton

Price: $121,950,500

Units: 415


Year Built: 2014 and older

Date Sold: Jul-2017

Name/Address: 5999 Monkland

Buyer: GWL Realty

Market: Montreal

Price: $46,400,000

Units: 170


Year Built: 1966

Date Sold: May-2017

Source: Real Capital Analytics and RealNet


TrendingDemographics

0

5

10

15

20

25

30

35

40

45

50

1923 1933 1943 1953 1963 1973 1983 1993 2003 2013 2023 2033 2043 2053 2063

14 and Under 15-24 25-54 55-64 65-79 80+

25-64 yrs

14 yrs and under65-79 yrs

15-24 yrs55-64 yrs

80+ yrs

Source: Statistics Canada


TrendingRising Urban Land Costs

215 Lakeshore Blvd E3.85 acres

$166 million$43 million / acre

Sunnybrook Plaza2.89 acres

$26.3 million (50%)$18.2 million / acre

$150 PSF GFA

Yonge & College0.45 acres

$67 million (50%)$149 million / acre

$191 PSF GFA

Source: RealNet


TrendingInterest Rates, GOC Bond Yields

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 Jun-14 Oct-14 Feb-15 Jun-15 Oct-15 Feb-16 Jun-16 Oct-16 Feb-17 Jun-17

5-Year

10-Year

Source: Bank of Canada


TrendingSecondary Markets

VECTOM*74%

All Other Markets

26%

Sales Volume 2011-2016

* VECTOM = Vancouver, Edmonton, Calgary, Toronto, Ottawa and Montreal



TrendingThe Apartment as Saviour

The WindsorBeltline, Calgary

Corktown PlazaHamilton

The Ice DistrictEdmonton


TrendingLegislative Changes

• Expanding Rent Control to All Units• Capping Rent Guideline Increase• Changes to the OMB• Non-Resident Speculation Tax• Fair Apartment Taxation

• Capital Gains Inclusion Rate Increase?


Strong Outlook RemainsThe Few Headwinds Are Relative

multi-residential market and investment trends...canadian apartment investment conference | 2017...

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