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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
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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
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