CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 1
Multi-ResidentialMarket and Investment Trends
Canadian Apartment Investment Conference I 2017
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 2
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
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 3
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
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 4
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
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 5
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
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 6
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
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 7
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
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 8
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
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 9
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
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 10
Capitalization RatesColliers Cap Rate Survey, 2017 Q2
Source: Colliers International
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 11
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
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 12
Condo Apartment RentsAverage Toronto (through MLS)
$2.00
$2.10
$2.20
$2.30
$2.40
$2.50
$2.60
$2.70
$2.80
$2.90
Q12012
Q22012
Q32012
Q42012
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Q12017
Source: Urbanation and TREB
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 13
Multi-Residential Transaction VolumeCanada ($ 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
$5.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD
Source: Real Capital Analytics
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 14
Purchaser Profile
1% 0% 0% 2% 0%
46% 44% 40%52% 53%
24%17%
34%17%
11%
6%
8%
7% 9%10%
23%31%
19% 20% 26%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
2013 2014 2015 2016 2017 YTD
Apartment Transactions, Canada
Institutional
Cross-Border
REITs/REOCs
Private
User/Other
Source: Real Capital Analytics
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 15
Purchaser ProfileTop 10 Buyers, Past 24 Months, Canada
Buyer Acquisitions Over 24 Months ($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
Source: Real Capital Analytics
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 16
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
Price/Unit: $175,000
Year Built: 1982
Date Sold: Jun-2017
Name/Address: Barafield Apartments
Buyer: Hollyburn Properties
Market: Vancouver
Price: $42,000,000
Units: 109
Price/Unit: $385,321
Year Built: 1958
Date Sold: Apr-2017
Source: Real Capital Analytics and RealNet
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 17
Select Transactions
Name/Address: Regency Suites
Buyer: Starlight Investments
Market: Hamilton
Price: $80,692,478
Units: 321
Price/Unit: $251,378
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
Price/Unit: $293,857
Year Built: 2014 and older
Date Sold: Jul-2017
Name/Address: 5999 Monkland
Buyer: GWL Realty
Market: Montreal
Price: $46,400,000
Units: 170
Price/Unit: $272,941
Year Built: 1966
Date Sold: May-2017
Source: Real Capital Analytics and RealNet
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 18
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
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 19
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
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 20
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
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 21
TrendingSecondary Markets
VECTOM*74%
All Other Markets
26%
Sales Volume 2011-2016
* VECTOM = Vancouver, Edmonton, Calgary, Toronto, Ottawa and Montreal
Source: Real Capital Analytics
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 22
TrendingThe Apartment as Saviour
The WindsorBeltline, Calgary
Corktown PlazaHamilton
The Ice DistrictEdmonton
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 23
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?
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 24
Strong Outlook RemainsThe Few Headwinds Are Relative
CANADIAN APARTMENT INVESTMENT CONFERENCE | 2017 Scott Chandler, Colliers International 25