Can Investment Activity Become Any Stronger in the Canadian Market or Has it Peaked? Montreal Investment Market Overview November 29th 2012 Michal Kuzmicki Managing Partner, Montreal Act on Principle
QUEBEC TRANSACTIONS > $10 MM Million $900 Industrial $1,445 MM $800 Multi-Res Office $700 Retail $600 $1,320 MM $500 $400 $892 MM $300 $510 MM $200 $100 $0 2009 2010 2011 2012 2
2012 QUEBEC RETAIL TRANSACTIONS Promenades de l’Outaouais Les Factoreries & Carrefour Champêtre Gatineau St-Sauveur & Bromont $220.3 million $94.7 million 840,435 sf 278,000 sf Enclosed Regional Outlet Centres Vendor: Canpro Investments Vendor: Private & Devimco Purchaser: Oxford Properties & Purchaser: Riocan & Tanger Montez Corporporation Top Tenants: Tommy Hilfiger, Top Tenants: Costco, La Baie Nike, Guess Galeries Charlesbourg Centre Le Village & Elgar Place Quebec City Montreal $33.0 million $21.9 million 254,415 sf 105,956 sf Enclosed Food Anchored Enclosed Food Anchored Vendor: Econo-Malls Vendor: Sandalwood Purchaser: First Capital Purchaser: Partners REIT Top Tenants: IGA, Hart, Top Tenants: Loblaws, SAQ, RBC Dollarama 3
2012 QUEBEC RETAIL TRANSACTIONS Place des Quatres-Bourgeois Place de la Colline & Marché Jonquière Quebec City Place des Cormiers Jonquière $31.0 million Chicoutimi & Sept-Îles $13.8 million 242,774 sf $14.4 million 66,189 sf Enclosed Food Anchored 125,160 sf Unenclosed Food Anchored Vendor: Bayfield & Sunstone Unenclosed Food Anchored Vendor: Brookline Purchaser: First Capital Vendor: First Capital Purchaser: Canmarc REIT Top Tenants: IGA, Winners, Jean Coutu Purchaser: Private Top Tenants: IGA, Jean Coutu, Top Tenants: Maxi, Uniprix, Provigo Desjardins 4
2012 MAJOR QUEBEC MULTI-RESIDENTIAL TRANSACTIONS Norgate & Renaissance Olympic Village La Cité Montreal, Qc Montreal, Qc Montreal, Qc $121 million $176.5 million $231.8 million 1,528 Units 980 Units 1,351 Units $/Unit: $79,188 $/Unit: $108,102 $/Unit: $171,577 Vendor: Private Consortium Vendor: El Ad Vendor: Private Investors Purchaser: True North Purchaser: CAPREIT Purchaser: Oxford Properties Apartment REIT 5
Highlights - Ottawa Office Market 6 As of November 20 th 2012 • Overall Vacancy - 7.3% (Up from 7.0% in Q3 2011) • CBD Class A Vacancy - 5.6% (Up from 4.5% in Q3 2011) • Leasing Activity (All Sectors) - 1.9 mil sq. ft. • Absorption (All Sectors) - 440,000 sq. ft. • Investment Volume - $2.0 Billion New Record ($1.8 Billion 2007)
The Ottawa Office Market 7 Federal Government Presence in the Ottawa Market Downsizing or Renewal? Nortel Campus: 2,200,000 sf Gatineau: 1,600,000 sf Ogilvy Road: 800,000 sf 90 Elgin Street: 646,000 sf Tremblay Road: 250,000 sf 5,500,000 0 sf sf 52.6 mil illion ion square are fe feet (Including Fed Owned)
Ottawa Market Overview 8 Institutional Grade Office Yeilds- Ottawa Q4 2009-Q3 2012 9.0% 8.5% 8.0% 7.5% 7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% Dec-09 Apr-10 Aug-10 Sep-12 Nov-10 Dec-10 Jan-11 Jun-11 Aug-11 Dec-11 Jan-12 Aug-12
Local Case Study – Record Setting Yield 9 200 Kent Street & 77 Metcalfe Street, Ottawa, ON $143,400,000 $45,000,000 200 Kent Street 77 Metcalfe Street Cap Rate: 5.25% Cap Rate: 5.20% Value Drivers: Value Drivers: Credit, Rent, & Term Credit, Rent, & Term
PREPARED FOR: VANCOUVER MARKET OVERVIEW Toronto Real 0 Estate Forum PRESENTED BY: Tony ny Quat attrin trin Executive Vice President National Investment Team CBRE Limited November 29, 2012
Vanco couver uver remai mains ns one e of the most ost sought ught after r inves estment tment market rkets s in Canada, da, with investmen estments s posing sing a lo lower er risk k profi ofile e comp mpar ared d to other her Canadian adian marke rkets. ts. VANCOUVER SUN: “VANCOUVER ONCE AGAIN THE WORLD’S THIRD MOST LIVABLE CITY”
B.C. P Popul pulatio ation n Change ge • International migration accounts for 77.4% of BC’s population gain • Between n 40,000 – 60,000 net new migrants nts settle in BC each year Total Population Net Migration 7,000,000 90,000 Net Migration Forecast (2013-2034) Total Population 80,000 6,000,000 70,000 5,000,000 60,000 4,000,000 50,000 40,000 3,000,000 30,000 2,000,000 20,000 1,000,000 10,000 0 0 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 Source: BC Stats
Investm tment nt Trends ds 20 2012 12 CONT NTINUED ED CAP LOCAL AL AND ND GLOB OBAL AL RECO CORD D LOW INCREA CREASE SE IN RATE TE COMPRE PRESSIO SION INFLU FLUENCE ENCE INTE TEREST T RATES ES INV NVESTME TMENT T ACTIVITY IVITY • Fueli ling g con onsum umer er • Continu inued ed deman and d for local l • Demand for “hard • Forei eign gn & Domest estic ic confidence onfidence propert operty assets” Investo estors • Great eat finan ancing ing • Little le supply, pply, stron ong g • Limited ited quali lity supply pply • Increased eased activit ivity from m a availabl lable deman and varie iety of buyer er grou oups ps • Steady eady leas asing ing • Favor orable able purchas asing ing • Unique que and d surpr urpris ising ing deals ls fundamen damentals als condition ditions in 2012
Debt Capital l Marke kets ts • Mortgag age e spread ads s have generall ally y held the line e at 180 180 - 190 190 bps for “A - quality” product • BoC likel ely to hold ld rates es for the forese seeable eable future Typic ical l terms ms: 5-Year r Comm mmercia rcial l Mortga tgage ge Rates (190 bps spread): ad): 3.24 LTV 55 - 65% 25 year amortiz tizatio tion 5-Year r Governm rnment t of Canada da Benchmark rk Bond Yield: d: 1.34 5 year term m 50 bps arrang ngeme ment nt fees 9 8.5 8 7.5 7 6.5 6 5.5 5 4.5 4 3.5 3 2.5 2 1.5 1 Week ekly ly Benchma hmark k Bond Yiel elds ds & Mortga tgage ge Rates es Januar ary 2002 to Novem ember ber 2012 Source: CBRE Limited, Bank of Canada
Purchase haser r Profile file REITS TS Pen ensi sion on Funds Forei eign gn Inve vestors stors Syndicat dicators s De Deve velopers pers Privat vate e Buye uyers High h interest rest from om all buyer r groups oups today
Downt ntown own Cl Class s A A Ca Cap Rates 11.00% 10.00% 9.00% Vancouver Calgary Edmonton 8.00% Toronto Ottawa 7.00% Montreal Halifax 6.00% National 5.00% 4.00% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Q1 2012 Q2 2012 Q32012 Source: CBRE Limited
Downt ntown own Su Supply ly & Demand d – All Classe ses Forecasted asted Total al Marke ket t Size: : 21.9 .9 Milli lion n SF 1,600,000 16% 1,400,000 14% Q3 2012 1,200,000 12% Vacan cancy cy 1,000,000 10% 3.4% 800,000 8% 600,000 6% 400,000 4% 200,000 2% 0 0% Potent ential ial Marke ket t Size e in -200,000 -2% 2016: : 23.5 .5 Million llion SF SF -400,000 -4% -600,000 -6% -800,000 -8% -1,000,000 -10% -1,200,000 -12% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 New Supply (SF) Absorption (SF) Vacancy (%) AAA/A Class Vacancy: ancy: 1.7% Last wave e of new builds ds (2001 2001-20 2004) ) 1.35m SF = 6.7% of total market et Current rent wave e of new builds s (2014 2014-2015 015) ) 1.59m SF = 7.0% of f total market et Source: CBRE Limited
Downt ntown own Offi fice ce Develop opme ments nts MNP P Tower er Oxfor ord d Properties erties N 745 Thurlow low Bentall tall Kennedy edy Pacific ific Centre e Expans nsio ion Cadillac llac Fairvi view ew TELU LUS S Garde den TELUS/ LUS/Westba estbank nk 800 Griffit iffiths Aquil ilini ini Grou oup MNP P Tower er 745 Thurlow low TELUS S Garden den 800 Griffit iffiths Pacific ific Centre e Expans nsio ion Oxfor ord d Properties erties Bentall tall Kennedy edy TELUS/ S/Wes estbank tbank Aquil ilini ini Grou oup Cadillac llac Fairvi view ew Source: CBRE Limited
Downt ntown own Offi fice ce Develop opme ments nts 2014 2014 – 2017 2017 Pacific ific Centre tre Expansion nsion MNP Tower er 800 Griffith 800 fiths s Way 745 745 Thurlow ow TELUS US Garden den Cadillac Fairview Oxford Properties Aquilini Group Bentall Kennedy TELUS/Westbank 300,000 SF 270,000 SF 213,000 SF 365,000 SF 448,000 SF Average Floor Plate: 75,000 SF 8,000 SF 14,000 SF 16,500 SF 22,000 SF Under Construction Under Construction Under Construction Under Construction Under Construction (West Tower – 180,000 SF) 2014 Completion 2014 Completion 2014 Completion 2015 Completion 2015 Completion - 44.0% Preleased - 51.0% Preleased 60.0% Preleased • No Pre-Leasing To Date • Vertex One (8,000 SF) • No Pre-Leasing To Date • TELUS (200,000 SF) • SNC-Lavalin (100,000 SF) • MNP LLP (72,000 SF) • Bull Housser LLP • McCarthy Tetrault (85,000 SF ) • CBRE Ltd. (24,000 SF) (67,000 SF) • Regus (16,000 SF) Source: CBRE Limited
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