Multi-Residential Market and Investment Trends

Transcription

1 Canadian Apartment Investment Conference I 2017 Multi-Residential Market and Investment Trends CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 1

2 Rental Market Universe Total Rental Units, October , , ,000 Condo Rental Purpose-Built Rental 400, , , ,000 0 Vancouver Edmonton Calgary Toronto Ottawa Montreal Source: CMHC CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 2

3 Condominium Rental Market Universe Rental Condo Units as Share of Total Condo Units, October % 30% 25% 25.4% 32.1% 31.1% 32.6% 28.7% 20% 15% 15.7% 10% 5% 0% Vancouver Edmonton Calgary Toronto Ottawa Montreal Source: CMHC CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 3

4 Housing Starts By Tenure and Type, Canada 100% 90% 80% 70% 60% 50% 42% Share that are multiples Share that are purpose-built rental 45% 42% 37% 39% 56% 49% 61% 65% 63% 65% 40% 30% 20% 10% 26% 15% 5% 10% 13% 20% 20% 15% 0% Source: CMHC CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 4

5 Rental Market Performance Average Vacancy, % 7.0% 7.1% 7.0% 6.0% 5.3% % 4.0% 3.0% 4.2% 3.4% 3.0% 4.0% 3.9% 3.7% 3.5% 2.0% 1.0% 0.8% 0.7% 1.6% 1.3% 0.0% Vancouver Edmonton Calgary Toronto Ottawa Montreal Canada Source: CMHC CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 5

6 Rental Market Performance Annual Average Rent Growth, 2 Bdrm, % 6.0% 4.0% 2.0% 4.3% 6.0% 2.6% 0.8% 3.0% 3.0% 3.7% 2.3% 4.1% 2.8% 3.5% 3.7% 0.0% -2.0% -4.0% -6.0% -8.0% -2.4% -5.6% Vancouver Edmonton Calgary Toronto Ottawa Montreal Canada Source: CMHC CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 6

7 Property Returns by Asset Type 12-Month Return for Standing Investments, Canada 18% 16% 14% 12% Retail Office Industrial Residential 10% 8% 6% 4% 8.3% 6.9% 6.0% 4.9% 2% 0% Jun-17 Source: MSCI REALpac/IPD Canada CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 7

8 Multi-Residential Property Returns 12-Month Return, Capital vs. Income Growth, Canada 20% 15% Income Growth Capital Growth 10% 5% 0% -5% Jun-17 Source: MSCI REALpac/IPD Canada CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 8

9 Capitalization Rates Toronto 8% 7% 6% Class AA Office Single Tenant Industrial 5% 4% 3% 2% 1% 10-Yr Bond Regional Mall Apartment 3.9% 0% Q Q Q Q Q Q Q Q Source: Altus Investment Survey and Bank of Canada CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 9

10 Capitalization Rates Colliers Cap Rate Survey, 2017 Q2 Source: Colliers International CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 10

11 Rental Apartment Development Rough Proforma Project Specs Land Area (Acres) Density (FAR) Gross Building Area (GBA SF) 450, , ,275 Net Rentable Area (SF) 382, , ,734 Potential Revenues Gross Potential Rental Revenue/SF $2.50 $2.75 $3.00 Gross Potential Rental Revenue $11,482,013 $12,630,214 $13,778,415 Less 30% operating expenses -$3,444,604 -$3,789,064 -$4,133,525 Net Operating Income $8,037,409 $8,841,150 $9,644,891 Potential Value Creation Cap Rate 4.50% 4.50% 4.50% Potential End Value $178,609,083 $196,469,992 $214,330,900 Development Costs Total Hard Costs (PSF) $ $ $ Soft Costs inc Financing (PSF) $54.00 $54.00 $54.00 Total Development Costs $145,889,100 $145,889,100 $145,889,100 Land Residual Land Residual Before Profit $32,719,983 $50,580,892 $68,441,800 Developer Profit (12%) $17,506,692 $17,506,692 $17,506,692 Net Land Residual $15,213,291 $33,074,200 $50,935,108 PSF Buildable $34 $73 $113 CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 11

12 Condo Apartment Rents Average Toronto (through MLS) $2.90 $2.80 $2.70 $2.60 $2.50 $2.40 $2.30 $2.20 $2.10 $2.00 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Source: Urbanation and TREB CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 12

13 Multi-Residential Transaction Volume Canada ($ Billions) $5.0 $4.5 $4.0 $4.13 $4.40 $3.86 $3.63 $3.73 $4.41 $4.13 $3.5 $3.0 $2.5 $2.55 $2.29 $2.0 $1.5 $1.0 $0.5 $1.67 $1.87 $ YTD Source: Real Capital Analytics CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 13

14 Purchaser Profile Apartment Transactions, Canada 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 23% 6% 24% 31% 8% 17% 19% 20% 7% 9% 17% 34% 26% 10% 11% Institutional Cross-Border REITs/REOCs 40.0% 30.0% 52% 53% Private 20.0% 46% 44% 40% 10.0% 0.0% 1% 0% 0% 2% 0% YTD User/Other Source: Real Capital Analytics CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 14

15 Purchaser Profile Top 10 Buyers, Past 24 Months, Canada Buyer Acquisitions Over 24 Months ($millions) Average Acquisition ($millions) 1 CAPREIT (Canada) $786 $14 2 Starlight Investments $650 $20 3 Northview Apartment REIT $414 $11 4 Skyline Apartment REIT $395 $9 5 Timbercreek Asset Management $224 $22 6 Killam Apartment REIT $176 $18 7 Akelius Residential AB $166 $17 8 Minto Group $157 $10 9 Greystone $145 $ InterRent REIT $133 $22 Source: Real Capital Analytics CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 15

16 Select Transactions Western Canada 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 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 Source: Real Capital Analytics and RealNet CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 16

17 Select Transactions Eastern Canada 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 Name/Address: 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 17

18 Trending Demographics yrs yrs and under yrs yrs 80+ yrs yrs and Under Source: Statistics Canada CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 18

19 Trending Rising Urban Land Costs 215 Lakeshore Blvd E 3.85 acres $166 million $43 million / acre Sunnybrook Plaza 2.89 acres $26.3 million (50%) $18.2 million / acre $150 PSF GFA Yonge & College 0.45 acres $67 million (50%) $149 million / acre $191 PSF GFA Source: RealNet CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 19

20 Trending Interest Rates, GOC Bond Yields 3.0% 2.5% 2.0% 10-Year 1.5% 5-Year 1.0% 0.5% 0.0% 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 Source: Bank of Canada CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 20

21 Trending Secondary Markets Sales Volume All Other Markets 26% VECTOM* 74% Source: Real Capital Analytics * VECTOM = Vancouver, Edmonton, Calgary, Toronto, Ottawa and Montreal CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 21

22 Trending The Apartment as Saviour The Ice District Edmonton The Windsor Beltline, Calgary Corktown Plaza Hamilton CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 22

23 Trending Legislative 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 23

24 Strong Outlook Remains The Few Headwinds Are Relative CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 24

25 CANADIAN APARTMENT INVESTMENT CONFERENCE 2017 Scott Chandler, Colliers International 25