2011 Review & 2012 Outlook Quebec Apartment Investment Market

Transcription

1 Quebec Apartment Investment Conference Review & 2012 Outlook Quebec Apartment Investment Market Presented by: CBRE Brett Miller Executive Vice President CBRE Montreal Benoit Poulin, MBA Vice President CBRE Montreal Marc Hetu Sales Associate CBRE Montreal

2 A LOOK BACK AT 2001 Best Selling Car Colorado Avalanche won the Stanley Cup ipod was released #1 Movie #1 Song on the Billboard Charts Gomez had 63 points (14 goals)

3 A LOOK BACK AT 2001 Habs finished the 2001 season with 70 points 11 th Place in the Eastern Conference DID NOT MAKE THE PLAYOFFS

4 Purchase in 2001 Revenue $450,000 Expenses 40% $180,000 NOI $270,000 Purchase Price $3,000,000 Cap Rate 9.00% Mortgage 80% LTV $2,400,000 Cash Requirement $600,000 Annual Debt Service $185,000 Cashflow $85,000 CAP RATE COMPRESSION MADE HEROES Annual revenues increase by 3% Annual expenses increase by 2% Re-Finance in 2006 Revenue $540,000 Expenses 40% $200,000 NOI $340,000 Re-Finance Value $5,000,000 Cap Rate 6.80% Mortgage 80% LTV $4,000,000 Interest Rate 6.00% Interest Rate 4.50% Structural reserve of 3% Equity Pulled Out $1,850,000 Annual Debt Service $265,000 Cashflow $75,000 Sale in NOI $385,000 Sale 5.0% Cap $7.7 M All Cash IRR 17.0% Leveraged IRR 42.0%

5 A LOOK BACK AT Docteur-Penfield Sold on March 30 th, 2001 Sale Price: $24,750,000 NOI : $2,475,714 Cap Rate: 10.00% Financing: $17,916,905 Interest Rate: 6.75% Debt Service: $1,322,200 Estimated IRR 22% 1100 Docteur-Penfield Sold on June 10 th, 2010 Sale Price: $47,000,000 NOI : $2,972,831 Cap Rate: 6.32% Financing: $41,900,000 Interest Rate: 3.65% Debt Service: $2,291,000

6 MARKET FUNDAMENTALS % 5.0% IMMIGRATION VACANCY Consistent positive net migration to continue in Montreal. 1.0% population growth. Most first time immigrants become renters. Consistent demand for rental housing. Montreal vacancy rates have been 4.0% stable over the past 5 years. 3.0% 5-year high of only 2.9% (2007). 2.0% 2.3% forecast for % Little rental inventory to come online 0.0% over the next 24 months.

7 MARKET FUNDAMENTALS RESIDENTIALCONSTRUCTION ECONOMIC GROWTH 17,606 residential units under construction in % increase over 2010 Only 11% are rental units 22,719 starts in 2011 Only 10% of starts are rental Economic growth of 2.0% expected for GDP growth above 2.0% projected beyond Manufacturing sector beginning to show positive signs. Construction sector propped up by residential sector.

8 APARTMENT INVESTMENT ACTIVITY Apartment Sales Greater Montreal Area ($1 Million +) $853 $881 $751 $765 $571

9 APARTMENT INVESTMENT ACTIVITY Apartment Sales Number of Deals & Average Deal Size (100 Units +)

10 APARTMENT INVESTMENT ACTIVITY Apartment Sales Investment Volume by Buyer Type (100 Units +) ($ million)

11 APARTMENT INVESTMENT ACTIVITY % Apartment Capitalization Rates By Asset Type (100 Units +) 6.0 % to 7.0% 5.0 % to 6.0 %

12 APARTMENT INVESTMENT ACTIVITY Apartment Capitalization Rates By Asset Type (100 Units +) Concrete Construction Wood Frame Capex Required Well Maintained

13 APARTMENT INVESTMENT ACTIVITY Average Sales Prices/Suite Montreal Apartment (100 Units +)

14 APARTMENT INVESTMENT ACTIVITY Average Sales Prices Per Suite Montreal Apartments (Under 60 Units)

15 2011 TRANSACTION ANALYSIS Excelsior 5775 Cavendish Côte-Saint-Luc Total Suites: 185 Buildings: 1 Sale Date: December 8 th, 2011 Structure: Total Building Size: Concrete 191,672 SF Sale Price: $38,000,000 Sale Price/Suite: $205,405 Sale Price/SF: $ Cap Rate: 4.87% Vendor: Purchaser: Institutional Institutional

16 2011 TRANSACTION ANALYSIS Terrasse Ouest des Érables Pierrefonds Total Suites: 123 Buildings: 2 Sale Date: May 31 st, 2011 Structure: Total Building Size: Wood Frame 79,396 SF Sale Price: $10,500,000 * Sale Price/Suite: $85,366 Sale Price/SF: $ Cap Rate: 6.00% Vendor: Purchaser: Private Equity Private Equity * $1.5 million balance of sale of sale granted

17 2011 TRANSACTION ANALYSIS Complexe sur le Parc Masson Longueuil Total Suites: 160 Buildings: 10 Sale Date: November 9 th, 2011 Structure: Total Building Size: Wood Frame 125,752 SF Sale Price: $11,250,000 Sale Price/Suite: $70,313 Sale Price/SF: $89.46 Cap Rate: 6.50% Vendor: Purchaser: Private Private

18 2011 TRANSACTION ANALYSIS Rockhill Apartments Côte-des-Neiges Montreal Total Suites: 1,004 Buildings: 5 Sale Date: July 5 th, 2011 Structure: Total Building Size: Concrete 1,001,680 SF Sale Price: $159,265,000 Sale Price/Suite: $158,630 Sale Price/SF: $ Cap Rate: 5.25% Vendor: Purchaser: Institutional Institutional

19 2011 TRANSACTION ANALYSIS Domaine Bellerive 1, 3 & 5 Belle-Rive Laval Total Suites: 805 Buildings: 3 Sale Date: July 15 th, 2011 Structure: Total Building Size: Concrete 798,843 SF Sale Price: $70,000,000 Sale Price/Suite: $86,957 Sale Price/SF: $87.62 Cap Rate: 5.85% * Vendor: Purchaser: REIT REIT * Cap rate adjusted for approximately $28.0 million in capital expenditures

20 2011 TRANSACTION ANALYSIS Parc Royal 3333 Jean-Talon Street West Mount-Royal Total Suites: 185 Buildings: 2 Sale Date: December 29 th, 2011 Structure: Total Building Size: Concrete 192,002 SF Sale Price: $30,750,000 Sale Price/Suite: $166,216 Sale Price/SF: $ Cap Rate: 5.00% Vendor: Purchaser: Private REIT

21 2011 TRANSACTION ANALYSIS Le Strasbourg Pearson & Cormier Gatineau Total Suites: Buildings: (281 concrete & 209 Wood Frame) Sale Date: December 31 st, 2011 Structure: Total Building Size: Concrete & Wood Frame 451,684 SF Sale Price: $28,775,000 Sale Price/Suite: $58,724 Sale Price/SF: $63.71 Cap Rate: 7.87% Vendor: Purchaser: Institutional REIT

22 2011 TRANSACTION ANALYSIS Le Samuel Holland Sainte-Foy Québec City Total Suites: 819 Buildings: 6 Sale Date: May 19 th, 2011 Structure: Total Building Size: Concrete Residential: 647,835 SF Commercial: 178,066 SF Sale Price: $98,600,000 Sale Price/Suite: $120,390 Sale Price/SF: $ Cap Rate: 7.00% Vendor: Purchaser: Institutional REIT

23 Purchase in 2011 Revenue $600,000 Expenses 40% $215,000 NOI $385,000 Purchase Price $7,700,000 Cap Rate 5.00% Mortgage 60% LTV $4,400,000 Cash Requirement $3,000,000 Annual Debt Service $290,000 Annual revenues increase by 2% Annual expenses Sale in 2021 Revenue $730,000 Expenses 35% $260,000 NOI $470,000 Sale Price $6,000,000 Cap Rate 7.85% All Cash IRR 3.29% Interest Rate 3.50% increase by 2% Leveraged IRR 3.10% Structural reserve of 3% Cashflow $95,000 Interest Rate 5.0% 6.0% 7.0% 8.0% Terminal Cap Rates Cap Rate All Cash IRR 7.0% 4.1% 8.0% 3.2% 9.0% 2.3% 10.0% 1.6% Leveraged IRR 5.1% 2.8% 0.3% -2.0%