Western Canada Apartment Investment Report

WESTERN CANADA

APARTMENT INVESTMENT REPORT CALGARY • EDMONTON • VANCOUVER Spring 2020

HOW ARE YOU WORKING WITH YOUR TENANTS TO GET THROUGH THE PANDEMIC?

HOW BALANCED IS SUPPLY AND DEMAND IN EACH MARKET?

realestateforums.com

ARE YOU READY TO MANAGE THE IMPACT OF ROUND 2 OR 3 OF COVID-19?

Connecting Capital With Opportunities

Contents 04 Message from Tim Grant, President, Development at PCI Developments (Chair of 2020 Conference)

06 Key Drivers of Demand for Calgary, Edmonton and Vancouver

10 The Western Canadian Market: Insights on Apartment Investment in Calgary, Edmonton and Vancouver

18 It’s About the Numbers: A Field Guide to the First Step in Developing an Apartment Building and Purpose-Built Rentals

22 How to Retain Your Tenants and Increase the Value of Apartments in the Three Major Western Markets

26 Thinking Outside the Box: The Next Steps with New Built Rental - from Concept to Delivery to Lease-Up

30 A Look at Asset Management and Rental Strategies: Case Studies of Repurposing and Other Strategies to Remain Competitive in a World of New Developments and Condos

36 Case Studies on Mixed-Use Developments and New Rental Project Innovation

40 Construction and Debt Financing: Calgary vs. Edmonton vs. Vancouver

44 Multi-Family Assets in Alberta and BC: Where are Senior Executives Placing Their Bets?

To talk to us about sponsorship opportunities email Ben.Carson@informa.com

To talk to us about speaking opportunities email Kelsey.Deluca@informa.com

About Informa Connect

Conferences

BRINGING KNOWLEDGE TO LIFE Informa Connect is a specialist in content-driven live events and digital platforms that allow professionals to meet, connect, learn and share knowledge.

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We operate major branded events in Finance, Commercial Real Estate, Biotech & Pharma and a number of other specialist markets, and connect communities live and online year-round.

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2020 Informa Connect Inc. Disclaimer: The views, opinions, positions or strategies expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of Informa Canada.

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Western Canada Apartment Investment Report Firstly, I sincerely hope that you, your family, friends and colleagues are safe and well.

Dealing with challenges created by COVID-19 has without doubt taken a significant toll on the real estate industry locally, nationally and around the globe.

Tim Grant Vice President, Development PCI Developments

The Western Canada Apartment Investment Conference was scheduled to take place in Vancouver on April 1, we had an outstanding program with first class speakers and record registrations for the event.

However, the health and wellbeing of our industry colleagues, speakers, sponsors and attendees is paramount and the organizers of the 20 Canadian Real Estate Forums and conferences across Canada, postponed some spring events to the fall. Regrettably, the Western Canada Apartment Investment became a casualty of 2020 and will now take place in Edmonton on May 11, 2021.

To keep you informed and connected we have curated this, the inaugural Western Canada Apartment Investment Report designed to provide valuable insight to owners, managers, developers, investors and lenders who are active in the Western Canada multi-unit residential market. A number of speakers who were set to participate in panel discussions at the conference have provided some excellent commentary on some of the most prevalent issues that their panels were planning to discuss, along with various impacts that COVID-19 is having on their organizations and activities.

The report covers major theme areas such as investment activity, development strategies, financing trends for construction and debt, technology solutions, and more.

It is ideally positioned to provide comprehensive knowledge and information sharing from respected industry members on a multitude of topics that you can take away and in many instances apply to your businesses now.

We are open to any and all ideas on how we can best serve the market during this difficult period and, until we can return to live events, why not take advantage of the extremely popular and informative live and on demand webinars and numerous reports that can be found through the realestateforums.com portal.

I wish to thank you personally and on behalf of the speakers, sponsors and organizers for supporting The Western Canada Apartment Investment Conference. For now the organizers are working on bringing a number of our events to you virtually, and, when the time comes, we will all be readier than ever to attend the live Forums and conferences of the future and I am looking forward to being part of that.

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Thank You to Our 2020 Conference Speakers Bradyn Arth Institutional Property Advisors Bill Blais Maclab Development Group Tom Burr ONE Properties John Courtliff ICM Asset Management Jamie Dysart KingSett Capital Michael Ferreira Urban Analytics

Daniel Bar-Dayan Porte Communities Matthew Boukall Altus Group Paul Chaput Institutional Property Advisors Samuel Dean JLL David Eger Altus Group Mark Goodman Goodman Commercial Inc.

Tim Grant PCI Developments

James Ha Boardwalk REIT

David Hanick Starlight Investments

Kendal Harazny Wexford Developments

Emmett Hartfield Intelligence House Ltd.

Robert Hogue RBC

Raul Jaime QuadReal Property Group

Ray Johnson MCAP

Steve Krilanovich Lotus Capital Corp.

Gary Lee BentallGreenOak (Canada)

Sandeep Manak Wesgroup Properties

Nick Marini Macdonald Property Management

Phil Milroy Westcorp

Todd Nishimura GWL Realty Advisors Residential

Andrey Pavlov Beedie School of Business

Keri Rodgers HighStreet Accommodations

Michael Sager CMLS Financial

Dan Sander Hollyburn Properties Limited

Greg Shumlich Domain Apartments Ltd.

Russell Syme First National Financial LP

Sally Turner SVN Rock Advisors Inc.

Scott Ullrich Gateway Property Management Corporation

Craig Watters Concert Properties

Reade Wolansky Laurentian Bank of Canada

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Key Drivers of Demand for Calgary, Edmonton and Vancouver: What can be Expected for the Remainder of 2020 and Beyond?

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Michael Ferreira, Managing Principal, Urban Analytics WHAT IS THE SIZE OF THE RENTAL MARKET IN THE CALGARY, EDMONTON AND VANCOUVER CMAS? Pre-COVID, the rental market was steady in Calgary and Edmonton.

The introduction of new rental projects to each market (some planned as purpose-built rentals from the start while others converted from condo projects) has kept the occupancy rate between 85% and 90% in each market.

It will take some time to determine how the COVID measures will impact the economy and therefore the rental markets in each city in the longer term and whether demand for rental product remains as steady as it has been in recent years.

In Metro Vancouver, the rental market remained as tight as ever in the first quarter of 2020 with an occupancy rate of approximately 92% for all purposebuilt rental projects. Demand remained strong pre-COVID as representatives for most new projects that have launched their initial leasing campaigns in recent months reported steady absorption rates. Monthly turnover at fully leased projects (i.e. projects that have been fully leased up and are now beyond the initial lease terms) has remained constant at 2.1% to 2.4% over the past four quarters.

HOW BALANCED IS SUPPLY AND DEMAND IN EACH MARKET? Both the Calgary and Edmonton rental markets were considered balanced prior to COVID-measures being introduced. Given the softer economic conditions that have prevailed in each city over the past few years, new rental supply coming to market has satisfied new demand.

HOW HAS COVID-19 AFFECTED DEMAND IN EACH OF THE THREE MAJOR WESTERN CANADIAN MARKETS? It is too early to report to report any conclusive impacts on demand in each market. There are reports of softer demand, particularly for 2 bedroom and larger product, but this could be a short term result of renters wanting to avoid living with a roommate and preferring a 1 bedroom unit if they're able to afford the rent on their own. Based on conversations with several clients who own multiple rental buildings, the number of tenants not able to pay rent, or requesting some deferral of rent has been much lower than anticipated; less than five percent for most. There is much uncertainty over how long these rates will remain as low depending on the duration of COVID measures on the economy and how quickly different sectors of the economy can recover.

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ARE YOU STARTING TO SEE ANY OTHER IMPACTS FROM THE PANDEMIC ON THE MULTI-RESIDENTIAL MARKET? The biggest impact to date is uncertainty across the market. Uncertainty over how the COVID-related measures implemented in the immediate wake of the pandemic declaration and the measures that will impact the economy, the employment picture and thus demand for housing in the short, mid and longterm. Uncertainty over what expectations tenants will have for rental buildings and whether common amenity features will remain a key consideration for renters of new purpose-built rental projects for instance.

HOW ABOUT THE IMPACT OF THE OIL MARKET IN ALBERTA? There is no question the continuing challenges faced by the oil industry in Alberta have had and continue to have a major impact on all facets of the residential market in Alberta. Aside from considering the impact on the economic metrics, there is the psychological impact the challenges faced by the energy sector has on the market. The importance of this sector to the economy in Alberta is reflected in how other sectors of the economy also struggle when the energy sector struggles.

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2020 Canadian Multi-Res Tenant Rental Survey The 2020 Canadian Multi-Res Tenant Rental Survey has asked Canadian tenants to answer questions regarding preferences, lifestyle choices, operation issues, technology opportunities and satisfaction levels in their rental units.

A detailed Dashboard and Trend Report are being produced that offers the market a detailed and/or summary level information.

Interested in Purchasing?

The Trend Report and Dashboard are tools that allows you and your team to conduct simple and complex analysis of the 2020 survey findings.

More Information For more information on purchasing the Trend Report or gaining access to the Dashboard please contact Sarah Segal, Director, Informa Canada at sarah.segal@informa.com

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Signs of

hope

Now more than ever, it’s important we tell the stories of unity, compassion and how we are supporting each other, our clients and our communities during these challenging times. JLL shares our warm thoughts of hope with you and your colleagues as we transition to our ‘next normal’ together. jll.ca/real-stories #JLLRealStories

The Western Canadian Market: Insights on Apartment Investment in Calgary, Edmonton and Vancouver

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WHAT ARE SOME OF THE KEY TRANSACTIONS THAT OCCURRED PRIOR TO MARCH 2020?

Infiniti on 105 (11703 105 Ave) Wood-frame, low-rise, 109 suites Sale price: $28,300,000 ($259,633 per unit / 5.08% cap rate) The Level (1104 Windermere Way SW) Wood-frame, low-rise, 171 suites Sale price: $40,800,000 ($238,596 per unit / 4.61% cap rate) Mayfair on Jasper (10803 Jasper Ave) Concrete, high-rise, 238 suites Sale Price: $100,000,000 ($373,014 per unit / 4.25% cap rate) Retail Space: 24,000 sqft, 7% retail cap, Sale Price: $11,222,680 The Core Portfolio (3 Central Properties) Concrete, high-rise, 832 suites Sale price: $20,500,0000 ($246,394 per unit / 3.98% cap rate) Paul Chaput, Senior Vice President, Investments, Institutional Property Advisors

In Calgary, three transactions pushed investment levels close to $100M over the first few months of the year. Notably, the sale of King's Alley Townhomes, totaling 156 units, one of the single largest townhouse projects offered to the market in Southwest Calgary over the last 15 years. The Property was privately held and sold to Avenue Living as they continued to expand their Calgary presence.

CAPREIT was also active in Calgary, acquiring the Carrington in the heart of downtown for $19.5M ($246,835 per suite).

Samuel Dean, Senior Vice President, Multifamily, Alberta, JLL Canada

Some sample transaction Goodman Commercial Inc. sold just before COVID-19 include: 1230 Nelson Street, Vancouver (West End neighbourhood) 21 storey concrete high-rise comprising 107 suites Sale price: $52,000,000 ($485k per unit / 2.7% cap rate) 4750 Granville Street, Vancouver (Shaughnessy neighbourhood) Westside purpose-built rental development site Proposed 4-storey apartment building featuring 85 suites Sale price: $12,700,000 (approx. $220/ sq. ft. buildable) 1265 W 13th Avenue, Vancouver (South Granville neighbourhood) 44 suite rental apartment building improved on a 25,000 SF lot Sale price: $19,600,000 (445k per unit / 3% cap rate) Mark Goodman, Principal, Goodman Commercial Inc.

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WHAT HAS HAPPENED TO PROSPECTIVE INVESTORS IN EACH MARKET SINCE THE SURGE IN COVID-19?

Investors in both Edmonton and Calgary are taking a wait and see approach.

Some transactions have been cancelled/dropped and some have been extended.

Those being extended appear to be ones where the purchaser is pleased with the real estate but needs to get their lender on board. Debt markets ground to a halt as self-isolation hit, but they appear to be operating better as more lenders are getting comfortable with their cash reserves and monthly collections. It still appears that while debt is freeing up there is still way more money on the sidelines waiting then there is looking to be deployed.

Alberta is also working through the effects of the significant drop in world oil prices. This has investors more focused on the operations and performance of existing assets than out looking for opportunities to bulk up or take advantage of perceived market weakness.

Investors do appear to be looking at MTV assets (MontrĂŠal, Toronto, Vancouver) as priority #1 for purchase and we see transactions taking place in these markets as a potential canary in the coal mine as it were. The Okanagan and Vancouver Island also appear to be on investors radar right now, as a higher priority than Alberta but below those three primary markets.

Paul Chaput, Senior Vice President, Investments, Institutional Property Advisors

Both major markets in Alberta, Edmonton and Calgary, have experienced a "double-whammy", COVID-19 and the price of Western Canada Select plummeting. It's a bit scary thinking I could buy a barrel of oil for less than a domestic beer. However, it won't last forever, and Alberta will rebound.

Generally, most prospective investors spent the first few weeks managing tenant relationships and rent collections. Any acquisitions and dispositions took a backseat. From our conversations across the country, most firm transactions closed, but conditional deals were either dropped or extended.

For the most part, investors sat on the sidelines hoping for a 15-20% drop in value, but those same investors would never consider selling at those prices.

Private investors seemed somewhat active and opportunistic during this period of time hunting for discounts.

The tone has changed over the past few weeks and April and May collections came in better than expected in most cases. Management protocols and systems to accommodate tenants have been implemented and efficiencies improved.

Samuel Dean, Senior Vice President, Multifamily, Alberta, JLL Canada

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Despite the challenges faced during the COVID-19 crisis, we have been quite busy. Clearly, it is not business as usual. But we continue to field calls, emails and offers on behalf of investors.

Certainly, there have been some challenges showing tenanted properties, but the market has adapted quickly. We are working remotely with investors as required, and in most cases, have been able to extend due diligence periods to allow time for investors to complete a transaction.

Despite these uncertain and surreal circumstances, business continues to move forward, albeit at a different pace. We currently have offers on many of our apartment building and development site listings. In the last 6 weeks, we have put 3 properties under contract and closed 2 transactions.

As well, the market fundamentals are still there. Mortgage rates have decreased, allowing investors better leverage. And Vancouver continues to remain a safe place relative to many areas of the world. There appears to be a flight to safety with the crash to the stock market, and multi-family rental properties have always been regarded as a safe place to invest.

Mark Goodman, Principal, Goodman Commercial Inc.

WHAT NEEDS TO HAPPEN IN ORDER FOR INVESTMENT ACTIVITY TO BE RESTORED IN EACH MARKET? Easing of isolation restrictions preventing investors from flying across the country as well as touring individual properties (suites, common areas, etc.) would be a significant improvement.

Paul Chaput, Senior Vice President, Investments, Institutional Property Advisors

For Edmonton and Calgary, confidence needs to be restored in the marketplace.

Investors are hoping to see new data points in multi-family trades and adjustments in valuations. There is still lots of capital in the market. The ability to get debt financing will also play a factor in the return to normal investment activity in our market. I believe we will see investors jump at the opportunity to invest in beds (multi-family) and sheds (industrial). Multi-family will be in demand as investors search for stability, predictability, leverage, and liquidity.

We are seeing stress in the Edmonton and Calgary multi-family markets, but not a lot of distress yet. It seems that investors are starting to pick up their pencils to review deals. I'm hopeful it won't be much longer until they sharpen those pencils for multi-family investment opportunities in Alberta.

Samuel Dean, Senior Vice President, Multifamily, Alberta, JLL Canada

Relaxing the physical distancing rules in BC would dramatically restore investment activity to the pre-COVID-19 levels. I would also suggest a vaccine would provide a big boost in confidence for everyone to go about their daily lives and get back to business. Supporting small business is equally important.

Mark Goodman, Principal, Goodman Commercial Inc. Spring 2020

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It's About the Numbers: A Field Guide to the First Step in Developing an Apartment Building and Purpose-Built Rentals

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HOW HAVE COVID-19 AND THE SLUMPING OIL MARKET IMPACTED NEW RENTAL DEVELOPMENT IN EDMONTON, CALGARY AND VANCOUVER RESPECTIVELY? Despite the current economic uncertainty surrounding what the economy will look like post-COVID, the fundamental drivers of demand for new purpose-built rental in Western Canada in the mid- to long-term remain, and in our view the underlying demand for this sector remains strong when taking a mid- and longer-term view.

Given the current conditions, there will likely be price sensitivity from renters given the uncertainty in employment and incomes over the short-term and while the economy returns to growth. On the other hand, rental demand will be supported during this time by an expected shift from home ownership to rental, resulting from the uncertainty in the market. However, the magnitude and duration of this shift towards rental is not yet known and will ultimately depend on the strength and speed of the economic recovery.

Opportunities exist in all three of the cities; however, it is not safe to assume that a project will be successful wherever it is built. Now more than ever it is important to understand where the pockets of demand exist within the city. It is imperative to understand target market for the development and the pipeline of future supply in the submarket. Demand drivers may shift in the short-term, but the underlying demand for rental remains strong and we note that there has been a historic undersupply of new purpose-built rental in each city when taking a very long-term view (that is, since the 1980s). While new supply has increased in recent years, there is still strong demand for well-priced new product in each city.

David Eger, Vice President, Western Canada, Altus Group Limited

My comments relate specifically to Vancouver, as we currently aren't doing any active development in Edmonton and Calgary.

For those new rental projects in the design development and approval stages, we continue to move these forward working remotely. However, we have experienced delays and longer timelines due to municipal office closures and limitations of staff working remotely. Although we currently don't have any rental developments in the rezoning process, those that do have been temporarily delayed as most City's have postponed their public consultation processes.

For those new rental projects under construction, construction continues on-site work with suitable COVID-19 safety protocols in place. However, sites have experienced reduced workforce levels. New site safety protocols, reduced manpower, delays in supply chains and overall diminished productivity will have impacts on schedules and project budgets. We are currently in the process of working with our contractors and suppliers to access the impacts.

Craig Watters, Senior Vice President, Development, Concert Properties

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HOW ARE CONSTRUCTION AND DEVELOPMENT COSTS TRENDING IN EACH OF THE THREE MARKETS? VANCOUVER - Construction cost escalation slowed in Q1 2020 to around 1.52% vs last year at 4-5%. There was increased interest in contractors bidding, although labour shortages and material increase still remain in the market, albeit at a lower level than 2019, as large projects consume much of the labour. Concrete, metals, mechanical and glazing attracted costs increases, particularly as designers and contractors are gradually working towards the Cities' higher energy step-code requirements.

CALGARY - A slower construction market caused by very low oil prices and demand, coupled with higher vacancy rates and low absorption. Construction escalation remains very moderate with minor increases to trade comparable to Vancouver, concrete, metals, glazing and conveying systems.

EDMONTON – Seeing increased levels of activity in relation to prior year with escalation similar to Calgary.

David Eger, Vice President, Western Canada, Altus Group Limited

There is no question costs will trend upwards in the short term given reduced site productivity, supply chain issues and longer development timelines.

Difficult question to answer though for the mid- to long-term given the uncertainty particularly around how long the pandemic impact lasts.

With this uncertainty though we remain committed to doing everything possible to continue to advance new rental development given the shortage of rental housing that still exists in our market and the importance of our industry in contributing to our overall economic recovery.

Craig Watters, Senior Vice President, Development, Concert Properties

See You Next Year!

Western Canada Apartment Investment Conference May 11, 2021 Edmonton Convention Centre

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STAY ON ON TOP TOP OF OF VANCOUVER’S VANCOUVER’SAPARTMENT APARTMENT STAY MARKET. GET GET RELIABLE RELIABLE RENTAL RENTALHOUSING HOUSING MARKET. INTELLIGENCE WITH WITH GOODMAN GOODMANREPORT. REPORT. INTELLIGENCE FORSALE SALE FOR

FOR SALE FOR SALE

HARLEY HARLEYHOUSE HOUSE

HAWTHORNE HAWTHORNEAT ATTIMBER TIMBERCOURT COURT

ARLINGTON COURT APARTMENTS ARLINGTON COURT APARTMENTS

1230 1230Nelson NelsonStreet, Street,Vancouver Vancouver 21-storey 21-storey107-suite 107-suiteconcrete concreterental rental apartment apartmenttower towerininVancouver’s Vancouver’sWest WestEnd. End. Sold Sold$52,000,000 $52,000,000

District Vancouver DistrictofofNorth North Vancouver New Newpurpose-built purpose-builtrental rentalapartment apartment building Valley. buildingfeaturing featuring7575suites suitesininLynn Lynn Valley.

Call Callfor forprice price

233 East 14th Avenue, Vancouver 233 East 14th Avenue, Vancouver 5454 suites in in Mount Pleasant—half a block suites Mount Pleasant—half a block east ofof Main St.St. Massive 28,778 SFSF lot.lot. east Main Massive 28,778 Call forfor price Call price

SOLD SOLD

FOR FORSALE SALE

FOR SALE FOR SALE

SOLD SOLD

BEACH BEACHTOWERS TOWERS

West WestEnd, End,Vancouver Vancouver Iconic Iconic4-tower 4-tower601-unit 601-unitrental rentalcomplex complexinin Vancouver’s English Bay (2019 Vancouver’s English Bay (2019sale). sale).

SIX-STOREY SIX-STOREYRENTAL RENTALSITE SITE

Corner Vancouver CornerofofMain Main&&East East33rd, 33rd, Vancouver 18,487 site.

18,487SF SFmulti-family multi-familydevelopment development site.

Plans submitted—69 units proposed.

Plans submitted—69 units proposed.

Call Callfor forprice price

SOLD SOLD

BALMORAL PARK APARTMENTS BALMORAL PARK APARTMENTS 1265 W 13th Avenue, Vancouver 1265 W 13th Avenue, Vancouver 44 suites in South Granville on a massive 44 suites in South Granville on a massive 25,000 SF lot (200’ × 125’).

25,000 SF lot (200’ × 125’).

Sold $19,600,000 Sold $19,600,000

Mark Goodman* Mark Goodman* Principal

Principal Direct 604 714 4790 Direct 604 714 4790 mark@goodmanreport.com mark@goodmanreport.com *Personal Real Estate Corporation. *Personal Real Estate Corporation.

SIDE-BY-SIDE BUILDINGS SIDE-BY-SIDE BUILDINGS

4651 && 4663 Hastings Street, Burnaby 4651 4663 Hastings Street, Burnaby Mixed-use investment opportunity with Mixed-use investment opportunity with development potential.

5 comm. & development potential. 5 comm. 8& res.

8 res. $7,700,000 $7,700,000

SOLD SOLD

MOUNTVIEW APARTMENTS MOUNTVIEW APARTMENTS

2182 West 39th Avenue, Vancouver 2182 West 39th Avenue, Vancouver 21-suite well-maintained apartment 21-suite well-maintained apartment building. One block to Kerrisdale Park. building. One block to Kerrisdale Park.

Sold $10,000,000 Sold $10,000,000

Cynthia Jagger* Cynthia Jagger* Principal

Principal Direct 604 912 9018 Direct 604 912 9018 cynthia@goodmanreport.com cynthia@goodmanreport.com

SOLD SOLD

MAGNOLIA MANOR MAGNOLIA MANOR

325 Ash Street, New Westminster 325 Ash Street, New Westminster 27-suite three-storey apartment building 27-suite three-storey apartment building improved on a large ~21,000 SF lot. improved on a large ~21,000 SF lot.

Sold $5,750,000 Sold $5,750,000

Goodman Commercial Inc. Goodman Commercial Inc. goodmanreport.com goodmanreport.com 560–2608 Granville Street 560–2608BC Granville Street Vancouver, V6H 3V3 Vancouver, BC V6H 3V3

Although this information has been received from sources deemed reliable, we assume no responsibility for its accuracy, and Although this information has been received sources reliable, assume no and responsibility its accuracy, without offering advice, make this submission subject from to prior sale ordeemed lease, change in we price or terms withdrawalfor without notice. and without offering advice, make this submission subject to prior sale or lease, change in price or terms and withdrawal without notice.

How to Retain Your Tenants and Increase the Value of Apartments in the Three Major Western Markets

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HOW ARE YOU WORKING WITH YOUR TENANTS TO GET THROUGH THE PANDEMIC? We are sharing all the government programs available to them personally and related to rent. We are assisting them to apply for the rent assistance program and creating payment plans until they can pay. We are also doing more cleaning and regular sanitizing of common areas.

Daniel Bar-Dayan, Vice President, Asset & Property Management, Porte Communities

If tenants can demonstrate that their employment situation has been directly impacted by lockdowns, we've worked with those tenants to reduce rent and extend leases to allow repayment of the deferred rent over a longer period of time. Tenants have been required to actively pursue EI and CERB and in nearly all cases rent has been caught up in full once a tenant begins receiving government payments.

John Courtliff, Partner, Managing Director & Portfolio Manager ICM Asset Management

With the help of the landlords we have taken a patient approach. For the most part the tenants and the landlords have been reasonable.

Nick Marini, Vice President, Property Management, Macdonald Commercial

WHAT IMPACTS ON THE MULTI-RESIDENTIAL MARKET ARE YOU BEGINNING TO SEE AS A RESULT OF COVID-19? WHAT MAY LIE AHEAD? It is still a bit too early, but we don't anticipate too many challenges with the older stock since it's more affordable. We are starting to see more vacancy with our more expensive units in newer buildings or renovated units. This will likely push the rents down a bit.

Daniel Bar-Dayan, Vice President, Asset & Property Management, Porte Communities

We are beginning to see additional renewal or lease incentives, which are frankly just a reduction in rent. Typically, first month free or some iteration thereof. I'm concerned that as the world reopens that many of the jobs lost will not return. This will disproportionately affect the demographic that is more likely to be a renter. I can see a situation where we have fairly meaningful rent declines as a result, particularly in markets where there has been a substantial amount of new product delivered over the last number of years. While there are positives for multi-res in the sense that more people are likely to become renters and remain renters for longer, this is still a big net negative for society

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as this crisis will have eroded a significant amount of wealth from segments of the population that are less able to afford it. That probably translates into muted potential for rental rate growth in the years ahead. I can also take the complete opposite position that we are bound for a bout of inflation as monetization is really the only way to deal with the excess government debt taken on during the crisis. The only thing that is certain is that interest rates are at record lows and CMHC refinancing’s look pretty attractive right now. This will serve to boost equity returns in the near term and shelter equity returns in the medium term even if rents drop.

John Courtliff, Partner, Managing Director & Portfolio Manager ICM Asset Management

For the month of April inquiries and showings were nonexistent, although there was interest in new product. There were some notices to end tenancies due to tenants losing their jobs. For the month of May we have seen a modest increase in inquiries for vacant units. I would think that the vacancy rate will move up a bit in the short term especially in the areas around universities due to the uncertainty of the Fall school year.

Nick Marini, Vice President, Property Management, Macdonald Commercial

HAVE GOVERNMENT PROGRAMS PROVIDED SUFFICIENT RELIEF TO YOUR TENANTS IN ORDER FOR THEM TO PAY RENT? Yes. Daniel Bar-Dayan, Vice President, Asset & Property Management, Porte Communities

With few exceptions, yes. It remains to be seen whether the government programs will be extended long enough for all of those whose livelihoods have been impacted to replace their incomes.

John Courtliff, Partner, Managing Director & Portfolio Manager ICM Asset Management

Although it was understandably slow to launch, I think the government programs have been a great help for the tenants and the landlords. I would say that the provincial rent subsidy was a bit difficult to administer for PM companies as the payments were random and difficult to trace to the individual applicant.

Nick Marini, Vice President, Property Management, Macdonald Commercial

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IF POSSIBLE, COULD YOU SHARE WITH US WHAT PROPORTION OF YOUR TENANTS COULD NOT AFFORD TO PAY THEIR RENT? Overall, collections have been strong despite the situation. I'd say about 5% have struggled but are managing to pay us with the government support or through deferred payment plans.

Daniel Bar-Dayan, Vice President, Asset & Property Management, Porte Communities

We have collected approximately 94% of rent in each of April and May, before adjusting for any agreed deferrals. It took longer to get there in April than in May. John Courtliff, Partner, Managing Director & Portfolio Manager ICM Asset Management

For the month of April about 8% of the tenants could not afford to pay the full rent but made partial payments and the figures for the month of May are tracking about the same. I will qualify that by adding that we have written agreements for rent deferrals for most of the tenants, but I am not confident that we will not collect 100% of the rent for the month of April and May. Nick Marini, Vice President, Property Management, Macdonald Commercial

GOING VIRTUAL IN 2020!

For More Information on this and the Real Estate Forums Club visit:

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Alberta Real Estate Forum

September 15 & 16, 2020

October 21 & 22, 2020

Spring 2020

Calgary & Edmonton

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Thinking Outside the Box: The Next Steps With New Built Rental - from Concept to Delivery to Lease-Up

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IF IN MARCH YOU WERE DESIGNING OR CONSTRUCTING A NEW-BUILD, WHAT IMPACTS HAS COVID-19 ON YOUR PROJECT? HAS IT RESULTED IN RETHINKING ANY OF THE AMENITIES OR LAYOUTS OF PUBLIC SPACES? We deal with many borrower clients who are at various stages of design and construction of rental apartment buildings. For those under construction, they've mostly been able to continue without major disruption other than putting in place stringent site rules and having some trades not able to work.

We've seen no significant delays in construction schedules on any active projects in Western Canada to date. We've heard of no clients planning design changes as a result of COVID-19, although that is a possibility for future projects. Lease-up of recently completed projects has been interesting, with many clients using virtual tours and, where in-person viewing is required, strictly limiting leasing staff's and existing residents' contact with those visitors.

Markets with low vacancy are still seeing strong leasing activity in newly completed buildings for April and May. Russell Syme, Assistant Vice President, Commercial Financing First National Financial LP

We are all social creatures and want to interact with others. Normally I would want to pack in as much as possible into amenities such as exercise facilities and public areas and I'm not sure I would be changing that today, other than by giving thought to how layouts could be easily adjusted to temporarily accommodate social distancing. I also believe that going forward, renters are going to expect higher levels of common area cleanliness (hand sanitizer dispensers, etc.)

Scott Ullrich, Chief Executive Officer, Gateway Property Management Corporation

WHAT ARE THE MAJOR DIFFERENCES BETWEEN DEVELOPING A CONVENTIONAL RENTAL BUILDING OPPOSED TO ALTERNATIVE ASSETS SUCH AS A STUDENT RESIDENCE AND A SENIORS’ BUILDING? From a financing perspective, a standard rental building is simpler to finance and offers better terms (higher leverage, lower debt service coverage requirement) than financing a student residence or seniors' building. This is partly due to the fact that the volume of rental buildings built is much higher than the other two, resulting in lenders having access to more market comparables and prior similar deals financed. Another factor is operational expertise requirements. Given that successful seniors housing is at least as dependent on the skills of the operator as on the real estate itself. Lenders and CMHC require proponents to have a higher level of experience than they typically require for a rental apartment building. Prior experience managing high annual turnover and summer vacancy is a key requirement for most student housing projects.

Russell Syme, Assistant Vice President, Commercial Financing First National Financial LP Spring 2020

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ONCE THE DECISION HAS BEEN REACHED TO PROCEED WITH A NEW DEVELOPMENT, WHAT HAPPENS NEXT? By this stage, we will have advised our borrower client of their various financing options (i.e. conventional or CMHC construction and takeout financing, possibly including one of CMHC's affordable housing products) and we will have outlined the expected loan amount, pricing, terms, etc. We then gather documentation from our client including cost budget, architectural drawings, financial statements, etc. and use our large database of similar prior projects to present compelling arguments in support of our financing recommendation. Once approved by CMHC or our credit committee, we immediately commit to the financing and prepare to fund the construction costs as soon as the borrower has injected their required equity and commenced construction.

Russell Syme, Assistant Vice President, Commercial Financing First National Financial LP

Our involvement would be conducting market surveys and extrapolating where rents will be once the building is completed. We would also be working with the developer in creating public areas and amenity spaces that will be most desirable for potential residents. With regards to individual suites, we would provide recommendations as to suite size and suite mix as well as suite finishes. The goal here to maximizing the square foot returns both from a revenue perspective and a maintenance perspective.

Scott Ullrich, Chief Executive Officer, Gateway Property Management Corporation

WHAT ARE SOME OF THE MOST SIGNIFICANT COMPONENTS OF A SUCCESSFUL BUSINESS PLAN FOR A NEW BUILD? As a rental apartment lending specialist, I may be biased but I believe our involvement at an early stage is a critical component of planning a new build. Financing assumptions can have a massive impact on the internal rate of return and go/no go decision of the developer. Assumptions that are too optimistic can result in an unpleasant situation of having to inject additional equity unexpectedly. Assumptions that are too pessimistic can result in missed opportunities. Having early, expert financing advice is one of the keys to a successful new build. Another key component is a high-confidence cost budget based on issued-for-construction drawings and with a significant percentage of the hard costs fixed through firm contracts with established suppliers and trades. This protects the economics of the project in the event there is significant cost inflation like we saw hit the market a couple of years ago.

Russell Syme, Assistant Vice President, Commercial Financing First National Financial LP

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Our involvement is in the lease-up of new buildings and the continuing management after that point. The key components to a successful lease-up include: Pre-leasing - Creating a brand, building up the hype, and identifying interested renters. Digital 3D walkthroughs, renderings, and photography are all important parts of this phase. Taking advantage of social media and other digital opportunities are what attracts today's renter. This is even more important with our new normal during this COVID-19 pandemic.

Leasing - Pre-leasing builds up the potential demand for a new build, but being able to see the finished product is what closes the deal. Curb appeal and amenities are still number one and two on most renter's lists and the suite itself is number three. Under normal conditions, the leasing team focuses on face-to-face meetings to show off the new project and help the renter through the process of applying to rent. This, of course, is currently more challenging today, and leasing teams have to adjust by using technology (Facetime calls, Zoom discussions, etc.) to communicate with potential renters.

Scott Ullrich, Chief Executive Officer, Gateway Property Management Corporation

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A Look at Asset Management and Rental Strategies: Case Studies of Repurposing and Other Strategies to Remain Competitive in a World of New Developments and Condos

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WHAT IMPACTS HAS COVID-19 HAD ON YOUR ASSET AND PROPERTY MANAGEMENT STRATEGIES FOR YOUR PORTFOLIO? WHAT MAY LIE AHEAD? As businesses close or reduce their operations, their owners and employees have seen their income significantly reduced. Our residents are obviously part of the population that has seen their income affected by this pandemic and it has become harder for them to pay rent. Our building managers have had to more closely deal with tenants who have requested help with their rents. The vast majority of requests have been cordial, and we've been able to work out a solution with most tenants. However, our revenues are slightly lower than usual.

In the future, we will probably pay a bit more attention to who we target as residents as well as pay a bit more attention at people's employment. Foreign students for example have basically all moved away since this situation started.

Raul Jaime, Director, Investment Management, Residential, QuadReal Property Group

The greatest impact we have noted is the amount of communication and level of detail we exchange with our Tenants. Tenant-Landlord communication has become more collaborative and we see this as an opportunity to strengthen our relationships and learn more about the Tenant's life circumstances and their specific housing needs. We believe that gathering information specific to our individual tenants, to the buildings in our portfolio and our portfolio as a whole will allow us to more accurately provide the services our Tenants find most valuable during, and beyond, the COVID-19 crisis. We are modifying our strategies to adapt to the consumer's changing needs and hope this approach will have a positive, lasting impact on retention and reshape our Tenant-Landlord dialogue in the future.

Practical operation changes have revolved around rebalancing operating costs to reflect the current requirements of the crisis. As cleaning and security have increased, we have adjusted other service and amenity costs appropriately to reflect use. We have recently incorporated an online platform allowing the Tenant and PM to communicate remotely. This system is designed to streamline traditional reporting and communication procedures that would otherwise be impacted by COVID restrictions. This platform also enables us to provide additional payment options, new services, and procedural efficiencies.

Steve Krilanovich, Vice President, Development & Asset Management Lotus Capital Corp.

Spring 2020

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WHAT OPERATIONAL STRATEGIES ARE YOU IMPLEMENTING IN RESPONSE TO COVID-19 PROTOCOLS LIKE PHYSICAL DISTANCING? We have closed down all amenities where people cannot stay apart. We have also started to install automated parcel lockers to reduce the need for residents to interact with our staff. We have also reviewed the cleaning protocols with our service providers.

Raul Jaime, Director, Investment Management, Residential, QuadReal Property Group

We have: •

Closed nonessential amenities and developed rotational schedules limiting the number of residents permitted in places like laundry rooms, storage areas, and elevators. To promote the ideas of wellness and safety new wayfinding promotes the use of alternatives like taking the stairs over the elevator;

• Limited visitors and deliveries to essential caregivers, trades and package door drop/contactless delivery only; • Increased cleaning frequency to touchpoints and common area surfaces; • Promoted online communication via email and Building Stack for the distribution of notices, service requests and general bulletin correspondence.

We hope to promote a 100% digital environment as our primary communication channel; and, •

Provided each Tenant with a COVID-19 key chain "claw" the allows the user to open doors, press elevator buttons, and avoid directly touching dozens of common area surfaces and devices that may be contaminated. We hope to reinforce physical distancing and safe hygiene practices that Tenants will use in their homes and their daily lives.

Steve Krilanovich, Vice President, Development & Asset Management Lotus Capital Corp.

WHEN WOULD YOU LIKELY INTRODUCE ELEMENTS IN YOUR BUILDINGS TO IMPROVE PROFITS AND REDUCE EXPENSES? WHAT WOULD BE SOME EXAMPLES? We are constantly looking for ways of improving business performance. We do this when we think of renovating suites and therefore driving revenue. On the expense reduction side we have done a complete LED retrofit program and continue to look for opportunities like this. We are not sure when we will be able to get back to work but when we do, priority will be given to projects that are accretive to our returns while obviously keeping the safety of our residents and staff as a top priority.

Raul Jaime, Director, Investment Management, Residential, QuadReal Property Group

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Yesterday, today, and tomorrow! We constantly evaluate our financial strategies in conjunction with our operational requirements. Meeting the needs of our current Tenants and providing the value-add services, that will attract our future Tenants, is the focus of our management team.

In the short term we have reduced expenses by placing on hold all nonessential maintenance, repair, and dispensable capital work. Long term, we will soon begin preparing 2021 budgets which will need to be COVIDclimate sensitive. This pandemic has virtually transformed the consumer's expectations of touchless package delivery and refrigerated parcel lockers as essential value-add services. We expect upgrades to touchless common area entry mechanisms and technology-based upgrades to common area i.e., laundry facilities will help the consumer differentiate our rental product to comparably aged product in the market.

Steve Krilanovich, Vice President, Development & Asset Management Lotus Capital Corp

HOW CAN YOU REPURPOSE COMMON AREAS TO MANAGE NEW TRENDS LIKE PACKAGE DELIVERY DEMANDS ON SPACE AS A RESULT OF ONLINE SHOPPING? We have already begun repurposing indoor and outdoor areas. We feel that the success of projects such as parcel delivery systems, is dependent on the location of the unit. It has to be convenient for both delivery people and residents to use these systems. If they are located in an area that is difficult to access, it will become an inconvenience to all users and its effectiveness will be hindered. Without compromising on aesthetics we feel it is important to have these systems in areas of high traffic like our lobbies.

Raul Jaime, Director, Investment Management, Residential, QuadReal Property Group

As mentioned previously, we expect the demand for refrigerated grocery and parcel lockers to continue to rise and anticipate consumers will see this as an essential service. Our portfolio is comprised predominantly of heritage class and 1970-80s era buildings. Changes to the common areas are not always feasible under building code and City zoning requirements. As such, we are investigating external, covered parcel locker installations ad parking stall conversions. Where this is not possible, we will be introducing a one-way parcel drop off slot to a secured, Tenant-only accessible storage room.

Steve Krilanovich, Vice President, Development & Asset Management Lotus Capital Corp.

Spring 2020

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Case Studies of Mixed-use Developments and New Rental Project Innovation

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WHILE THERE IS GROWTH IN PURPOSE-BUILT APARTMENT DEVELOPMENT ACROSS CANADA, HAVE YOU SEEN SOME OTHER CREATIVE WAYS OF DEVELOPING NEW RENTAL UNITS? The creativity I am seeing in this asset class is really reflected in what BentallGreenOak sees as evolving demands from residents for access to more lifestyle-oriented services. As a result, we are seeing greater instances of mixed-use projects being developed, that include the opportunity for servicebased businesses to become an integrated part of the living environment for residents. In many cases, this demand is resulting in some interesting conversions of assets from other use to residential rental, and unique opportunities for densification and intensification.

Gary Lee, Managing Director, Residential Services, BentallGreenOak (Canada)

We have researched extensively in the Dallas, Denver, Toronto and Vancouver markets as well as Edmonton and Calgary. The USA markets have developed significant amounts of purpose-built rentals in contrast to the Canadian market, primarily focused on condo ownership.

The 2 types of products differ significantly; condos are generally price driven while purpose-built rental require amenities, social space, storage, fitness, bike storage, meeting rooms, higher quality enduring construction etc.

Property management is changing increasingly to customer service.

Greg Shumlich, Managing Director, Domain Apartments Ltd.

WHAT IS AN EXAMPLE OF AN INNOVATIVE PROJECT CURRENTLY UNDERWAY OR RECENTLY COMPLETED IN YOUR MARKET? In Vancouver, we are currently developing a 116-suite, 12-storey concrete tower addition to a 1.3 acre site comprised of an existing 13-storey tower built in 1972 with 135-suites. Moreover, we were able to convert excess storage space on the ground floor of the existing tower to two additional suites. Although densification projects may not be a completely new concept these days, the entitlement and zoning process for this project situated in South Granville commenced 5 years ago.

Another innovative project we are currently leasing and managing is in Victoria. The 11-storey property located in James Bay was originally a hotel (Harbour Towers) and was completely renovated and converted into a 219-suite multi-family rental. Occupancy commenced in mid-March of this year and as of May, the property is currently 60% leased. Unit mix includes Studios, 1 bedroom and 2 bedroom units.

Gary Lee, Managing Director, Residential Services, BentallGreenOak (Canada)

Spring 2020

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Westman Village nearing completion; 10 acre development, www.westmanvillage.com University District Calgary is well on its way, www.myuniversitydistrict.ca Our project is an 80 acre TOD (transit oriented development) 60 acres consisting of +/- 3,700 apartment/townhouse units & +/- 100,000 sf of retail, 18 acres for a high school & a neighbouring YMCA. We are the terminal station for the LRT. Greg Shumlich, Managing Director, Domain Apartments Ltd.

WHAT IMPACTS ON THE MULTI-RESIDENTIAL MARKET ARE YOU BEGINNING TO SEE AS A RESULT OF COVID-19? WHAT MAY LIE AHEAD? There will be re-thinking required on new rental developments going forward.

Particularly during the design development stage – do we need to make changes to our amenity areas to be more suitable for physical distancing?

During this period, we noticed a remarkable increase in online deliveries – so are we allocating enough lockers in our Parcel Management Systems?

With the need for physical distancing measures, we are hearing from residents about their new appreciation for balconies – so do we now design balconies in every suite we build? These are the sorts of questions that we will be posing when we consider new development and re-development activity for our multi-family residential assets.

Gary Lee, Managing Director, Residential Services, BentallGreenOak (Canada)

Our project is many years out to completion; initially the world, our country, province & municipalities will react and then respond with long term policies, etc. It is very hard to predict. I have been discussing with medical professionals from caregivers to medical specialists, etc.

Many opinions, ideas and concerns. No easy solutions.

Greg Shumlich, Managing Director, Domain Apartments Ltd.

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OVER 80 OFFICES AND NEARLY 2,000 AGENTS IN CANADA AND THE U.S. Partnering Together to Help Grow Your Wealth And Secure Your Financial Future Real Estate Investment Sales » Institutional Property Sales » Research » Advisory Services Spring 2020

MarcusMillichap.com

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Construction and Debt Financing: Calgary vs. Edmonton vs. Vancouver

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TO WHAT EXTENT ARE YOUR PRIORITIES, UNDERWRITING AND STRATEGIES VARYING AT THIS TIME AS A RESULT OF COVID-19 AND THE OIL SLUMP IN ALBERTA? Everything has changed to compensate for the increased risks and unknowns associated with COVID-19 and oil slump. All new opportunities are being evaluated on a deal by deal basis and all existing loans are being reviewed, stressed, and closely monitored (especially construction loans).

Jamie Dysart, Executive Director, Mortgage Investments, KingSett Capital

Our business has been built in partnership with the largest and most experienced property owners in Canada. As a result, we continue to leverage these seasoned relationships with the confidence that our clients have the experience to navigate the current market conditions, including Alberta.

CMHC insured term business has experienced a more steady deal flow while industry wide risk tolerance continues to take shape in the conventional space.

Michael Sagert, Director, CMLS Financial

• Increasing sensitivity analysis on vacancy rates, rent stagnation, Sponsor free cash flow, and development margin.

• Focus on sponsorship with increased balance sheet strength and liquidity to weather a prolonged sales or lease up cycle.

• Asset class bias i.e., heavily scrutinizing retail / office given many unknowns in those markets adapting to the changes caused by COVID-19.

• Track record of operator / developer is paramount when dealing with slower or zero growth scenarios and slowing international immigration on a temporary basis.

Reade Wolansky, AVP, Real Estate Financing, BC, Laurentian Bank of Canada

HOW CHALLENGING IS IT FOR A VALUATION IN THESE MARKET CONDITIONS? It's extremely challenging as the investments sales market is basically frozen.

Without an active market (bid/ask) there are no reasonable comparable sales to utilizes as for valuation purposes; all available comparable sales are historical and were completed in a materially different economic environment.

Jamie Dysart, Executive Director, Mortgage Investments, KingSett Capital

Spring 2020

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The story is still unfolding. At this point in time, we have not encountered a significant expansion in cap rates or vacancy rates and believe that the multifamily asset class is likely to be the most resistant to downward valuations.

New challenges may arise in the future, in which case the market will adapt.

Michael Sagert, Director, CMLS Financial

It is too early to tell. This can be mitigated by decreasing leverage and seeking projects with good margins and low historical land cost basis.

Reade Wolansky, AVP, Real Estate Financing, BC, Laurentian Bank of Canada

HOW ARE YOU ASSESSING A TRANSACTION AND PRICING IT IN EACH MARKET? All new opportunities are being assessed on a case by case basis to make sure we're supporting our existing and new customers while still maintaining an adequate risk rated return. We are open for business and actively lending.

Jamie Dysart, Executive Director, Mortgage Investments, KingSett Capital

The fundamental analysis of borrower, market and property are more important now than ever. I am a big believer in keeping it simple. If we are transacting with an experienced borrower who we have had a strong track record with, this is the most important aspect of a deal. Nothing can replace the character of a well-seasoned borrower. Layering in a strong market and a well-managed property are the final ingredients for a strong deal.

Michael Sagert, Director, CMLS Financial

The risk reward conversation is a frequent topic of discussion as financing premiums in the marketplace have widened even though Commercial Prime has lowered.

The covenants of landlords, commercial tenants and guarantors are going to be put to the test, and the perceived strength of certain deals in the past may have a different flavour going forward as we adjust to new market realities.

Reade Wolansky, AVP, Real Estate Financing, BC, Laurentian Bank of Canada

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WHAT IMPACTS ON THE MULTI-RESIDENTIAL MARKET ARE YOU BEGINNING TO SEE AS A RESULT OF COVID-19?

Biggest impact on the multi-family market is the lowering of borrower costs associated with lower bond yields - specifically CMHC insured loans. There will be some increased operating costs to multi-family landlords relating to COVID-19 including cleanliness, building improvements, new protocols, etc., but I think these will be offset by the lower long-term borrowing cost for multifamily landlords. I also think lower borrower costs will insulate multi-family landlords from cap rate increases and may actually put some downward pressure on core apartment building properties in major Canadian markets.

Jamie Dysart, Executive Director, Mortgage Investments, KingSett Capital

We have been pleasantly surprised by the response of the landlord community to the COVID-19 environment. Safety of tenants has proven to be a primary driver of higher maintenance and upkeep costs. Also, the emergence of virtual inspections and tenant showings has been a new development for our business.

Michael Sagert, Director, CMLS Financial

Rental - Operator cash flows will be immediately affected as monthly rent collection diverges from historical, predictable flows. Well-heeled sponsors can weather the storm in the short - medium term.

Market Condo - buyer interest in visiting sales centers has lowered but some unique projects show signs of some level of demand still present. End users, ready to buy, seems to be the more active cohort during the past 2 months, greater than originally presumed, but overall activity is quite diminished.

2020 sales and listings might make new 30-year lows.

Reade Wolansky, AVP, Real Estate Financing, BC, Laurentian Bank of Canada

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Multi-Family Assets in Alberta and BC: Where are Senior Executives Placing Their Bets?

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WHAT ARE YOUR VIEWS ON THE CALGARY, EDMONTON AND VANCOUVER MARKETS RESPECTIVELY IN THE LAST TWO MONTHS? Our underwriting strategies are generally unchanged. Starlight Investments continues to specifically target strategically located concrete high-rise multiresidential buildings. We believe that there remains a disconnect between supply when compared to demand as well as acquisition pricing when compared to both replacement cost and condominium values.

David Hanick, Chief Legal Officer, Starlight Investments

All strong markets that have held up well. Underlying fundamentals still remain strong, particularly in B.C. Dan Sander, Hollyburn Properties Limited

WHAT IMPACTS ON THE MULTI-RESIDENTIAL MARKET ARE YOU BEGINNING TO SEE AS A RESULT OF COVID-19? WHAT MAY LIE AHEAD? COVID-19 has accelerated the movement to digital platforms, streamlined communication channels and required augmented focus on all stakeholder needs. The multi-residential asset class remains strong given its defensive nature and composition of tenants.

David Hanick, Chief Legal Officer, Starlight Investments

Positives: communities coming together to keep all residents safe, going above and beyond helping their neighbours. Resident managers taking ownership and accountability for the residents’ homes but now also their health and safety.

Negatives: Many markets like B.C. are still in a housing crisis and will continue to be in a housing crisis post COVID-19. Landlords of multi-family asset class need government support, as we as a province, city, country still need to add significant supply post COVID-19.

Dan Sander, Hollyburn Properties Limited

Spring 2020

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ARE YOU READY TO MANAGE THE IMPACT OF ROUND 2 OR 3 OF COVID? As we manage the current impact of COVID-19 on our tenants and operations, we are constantly planning our approach to future disruptions and how to mitigate future rounds of COVID-19 for all stakeholders. There has been some significant learning at both the site level and management level which we will implement regardless of the occurrence of future impacts of COVID-19.

David Hanick, Chief Legal Officer, Starlight Investments

It really depends on the significance. We have strong practices, an occupational health department, and robust systems designed to keep our residents safe.

How will landlords manage vacancy, bad debt, loss of tools to address these issues, while managing higher operating costs?

Dan Sander, Hollyburn Properties Limited

WHAT TECH SOLUTIONS HAVE YOU PUT IN PLACE FOR YOUR STAFF TO WORK REMOTELY EFFECTIVELY AND FOR THE LONG TERM IF NECESSARY? COVID-19 will likely be a short term, high impact event. Operationally, COVID-19 has increased the velocity of the digital strategies with online and pre-authorized payments becoming more common, a higher focus on website enhancements for tenant engagement and interactions, and greater investment in online marketing for virtual leasing.

David Hanick, Chief Legal Officer, Starlight Investments

• File sharing • Video Conference calls • Databases • Property management portals • Resident portals • IM tools • Decent hardware in the field • YARDI remote Dan Sander, Hollyburn Properties Limited

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TECHNOLOGY KEEPING MULTIFAMILY STRONG AMID CRISIS The Canadian apartment rental market seems to be weathering the forced shutdown prompted by the COVID-19 outbreak. Landlords in major cities like Toronto, Vancouver, and Montréal expect vacancy rates to hold or with modest increases while some investors view the sector as a safe haven in a volatile environment.

But can the industry maintain its relatively favourable position as social distancing extends and a potential second wave of the pandemic looms? A prolonged economic slump holds the potential to hinder property owners’ cash flows, decrease asset values, and complicate debt management. There’s also the challenge of collecting rents, maintaining expected resident service levels and marketing vacant units, under physical distancing restrictions.

As disruptive as the health crisis is, it creates an opportunity for Canadian property owners and managers to remedy shortcomings in operational areas such as payment processing, resident services and internal and external communication.

Facing the prospect of a prolonged business slowdown of unknown duration and impact, some multifamily property owners are embracing technology that integrates their entire operational process, including accounting, marketing, leasing, property and vendor management, all in a single connected solution.

Such a system can, for example, bring order to the process of deferring rents and delaying collections by creating an automatic payment recovery schedule.

New rent deferment functionalities can be integrated into existing accounting and resident portals, allowing renters to digitally sign rent deferral agreements and upload all necessary documents to the platform. Along with enabling orderly reporting, the automation of manual processes saves property staff time by eliminating duplicate data entry.

Maintaining efficient rent collection and responsive resident service are additional formidable challenges in this environment. That’s where online resident portals that enable contactless renter interactions come into play.

They constitute a crucial pillar of business continuity by allowing resident payment collections and maintenance requests to be managed online.

Integrated property management solutions can also create new efficiency for vendor management. Along with eliminating cheque-writing and other paperintensive operations, property managers can onboard vendors, process invoices, and manage procurement and vendor compliance within one system.

Vendors, for their part, can upload all required documents and track purchase 48 I

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orders, invoices, and payments within the system. Most relevant to current circumstances, every aspect of vendor interaction – processing work orders, payments, and responses, enforcing compliance – can be executed remotely.

Furthermore, as COVID-19 dominates the collective consciousness, property managers are “either seizing or missing out on a big opportunity to make sure your residents know they live in a safe and well-managed community,” according to Peter Altobelli, vice president of sales for Yardi Canada Ltd. Property managers can capture such opportunity with portals that use online bulletin boards, login announcements, or texts to deliver news affecting their communities (while staying CASL compliant).

And what about apartment seekers and property managers who engage with them? Can marketing, applications, and leasing be done efficiently with less personal interaction and fewer site visits? Yes, with solutions that integrate marketing websites, ILS providers, SEO and PPC campaigns and applicant portals into a contactless lead-to-lease process. The full experience can be executed online – resident screening and virtual tours complete with photos, videos, 3D floor plans, and live leasing agent support. This integrated environment allows leasing and property staff to be automatically notified when an approved applicant electronically sign lease and selects a move in date. Both the ability to attract quality leads with an effective online market presence and the applicant experience can be preserved with no reduction in quality or efficiency.

Advanced property management technology represents a powerful resource for sustaining marketing, resident service, vendor relations, staff efficiency, and communication. Multifamily property managers maximizing its utility have a better chance of thriving during favourable economic cycles and surviving downturns.

- Yardi Canada

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Thank You to our Sponsors for their Ongoing Support

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Weathering the challenge together

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