CAM January 2012

C A N A D A ’ S O N LY N A T I O N A L P U B L I C A T I O N F O R A P A R T M E N T O W N E R S A N D M A N A G E R S

VOLUME VOLUME 8 / NUMBER 9 / NUMBER 6 / NOVEMBER 1 / JANUARY 2011 2012

WWW.CANADIANAPARTMENTMAGAZINE.CA

PM#40063056

Annual Retrofit Issue

The quick change artists O’Shanter Development Company

11189_CAM_January_2012.indd 1

12-01-13 4:04 PM

“Yardi Voyager enables us to process applications at the property level – saving time and labor by eliminating paper transfer across our offices.”

David Melo Vice President, Finance

Timbercreek Asset Management Inc.

F

O t v o

With over $1 billion in assets across Canada, Timbercreek Asset Management Inc. relies on Yardi Voyager™ software to automate property management for greater operational efficiency.

From leasing workflows and financial reporting to optimizing collections and cash flow, Voyager gives Timbercreek tools to retain tenants and support growth — while reducing costs.

For more information, call 1-888-569-2734 or visit www.yardi.com

11189_CAM_January_2012.indd 2

12-01-13 4:04 PM

Untitl

TAKE A fresh LOOK AT WHAT’S POSSIBLE

Flexibility

Lower Interest Rates

Reduced Renewal Risk

Obtain mortgage financing on up to 85% of the multi-unit property’s value when you are buying, building or refinancing.

Benefit from interest rate savings available throughout the entire life of CMHC-insured loans, including construction periods and renewals.

Enjoy mortgage renewal with no need to re-qualify. CMHC insures the entire amortization period of the loan and coverage is transferable between CMHC-approved lenders.

Learn how CMHC mortgage loan insurance gives you more choices for your multi-unit property investment. Call 1-877 Multi GO or visit www.cmhc.ca/multi-unit.

11189_CAM_January_2012.indd 3 Untitled-1 1

12-01-13 4:04 PM 11-09-29 10:55 AM

MC10

editor’s note

Retrofits and then some Retrofitting is not a new phenomenon in the industry. The practice of taking something old and established and updating it with new features to make it even more attractive in the marketplace has been the norm since time began.

But succeeding in the retrofit business takes more than a run-down building and a hammer and some nails. It takes foresight, planning, and a touch of luck.

“It is more important than ever to carefully study the market you are entering into and to renovate your properties right, with an eye to serving that market directly. Opportunities exist for a high rate of return, but only to those investors that know what they are doing,” writes Derek Lobo, the magazine’s portfolio columnist, in this month’s issue.

And there is not a better company to feature in Canadian Apartment Magazine’s “retrofit” issue than O’Shanter Development Company which has proven to be masters of transformation. The company, which began in 1955 in the housing industry, has shifted its focus over the decades to rental apartments. It has also carved out a niche of taking buildings with so-called “warts” and sprucing them up under the direction of the second-generation principals Adam and Jonathan Khrem.

With a particular focus on Toronto’s old City of York, which includes Forest Hill and Rosedale, the company has transformed some classic old buildings into modern day gems. In this issue we feature its most recent project at 660 Briarhill Avenue.

It is also ironic that as the magazine features its retrofit issue, we also put the finishes touches on our own retrofit project.

Late in 2011 Canadian Apartment Magazine saw an overhaul of its design with a bold, new look. The changes included brighter, more colourful pages, more dynamic pictures, and a number of informative columns and features. The editorial direction has also seen a recent retrofit as I have taken over the editorial duties on a temporary basis.

With a new look and a new feel, but with the same purpose in mind, we could not agree more with Lobo’s words.

Scott Anderson Editor

Quoteworthy “We built a corporate culture around customer service. That is where we start and that is where we end and it flows right through to our retrofits in terms of the experience that our tenants have…”

Publisher

Ian Lederer ianl@mediaedge.ca (416) 512-8186 ext. 262

Acting Editor

Scott Anderson

Senior Designer

Annette Carlucci

Designer

Jennifer Carter

Production Manager

Rachel Selbie

Contributing Writers Peter Cook, John Dickie, Derek Lobo, Robert Fleet, Paula Gasparro, Carissa Drohan-Jennings, Andy Schwartze Circulation

Lina Trunina

For sales information call (416) 512-8186 ext. 262 Canadian Apartment Magazine is published six times a year by:

5255 Yonge St., Suite 1000, Toronto, Ontario M2N 6P4 E-mail: info@mediaedge.ca

Tel: (416) 512-8186 Fax: (416) 512-8344 President Kevin Brown Copyright 2012 Canada Post Canadian Publications Mail Sales Product Agreement No. 40063056 ISSN 1712-140X Circulation ext. 232 Subscription Rates: Canada: 1 year, $46* 2 years, $82* US $71 International $96 Single Copy Sales: Canada: $10* * Plus applicable taxes Reprints: Requests for permission to reprint any portion of this magazine should be sent to Ian Lederer Authors: Canadian Apartment Magazine accepts unsolicited query letters and article suggestions.

Manufacturers: Those wishing to have their products reviewed should contact the publisher or send information to the attention of the editor.

The opinions expressed are those of the authors of articles and do not necessarily reflect the views of Canadian Apartment Magazine. This information is general and is not a substitute for legal advice.

Sworn Statement of Circulation: Available from the publisher upon written request.

Although Canadian Apartment Magazine makes every effort to ensure the accuracy of the information published, we cannot be held liable for any errors or omissions, however caused.

Printed in Canada

– page 19 4 www.canadianapartmentmagazine.ca

11189_CAM_January_2012.indd 4

12-01-13 4:04 PM

Untitl

MC10192 KZPXAdCanada_CHC_Layout 1 8/16/11 1:18 PM Page 1

“KILZ PRO-X

IS MY PAINT FOR LARGE AND SMALL PROJECTS.”

Nathan Bavolek, Owner Nathan James & Company Design & Construction

We asked you what you wanted in a paint.

Durable finish. Fast application. Great feel.

All at a great price.

We heard you. Now after years of testing, it’s available. We call it KILZ PRO-X™ paint.

Available in over 1,100 colours in flat, eggshell and semi-gloss sheens. Give KILZ PRO-X paint a try. We know you’ll be impressed. After all, you told us how to make it.

Exclusively at ™

™

kilzpro-x.com Scan this QR code for more information

11189_CAM_January_2012.indd 5 Untitled-1 1

12-01-13 4:04 PM 11-08-30 1:06 PM

contents Cover Story 16

The Transformers O’Shanter Development Company By: Scott Anderson Cover image by capture it photography

columns 8

Finance Time is right for financing the future

By Peter Cook and Robert Fleet

10

CMHC Energy efficiency 10 ways to find energy savings in older buildings

By Paula Gasparro

30 Insurance Retrofit – Same word, different meaning

By Andy Schwartze

33 Association Building retrofits gain incentives and attract discussion

By John Dickie

34 Portfolio strategy Reno opportunities abound in Canada

By Derek Lobo

36 Marketing Things to consider before retrofitting an apartment website

By Carissa Drohan-Jennings

Departments 4

Editor’s Note

12 Newsline 14 New Products 38 Smart Ideas

Columnists Peter Cook, Robert Fleet, John Dickie, Carissa Drohan-Jennings, Paula Gasparro, Derek Lobo, Andy Schwartze

11189_CAM_January_2012.indd 6

12-01-13 4:04 PM

Strata

What’s in a name?

When the name is Stratacon, a lot!

A reputation as a leading sub-metering solutions provider since 1997, with a dedication to technology, innovation and customer service.

Now the Stratacon name has changed – to EnerCare Connections*.

And what’s in that name? A lot more!

EnerCare brings together a variety of “intelligent energy solutions” including:

• Electricity, Water and BTU Sub-metering • Water Conservation • Rental HVAC

Our energy products and services combine the best practices in the industry with comprehensive programs that are flawlessly delivered.

With our robust menu, we work together with property managers, multi-residential building owners, developers, condominium boards and residents to save energy, save money and help save the environment.

For more information about EnerCare Connection’s intelligent energy solutions, please visit Enercare.ca or contact us at 416-649-1900. *Stratacon Inc. and EnerCare Connections Inc., both wholly-owned subsidiaries of EnerCare Inc., have amalgamated and continue under the name EnerCare Connections Inc.

11189_CAM_January_2012.indd Stratacon_Rebrand_Corp_ad.indd 7 1

12-01-13 11-12-09 4:04 3:08 PM

Finance

Time is right for financing the future Follow us on Twitter @Robert_Fleet and on LinkedIn. Peter Cook and Robert Fleet are committed to helping borrowers strategize the best loan structure possible. They are available for oneon-one consultation for any CAM reader requiring multi-residential financing. As “Apartment Financing Specialists” with First National Financial LP they have originated over $4 Billion of mortgages. Their combined 35 years experience in the financial industry has lead to frequent speaking engagements across the country. They freely share their knowledge and techniques with audiences, clients and prospective clients. If you have questions, Peter and Robert may be reached by phone or email.

Peter Cook — (416) 593-2913 pcook@firstnational.ca Robert Fleet — (905) 301-3449 robert.fleet@firstnational.ca

8 www.canadianapartmentmagazine.ca

11189_CAM_January_2012.indd 8

These days, it’s virtually impossible to turn on the TV or surf the Internet without coming across the latest news update about the Eurozone debt crisis and the potential for a global recession.

But regardless of how factual or sensationalized you prefer your news to be, one thing is clear - the economic climate has been a major contributing factor in Canada’s lending industry relating to bond spreads, interest rates, the cost of funds and the number of lenders available in the marketplace. With the current economic conditions and the potential of another credit crisis, the signs may not seem positive, but after a harder look things may not be all that bad for the Canadian apartment investor.

What can you expect?

New international financial reporting requirements along with Canadian bank regulatory capital requirements (among other reasons), have reduced the overall number of lenders providing CMHC mortgage financing, to around five or six firms in total. Not only has the number of lenders declined, but there are other market-related factors pushing spreads higher and increasing lenders’ cost of funds, particularly with five- and 10-year term rates.

Over the course of 2011, spreads on single-family residential mortgages have increased to a point where they are now 1.0 per cent higher than spreads on insured multi-family residential mortgages. Lenders with limited funds for CMHC mortgages are allocating an increased proportion of these funds to single-family mortgages because of the superior return on investment. Since single-family residential mortgages are demanding a greater portion of CMHC funds, lenders may consider increasing spreads to be more in line with single family to accommodate borrowing demands of their multi-family clients.

In order to attract institutional investor funds into CMHC products like the Canada Mortgage Bond (CMB) program and NHA Mortgage Backed Securities, lenders may find it necessary to increase spreads to levels that compensate investors for the market volatility, while events unfold globally. It’s worth noting though, that Commercial Mortgage Backed Securities (CMBS) could eventually become available again and provide competition for conventional and CMHC spreads, but don’t expect that to happen until there’s some measure of stability in the global credit markets.

Not only has the global credit crisis affected CMHC mortgage rates but it has affected conventional mortgages as well. The increased instability over the last three months has impacted the cost of funds and driven commercial spreads between 25 and 50 basis points higher. As global market turmoil continues we anticipate further pressure on the cost of funds for both CMHC insured and conventional mortgages causing overall higher lending rates.

Looking ahead to 2012, the expectation is bond yields will remain low because of the pessimism surrounding the global economy as well as the uncertainty of the credit markets.

Also, concerns surrounding global equities will increase the demand for safety as investors continue to move to government bonds.

However, 12 months is a long time to speculate on the bond market even in the best of times, so look for bond yields to increase if the sovereign debt crisis currently raging in Europe ends with a positive resolution and the global economy begins to

12-01-13 4:04 PM

Finance

improve. Investors may flee bonds pushing yields higher to clamour for higher returns in other investments, but for now, you can expect yields to remain relatively low.

Helping to underscore this fact is Bank of Canada governor Mark Carney, who recently asserted that the situation in Europe is “barely contained,” during a recent speech to the Montreal Board of Trade.

“There is also a question, a sort of worry, about the capacity of European leaders to fix this situation,” the governor said. “It’s absolutely possible to find a solution to this problem. They have the means. They have the solutions. But they have to put them into practice. And better to do that this week, not next year.”

Carney also confirmed that the Bank of Canada is remaining steadfast in its price-stability policy approach, with the intention to keep lending rates near historic lows so as to mitigate the potential impact of another global economic downturn.

“We make monetary policy in the real world, where shocks are a fact of life,” Carney said. “That is why the bank responds with a flexible approach, taking decisions guided by considered analysis and informed judgment rather than mechanical rules.”

Taking a look at uninsured conventional mortgage funds, they will continue to be available through 2012, but with fewer lenders in the market (only 10 to 12). The ones remaining will be highly selective and allocate funds to higher quality buildings in stronger economic locations. There’s also a good chance you’ll see a limited supply of long-term debt (10 to 20 years) and plenty of shorter-term debt available (less than five years).

And last but certainly not least, as was standard practice during the most recent credit crisis in 2008, you can also look for lenders to continue their practice of establishing floor rates in an effort to hedge against interest rate fluctuations.

What does this mean to you?

The current period of economic uncertainty and shaky credit markets will definitely continue into 2012, but so too will the low vacancy rates and progressively increasing rental income that has become the norm across most parts of Canada. Although the economic circumstances have reduced the number of lenders in the market and the outlook may be for slightly higher borrowing costs, Canadian landlords will continue to have a variety of options available to borrow low cost funds. The year 2012 looks to be another fantastic year for the apartment industry and the perfect time to upgrade your buildings and finance for the future.

“

“With the current economic conditions and the potential of another credit crisis, the signs may not seem positive, but after a harder look things may not be all that bad for the Canadian apartment investor”

Are you contemplating the sale of your apartment property?

Consider the following: • Who will represent your best interests?

• Who will give your property maximum exposure?

• Who will deliver the highest value for your property?

With over 20 years experience, tens of thousands of units sold, and hundreds of clients represented, we have consistently delivered superior results. Through our local and national coverage, we create maximum exposure, ensuring maximum value for your property.

Please visit our website at www.cbre.ca/nag-toronto or contact us at 416.815.2332 to learn more about how we can help you.

SOLD 226 Suites - Oakville $182,655 per suite

SOLD 849 Suites - Toronto $129,564 per suite

SOLD 76 Suites - Toronto $139,474 per suite

CBRE Limited - National Apartment Group

: : David Montressor*, Executive Vice President 416.815.2332 david.montressor@cbre.com * Sales Representative CBRE Limited Brokerage

www.cbre.ca/nag-toronto Vancouver

Calgary

Edmonton

Winnipeg

London

Kitchener

Toronto

Ottawa

Montreal

Saint John

Halifax

January 2012 9 AD Redesign Half Page Island 2011 Jan 012.indd 1

11189_CAM_January_2012.indd 9

1/6/2012 4:35:37 PM

12-01-13 4:04 PM

CMHC

Energy efficiency - 10 ways to find energy savings in older buildings Paula Gasparro is the Manager, Business Development, Multi-Unit Mortgage Insurance at CMHC. Reach her at 416-250-2731, via e-mail at pgasparr@cmhc.ca or visit www. cmhc.ca/multunit. CMHC provides a wealth of research material and energy-saving tips at www.cmhc.ca > Business /Government Housing Organizations > Building & Design > Highrises and Multiples. You can also call CMHC at 1-800-668-2642.

Go online for more finance articles

www.canadianapartmentmagazine.ca 10 www.canadianapartmentmagazine.ca

11189_CAM_January_2012.indd 10

Apartment buildings are energy guzzlers. But, there are ways to turn around your building’s performance and save money.

During the ‘60s and ‘70s, builders did not make energy efficiency a priority; “the results were inefficient, poorly insulated and poorly sealed apartment buildings,” according to Canada Mortgage and Housing Corporation’s (CMHC) building science expert Jamie Shipley.

Some of the worst cases of inefficient buildings are in Toronto, with the second-highest average cost of electricity per housing unit in the country. Almost one quarter of this costly energy is lost through leaks, with some buildings losing as much as 14 per cent electricity, according to a CMHC study.

The key to improving building performance is to understand where and how much energy is used; “from there, you can focus your attention on the biggest problem areas and what can be done about them,” said Shipley.

While improving performance means making a capital investment, very often, the payback is surprisingly quick. For example, a study by Minto and the City of Toronto indicated that better tuning the pump pressure resulted in a reduction of 51 per cent energy used, with an investment of $52,000, for seven buildings, recouped in 3.4 years.

“Up-front costs are the biggest deterrent, but knowing your building and its problem areas can help you decide where you should act first,” said Shipley. “If a ventilation system needs changing, it could present the opportunity to introduce a more efficient one; if you have another 20 years left on your boilers, you might set that upgrade aside for later.”

Shipley shares the following energy-saving tips; you can “take one step at a time.”

Know your usage Review and analyze your gas, electricity and water bills. Ask for detailed billings indicating peak usage, allowing you to compare the performance of one building with others, or pinpoint trouble spots. Check your ‘time of use’ consumption, especially if you have Smart Meters.

Seal your building Air leakage is a huge energy-waster, but fixing it is easy. Add insulation over unheated spaces. When conducting repairs, add insulation where necessary and use sealant or foam for noticeable gaps. Weather-stripping is another inexpensive repair that can save you money immediately.

12-01-13 4:04 PM

CMHC Here’s where to start: • Work your way up – start at the bottom in the parking garage (vestibule doors and basement areas). Then head for the roof, checking stairwell doors, ventilation covers, mechanical equipment (elevator hoist cables and wiring conduits) and roof-top penetrations.

• Go through the interior – vertical shafts or chutes; pipe and duct hangers; floor penetrations of services and ductwork through slabs and walls.

• Check the exterior – walls, door and window frames; electrical receptacles, floor junctions and baseboard heaters on exterior walls.

Reduce hot water use Install low-flow showerheads and faucets. A cost of $20 per unit for showers can net $8 per year, per unit in water savings, and a further 10 per cent to 15 per cent savings in heating. Use washerless faucets when replacing old faucets. The cost of $15 to $45 is paid back in one to four years of non-dripping faucets. Upgrade to energy-efficient front-loading laundry equipment and allow only cold rinses on all cycles. Using high-efficiency washers and dryers uses about 50 per cent less energy, and 35 per cent to 45 per cent less water.

Verify your results Follow upCARMA_CondoBusiness_01-19-2009_CS2--F.pdf by tracking your utility use – water, electricity2/3/09 and gas 5:41:35 – to make PM sure the changes you’ve made are working properly.

Change the lights Use sensors to provide light only as needed, where legally permitted by codes and standards, and where security is not affected. Replace incandescent or older technology fluorescent lamps, ballasts and fixtures with high-efficiency fluorescent lamps and ballasts. You will reduce energy consumption and costs, with a possible payback in one or two years.

Control ventilation Automate corridor ventilation, matching speed to occupancy. Variable speed drive technology and building automation systems pay off; introducing this in a 100-suite apartment building costs $20,000 up front, but reduces costs by up to $7,500 per year.

Use booster pumps Install efficient pumps that match pump operation to water pressure demand. The Minto/City of Toronto study showed that better tuning the pump pressure resulted in electricity saving of $15,000 per year.

Convert the boilers If it’s time to replace your boiler, consider converting to higher-quality equipment, and implementing it into a building automation system, allowing for a better response to outdoor conditions. Condensing boilers could offer a 10-per cent fuel savings.

Watch the hot water Consider converting your hot water plant to use condensing boiler technology, or tie your highefficiency space heating boiler to the existing plant with a heat exchanger. A solar thermal array may extend the life of the boiler. Reduce the temperature to the lowest safe level that will provide a satisfactory supply of hot water to all tenants.

How low can you flow Replace aging toilets with ultra-low-flow technology for as much as a 70-per cent reduction in water use per flush. There is a cost of $180 per unit but you can get a municipal rebate of $60 to $75 and will see annual savings of $40 to $60 per unit. The payback - less than three years.

January 2012 11 11002_Carma_2011.indd 1 11189_CAM_January_2012.indd 11

11-05-02 11:09 AM 12-01-13 4:04 PM

newsline Orkin PCO Services renamed Orkin Canada Orkin PCO Services has changed its name to Orkin Canada. The company remains part of the Rollins, Inc. independent brands and the change, effective Jan. 1, 2012, reflects the fact that Orkin Canada is a Canadian operated company.

“As Orkin Canada, the company will continue to provide customers with superior service, setting it apart from our Canadian competitors,” said Gary Muldoon, president of Orkin Canada. “The management team will remain the same, and Orkin Canada employees will continue to have access to the best training and research available from the Rollins University and Learning Center.”

The change will not impact day-to-day business operations and the company will offer the same service customers have come to expect. However, the company will gradually phase in the new logo as it replaces vehicles, uniforms, signage and other forms of advertisement.

“We have consistently set the standard for the pest control industry in Canada for more than a half century, and we are excited to continue to do so as Orkin Canada,” said Muldoon. “We have always been proud that we are Canadians serving Canadians, and this rebrand simply drives home that fact.”

News tips

Vancouver to host CFAA 2012 Canadian Rental Housing Conference Planning is now underway for the CFAA 2012 Canadian Rental Housing Conference to be held from June 13 to 15 at the Coast Plaza Hotel in downtown Vancouver.

Building on the success of the last two years, the conference will bring together leading professionals and landlords from across the rental housing industry to share their knowledge, advice and expertise on topics relating to rental housing investment and facilities management.

The 2012 conference will begin with a building innovations bus tour (on June 13). On June 14 and 15, the conference will offer delegates two days of information sessions that are focused on the needs of rental housing investors and executives, as well as property managers and hands-on owners.

On June 14, the British Columbia Apartment Owners and Managers Association (BCAOMA) will combine its annual dinner boat cruise with the CFAA Conference to provide an enhanced networking experience, while cruising on the Vancouver waterfront. For more details, please visit www.cfaa-fcapi.org. For 2012 partnership opportunities, contact Erin Wallace at 613-235-0101 or events@cfaa-fcapi.org.

CMHC releases report on the state of housing Housing-related spending accounts for more than 20 per cent of Canada’s Gross Domestic Product, contributing about $330 billion to the Canadian economy in 2010 up 7.1 per cent from $308 billion in 2009. This and other key findings are in the ninth annual Canadian Housing Observer, released by Canada Mortgage and Housing Corporation (CMHC).

“The Observer is unique in its in-depth review of housing conditions and trends, including developments both domestic and international - that influence housing finance and housing market developments in Canada,” said Karen Kinsley, president of CMHC. “The Observer’s data provides insight into Canadian residential mortgage practices and housing market trends, while highlighting the importance of housing in this country.”

The 2011 Observer looks at other important housing data including: • The anticipated growth in the influence of seniors on the housing market in the future as their share of the population rises from about 14 per cent to almost 24 per cent by 2036.

• How urban core housing needs improved between 2002 and 2008 as 87 per cent of urban Canadian households either had, or could afford, acceptable housing in 2008.

• How low interest rates, coupled with a small inventory of existing homes for sale, helped push the average MLS price up by 5.8 per cent in 2010 to $339,042.

• How condominiums accounted for one-third of all housing starts in major Canadian urban centres in 2010, compared with 29 per cent in 2009.

Online, users can access a broad range of statistical information on housing conditions from national, regional and local perspectives. New this year is the launch of additional online interactive tables featuring housing data at the local level for more than 100 selected municipalities. The online publication and data are available at www.cmhc.ca/observer.

Please send your company’s news tips, acquisitions and new products to cam@mediaedge.ca.

As well, check out our website, www.canadianapartmentmagazine.ca for timely news, features and V-Reports.

12 www.canadianapartmentmagazine.ca

11189_CAM_January_2012.indd 12

12-01-13 4:05 PM

1127

www.williamshvac.com

Through the wall heating and cooling and solutions!

Gordon R. Williams Corporation provides quality products with a turnkey solution for condominiums and apartments • Quality Products • After Sales Technical Support • Service Contracts • Preventative Maintenance GE Zoneline Packaged Terminal Air Conditioners • Energy Efficient • Quite Operation • Reliable • Innovative Design Built In Series • Many of the features of the Zoneline units • More Compact Design Applied Comfort Products • Full Range of replacement Heating and Cooling units in various sizes and capacities • Ideal for new construction or replacement of vintage units

ASK US HOW WE CAN HELP YOU! Spot cooling solutions ideal for temperature sensitive technology and elevator rooms.

Email: info@williamshvac.com 11189_CAM_January_2012.indd 13 11278_GordonWilliams_2012.indd 1

Phone: 905-820-1400 12-01-13 4:05 PM 12-01-12 10:57 AM

111214FRPOmacADcam_V 12/14/11 4:19 PM Page 1

New Products

j

Would like to congratulate the winners of the Event Held December 1, 2011 at the Metro Toronto Convention Centre

Property Management Website: Single Property Property Management: Corporate Website Environmental Excellence Award: Richgrove Village Advertising Excellence, Single Project: 44 Charles St W. Advertising Excellence: Corporate Branding Curb Appeal: 77 Davisville Lobby Renovation of the Year: 565 Sherbourne St. Suite Renovation, under $5k: Briarcrest Manor, 263 Dixon R.

FTD Highrise Inspection If you want a good look at your building from the bottom up, look no further than FTD Highrise Inspection.

The Mississauga, Ontario-based firm offers a unique way to thoroughly inspect the exterior of your building without the need to climb ladders or set up cumbersome swing stages.

Using a remote-controlled robotic device, the company has the ability to scale the walls and inspect the building envelope for a fraction of the time and cost of the manual methods of building inspection.

The robot, affectionately called “Sam”, navigates the exterior of the building and shoots a sequence of digital images which are then downloaded onto an iPad computer.

These images are then used to detect problems associated with the building envelope from leaks and cracks to deteriorating caulking – all serious issues for building managers.

“This is a way for people to see their building in a different perspective,” said Filip Sobotka, co-owner of FTD. “Now you can physically scan your entire building which was never done before because of cost and time.”

The service offers a 3-D image of the building giving the building managers the ability to flag issues before it is too late or too costly. The images are stored on a company database for the client to use either at the time of the inspection or in the future. “This is a proactive approach,” Sobotka said.

For more information see www.ftdhighrise.com.

Suite Renovation, over $5k:

The new Union Gas website is

ready for business

Kingston Estates, 600 Kingston Road Rental Development of the Year: Sierra at Village Gate West Outstanding Community Service Award Lifetime Achievement Property Manager of the Year: Eugene Bussoli Leasing Professional of the Year: Jeff Brown Resident Manager of the Year: Thomas & Arlene O'Donnell Customer Service Award of Excellence

Special Thanks to our 2011 Event Sponsors

• Stay on top of the latest rebates and incentives • Access self serve tools to manage your account, services and bill online • Find information specific to your type of business • Review energy success stories, events and expert energy advice from Union Gas Visit uniongas.com/business submit feedback on our new business section and be automatically entered to WIN $500*

uniongas.com/business TM

CONSERVE • SAVE • PROFIT

TM

CONSERVE • SAVE • PROFIT

*Conditions apply. See website for complete details. © Union Gas Limited 2011 11/2011 UG20110133

14 www.canadianapartmentmagazine.ca Untitled-2 1

11189_CAM_January_2012.indd 14

11-12-15 12:49 PM Untitled-2 1

11-12-20 4:13 PM

12-01-13 4:05 PM

CMHC & Conventional Mortgages for: Multi-Family Rental Properties Senior’s Housing Projects Commercial Properties Construction Projects

CHOOSING THE RIGHT TENANTS IS NOW THIS EASY.

Vancouver Brian D. Kennedy or Jonathan Wong Phone: 604-685-1068 Fax: 604-683-2787 Email: vancouver@peoplestrust.com Calgary Dennis Aitken or Daniel Stewart Phone: 403-237-8975 Fax: 403-266-5002 Email: calgary@peoplestrust.com Toronto Michael Lombard or Ady Steen Phone: 416-368-3266 Fax: 416-368-3328 Email: toronto@peoplestrust.com ™

www.peoplestrust.com

Tenant Select r Fast, secure online tenant screening, anytime, anywhere.

Before you let new tenants into your building, screen applicants quickly and easily with Tenant Selector.

Whether you manage two rental units or two thousand, Tenant Selector is a new secure online tenant screening solution from Equifax and draws on one of Canada's largest sources of consumer data to help you take the guesswork out of tenant selection anytime, anywhere.

www.equifax.ca/growmybusiness

To learn more, scan, click or call 1-866-607-0432

INFORM

January 2012 15 Untitled-1 1

11189_CAM_January_2012.indd 15

11-12-12 10:43 AM

12-01-13 4:05 PM

Adam Krehm, principal

11189_CAM_January_2012.indd 16

12-01-13 4:05 PM

Cover Story

The Transformers

By Scott Anderson

You might call O’Shanter Development Company the “extreme makeover artists.”

After all, the company takes buildings with obvious defects and so-called “warts” and transforms them into things of beauty.

January 2012 17

11189_CAM_January_2012.indd 17

12-01-13 4:05 PM

Cover Story

Randy Daiter, vice-president and general manager

Building on two generations of property management experience, the company headed by principals Adam and Jonathan Krehm, has both the knack and the eye for mining the diamonds in the rough in some of the most desired locations in the Greater Toronto Area. And in the process it has succeeded in bringing out the best in the “ugly ducklings”.

“We have an organization that has the skill set to do these projects and we have developed considerable expertise in doing it and it is quite different from new construction,” said Adam Krehm.

“It has its own set of issues and problems. But we have developed considerable experience and we have had success in doing it.”

With an admitted fondness for areas in the old city of Toronto - including Forest Hill and Rosedale - the company seeks out these ugly ducklings that they can transform into prize possessions with some careful planning, designing and imagination.

“The ugly ducklings provide an opportunity to earn a return on the capital that must be invested in the form of rent increases,” said Adam Krehm. “Obviously you can’t do this kind of project in an area where the market is soft. You have to find run-down buildings in areas where you think the rents are well below market. Forest Hill, Rosedale and places like that.”

But the high-rise rental business was not always in the company’s sights and just like the buildings it has successfully transformed, the organization itself has seen a change over the years.

O’Shanter Development was founded in Toronto in 1955 by William Krehm. Although the company has its roots as a small housing business localized in the central Toronto area, the business slowly expanded and shifted its focus to rental apartments as the world of finance changed as well as the market for affordable rental units.

The company has further developed and currently has interests in a diverse portfolio that includes the management and ownership of commercial properties, rental apartments, and single-unit housing.

“It was a subtle shift. We have been in this business for a long time. My brother and I are second generation. Over time the rental housing stock in Ontario has aged and it has also suffered the ravages of rental control legislation in certain eras when it was impossible to maintain these buildings as we all would have liked to be maintaining them,” said Krehm.

“In the Bob Rae days you could not have passed through the costs of capital expenditures in any kind of effective way. So the maintenance was deferred.”

Along the way this subtle shift has seen the “Brothers Krehm,” as some of the long-time veterans of the company affectionately call them, amass an impressive property portfolio in some of the most desired neighbourhoods in the GTA. O’Shanter’s portfolio comprises more than 2,500 residential units and exceeds 1.65 million square feet with some third-party properties also included.

It also has more than 50 employees at some 24 sites to address the needs of its clients and tenants. The supervisory staff specializes in operational and project management,

18 www.canadianapartmentmagazine.ca

11189_CAM_January_2012.indd 18

12-01-13 4:05 PM

Cover Story

“

We are also familiar with the maxim that ‘the customer is No. 1’ but the reality is that if you don’t have happy employees how do you expect them to treat your customers and make your customers happy?”

- Randy Daiter, vice-president and general manager, O’Shanter Development

construction, energy management, fire code retrofit, mechanical systems, heating, ventilation and air conditioning, electrical, and plumbing.

“We try to empower our employees to make decisions instead of all the decisions coming from the top,” said Krehm. “One of the features of our organization is that the average tenure among our employees is very long. There are a lot of us who have been here for a long time. We are not the highest payers in the industry so there has to be something that makes people want to stay.”

This desire for people to want to stay extends to its tenants as well. Over the more than 50 years that the company has been in business it has built up a formidable group of loyal tenants allowing it to boast one of the better retention rates among its peers.

The company’s tenancy turnover rate per year is also usually well below the Canadian Mortgage and Housing Corporation’s average rate, said Randy Daiter, vice-president and general manager.

“We built a corporate culture around customer service. That is where we start and that is where we end and it flows right through to our retrofits in terms of the experience that our tenants have from the minute they enter the building to the time that they leave the building and we like to complement their physical space and experience with the customer service experience that they receive from our staff. We believe that it is a winning combination.”

Happy employees, happy tenants One of the cornerstones of the company’s success is customer service, but unlike most companies that strive to put the customer first, O’Shanter believes the way to a tenant’s heart is through its employees.

“We start with our customer service and by focusing on customer service we start with our employees. If you focus on the employees and you have happy employees you are going to have a happy customer,” said Daiter.

“We are also familiar with the maxim that ‘the customer is No. 1’ but the reality is that if you don’t have happy employees how do you expect them to treat your customers and make your customers happy?”

Ernie Puguon, senior property manager

January 2012 19

11189_CAM_January_2012.indd 19

12-01-13 4:05 PM

Cover Story

“

We try to empower our employees to make decisions instead of all the decisions coming from the top”

Jilan Balbaa, director of development

“

-Adam Krehm, principal O’Shanter Development

A study by JD Power suggests that satisfied tenants were 1.9 times more likely to renew their lease, 2.9 times more likely to refer other tenants, and 3.3 times more likely to pay a higher rent.

Indeed, at least 25 per cent of tenant satisfaction was impacted by better customer service.

“It’s a winning combination when you take a product and you reposition it, you turn it around and you complement that with good quality customer service,” Daiter said.

“Since we did this shift through a focus on internal development, training, employee development, working on our service standards, and service delivery program, we yielded a net return on investment of more than 300 per cent.”

Daiter added that by focusing on the internal development of its corporate culture and on the employees and by creating a service model around good customer service the company has been able to boost tenant satisfaction.

And fostering and maintaining happy customers has enabled the company to generate a loyal following of customers who are more than willing to pass on their pleasant experiences with friends, family and potential tenants.

Daiter said the firm conducted an internal study to determine how to make the customer experience more pleasant with the objective of driving tenant retention and word of mouth recommendations. As a result, it has been able to bring down marketing costs some 40 per cent by increasing tenant referrals, while significantly growing net operating income (NOI) through lower tenant turnover and improved customer service.

I did the design with quality in mind. I didn’t want to go to the Cadillac, but I didn’t want to go to the little car either. I wanted to upgrade things to the mid-range so that the price was still reasonable and adequate but you still get the beauty out of all these units” -Jilan Balbaa, director of development, O’Shanter Development

20 www.canadianapartmentmagazine.ca

11189_CAM_January_2012.indd 20

12-01-13 4:05 PM

Cover Story

“Location is very important. Amenities are important. The physical space in terms of the condition of the premises is obviously important.

But for us it’s all about our objective at the end of the day to have a happy customer. We want to drive tenant satisfaction,” he said.

Extreme makeover But without being adept at finding and transforming buildings in key locations the company would not have had the success which it enjoys today.

And Bill Scott, director of maintenance and technical services, credits the brothers for having the courage to take the risk and invest in buildings that needed much tender loving care. He notes that the various skills of the two brothers - Adam is an engineer and had training as an architect, while Jonathan is proficient in rent review issues and “knows how best to maximize revenue,” has led to the success of the firm.

“We look for buildings with warts; buildings that other people are afraid of. We have purchased buildings that other people had walked away from. They were interested in them but the projects were just too intrusive, too big, and too specific. The brothers Krehm have a mixture of skills,” said Scott.

This formidable, one-two punch has allowed the brothers to enjoy great success in the property management field by transforming run-down buildings into desirable locations.

“They feel that is their niche,” said Scott. “That is the niche that they look for. That is the strength and capabilities that they expound and they are doing quite well at it.”

Krehm and Scott can point to a number of buildings that they have renovated over the years including a 272-suite building on Yonge Street in Toronto and a 125-unit building in prestigious Rosedale. But the company is currently involved in a long-term project at 660 Briarhill Avenue in the Lawrence Avenue West and Bathurst Street area which they admit is among its more unique and challenging properties.

TOGETHER We Can Clean Up. It turns out that cleaning up the environment also helps our clients go green with the money they save.

By being more cost efficient, we’ve cut carbon emissions as well, even managing to surpass Canada’s mandate to the Kyoto agreement 4 times over.

At O’Shanter we’ve learned that by being environmentally friendly keeps us on friendlier terms with tenants too. Overall, we’ve created cleaner, healthier atmospheres for them with special attention to the details.

From the moment they enter your building, they feel the pride of knowing the grounds are wellgroomed. The lobby and hallways are spotless. And problems are solved promptly by friendly, top-notch professionals.

O’Shanter has been on a mission to set new standards. We are the only multi-residential property manager in Canada to have obtained both ISO Quality Management and ISO Environmental Management certifications.

O’Shanter. Trust our team to help you clean up.

It’s rewarding for both of us.

416.466.2642 • WWW.OSHANTER.COM

January 2012 21 Untitled-2 1

11189_CAM_January_2012.indd 21

12-01-05 5:31 PM

12-01-13 4:05 PM

Cover Story

“ Paul Wilson, maintenance manager

We look for buildings with warts; buildings that other people are afraid of. We have purchased buildings that other people had walked away from. They were interested in them but the projects were just too intrusive, too big, and too specific. The brothers Krehm have a mixture of skills” -Bill Scott, director of maintenance and technical services, O’Shanter Development

“Obviously the location was terrific and that is what drew us to it. It was probably one the most rundown buildings that we have acquired, but we knew that going in so there was not a surprise there for us. It was an opportunity,” said Krehm.

“We certainly called the market correctly, as these apartments are renovated; the market gives us a rent that justifies all of the effort that went into the building. It was worth the effort.”

But according to all concerned, the 76-unit was not a thing of beauty when the company began the long-term renovation project in May, 2010.

Despite a long list of deficiencies throughout the building from leaky roofs and dingy hallways to a crumbling underground garage and an inoperable heating and cooling system, the principals were drawn to the large and spacious units which they knew could attract top rental dollars after some work.

“It was a degraded asset but there was potential to bring it back up,” said Scott. “You can go and look at other apartment building units in the area; you don’t find buildings with this kind of room. They are enormous.”

So with sleeves rolled up and a financial target in mind, the company virtually gutted the building to, according to Daiter, “bring it up to condo standard.” From top to bottom the building saw $3 million in improvements with an average of some $20,000 earmarked for each unit. Over five years, the company plans to spend more than $3.5 million on the total retrofit project.

“With this particular property, we actually turned it around in the marketplace. It was probably a C building and we turned it around to an A building in the upper village of Forest Hill which is a high-end rental market,” he said. “We totally repositioned the building within that localized market and we did it through our retrofit initiative.”

The makeover included a new roof and roof top deck for tenants, new chillers and boilers, and complete restoration on the two-levels of sub-grade parking.

Each of the 76 units were also slated to receive a complete makeover including new kitchens, bathrooms, complete with efficient toilets, new flooring, crown molding, and energy efficient lighting.

The aesthetics of the 40-year-old building also saw an upgrade including an overhaul of the main lobby which salvaged the terrazzo marble flooring.

This was all done within the constraints of a tight budget and a conscious effort to retain the classic look of the building.

™

11189_CAM_January_2012.indd 22

12-01-13 4:05 PM

DOING OUR BEST FOR YOU

–

DELIVERING OUR BEST TO YOUR TENANTS As the industry leader in residential properties, Rogers understands what you’re looking for in a communications and entertainment provider. That’s why with us, you’ll get personalized support through a dedicated Account Executive. They’ll ensure your tenants are completely satisfied with our innovative Cable TV, Internet and Home Phone services. And you’ll rest assured knowing you’ve partnered with experts you can really count on.

Call a Rogers Account Executive today at 1 877 331 9202 or visit rogers.com/cma for more information.

™Rogers, the Mobius Design are trademarks of or used under license from Rogers Communications Inc. or an affiliate. ©2011 Rogers Communications.

11189_CAM_January_2012.indd 23

12-01-13 4:05 PM

Cover Story

Bill Scott, director of maintenance and technical services

One world: Let’s take care of it Energy conservation is a great opportunity. Not only does it offer returns twice over, you also get to do your part as a global citizen. It pays twice over, first because it straight up saves money, and secondly because every dollar off the expense side is worth almost $20 in capital value at today’s CAP rate. And even better, you are helping the future world.

O’Shanter is a leader in utility monitoring and conservation, and Energy Brain has been privileged to provide them with monitoring tools. (www. energybrain.ca). O’Shanter has helped us refine the reports to match their needs and improve our feedback system.

By connecting utility meters to the internet, Energy Brain allows managers to quickly see their progress and opportunities, and to get an overview of the whole portfolio. O’Shanter uses our system to fine tune their gas controls. They use our CUSUM charts to compare building performance year over year, and the portfolio graphs to identify which buildings offer the greatest opportunity. Adam Krehm, a principal at O’Shanter, discusses EnergyBrain further at www.YouTube.com/user/EnergyBrain.

Sometimes even small things can make a big difference, like fixing water leaks, or changing the piping arrangement in the boiler room. Conservation is an ongoing process, always offering new opportunities. We’d like to help you discover them. www.watershed.ca www.energybrain.ca

“

We have an organization that has the skill set to do these projects and we have developed considerable expertise in doing it and it is quite different from new construction” -Adam Krehm, principal O’Shanter Development

AP ELE SIN SU BU FLO PA AN ELE SIN SU BU FLO PA AN ELE SIN

24 www.canadianapartmentmagazine.ca

11189_CAM_January_2012.indd 24

12-01-13 4:05 PM

11278 Untitl

Congratulations totoVertica Residence Services and Thank You for Your Congratulations O’Shanter Developement thank you yourBusiness. business

The Right Product. The Right Price.

The Right People. The Right Choice.

Over 14,000 Products – In Stock, Everyday!

Eco-Friendly | Cleaning | Fire Safety | WHMIS | Paint | Building | Bathroom & Kitchen | Appliance | Wall & Floor Plumbing | Light Fixtures | Light Bulbs | Electrical | HVAC | Hardware | Seasonal | and More

APPLIANCEBATHROOMBUILDINGCLEANINGECO-FRIEND Choosing H&S as your maintenance material ELECTRICALFIRESAFETYFLOORHARDWAREHVACKITCH supplier means you are putting your confidence SINKSLIGHTBULBSLIGHTFIXTURESPAINTPLUMBINGSEA in a supplier willing to go the extra mile to SUPERSPECIALSWALLWHMISANDMOREAPPLIANCEBA provide you with the best one-on-one service.

A knowledgeable sales staff and over 35 years BUILDINGCLEANINGECO-FRIENDLYELECTRICALFIRESAFE of industry experience – no one else offers that FLOORHARDWAREHVACKITCHENSINKSLIGHTBULBSLIG combination and it’s why people all across PAINTPLUMBINGSEASONALSUPERSPECIALSWALLWHM Ontario choose H&S Building Supplies Ltd. as The one source for it all. their One Stop Maintenance Supply Superstore!

ANDMOREAPPLIANCEBATHROOMBUILDINGCLEANINGE ELECTRICALFIRESAFETYFLOORHARDWAREHVACKITCH SINKSLIGHTBULBSLIGHTFIXTURESPAINTPLUMBINGSEA SUPERSPECIALSWALLWHMISANDMOREAPPLIANCEBA BUILDINGCLEANINGECO-FRIENDLYELECTRICALFIRESA www.hsbuild.com 1 800-207-8325 or 905 738-6003 FLOORHARDWAREHVACKITCHENSINKSLIGHTBULBSLIG PAINTPLUMBINGSEASONALSUPERSPECIALSWALLWHM COMMERCIAL | MULTI-UNIT | RESIDENTIAL | INDUSTRIAL | INSTITUTIONAL ANDMOREAPPLIANCEBATHROOMBUILDINGCLEANING PROUD MEMBER OF: ELECTRICALFIRESAFETYFLOORHARDWAREHVACKITCH SINKSLIGHTBULBSLIGHTFIXTURESPAINTPLUMBINGSEA

11189_CAM_January_2012.indd 25 11278_H&S_2012.indd 1 Untitled-3 1

12-01-13 4:05 PM 12-01-03 11:43 3:28 PM 11-09-01 AM

Cover Story

“

The ugly ducklings provide an opportunity to earn a return on the capital that must be invested in the form of rent increases. Obviously you can’t do this kind of project in an area where the market is soft. You have to find run-down buildings in areas where you think the rents are well below market. Forest Hill, Rosedale and places like that” - Adam Krehm, principal O’Shanter Development

“I did the design with quality in mind. I didn’t want to go to the Cadillac, but I didn’t want to go to the little car either. I wanted to upgrade things to the mid-range so that the price was still reasonable and adequate but you still get the beauty out of all these units,” said Jilan Balbaa, O’Shanter’s director of development.

“I wanted to do things at a very reasonable cost. We wanted to fix the problem and give it a facelift and use the proper material that wasn’t too expensive but still gave you a good, good look.”

Green initiatives The company also drew on its conscious commitment to energy savings and its various initiatives.

As an ISO 14001 Environmental Management and ISO 9001 Quality Management certified multiresidential property management company, O’Shanter follows stringent international standards outlined in the dual certifications.

These standards hold it to a high standard of environmental practices, and ensure that the

Congratulations and continued success!

For your next painting job, call us for a free consultation.

Arctic Painting Ltd. Tel: 905-787-1222 Fax: 905-787-1555

26 11084_ArcticPainting_2011.indd www.canadianapartmentmagazine.ca 1

11189_CAM_January_2012.indd 26

12-01-11 2:07 PM

12-01-13 4:05 PM

Profile Water

Conservation and Efficiency are the best investments you can make for your building Utility consumption is like the heartbeat of your building.

Hourly monitoring puts your finger on the pulse.

EnergyBrain connects your meters to the Internet for continuous monitoring. Our science works for you round the clock, to insure performance and warn of problems before they multiply.

Property managers often find savings of 20% or more.

You can’t manage what you don’t measure.

Identify water leakage • Track gas controls • Benchmark and compare performance Spot electrical problems • Verify retrofits are working • Program implementation

To get EnergyBrain.ca working for you, contact Watershed Technologies Inc. info@watershed.ca

11189_CAM_January_2012.indd Profile_Fall2011.indd 7 Watershed_Profile_Fall2011.indd 127

www.watershed.ca | www.energybrain.ca

(416) 538-7940

12-01-13 4:05AM PM 12/11/11 5:41:22 PM 11/13/11 11:03:23

Cover Story

“

What we did in addition to this particular building in retrofitting it and turning it around and repositioning it in the marketplace was that we added sizzle in terms of the décor ...”

-Randy Daiter, vice-president and general manager, O’Shanter Development

company’s day-to-day business practices are carried out using good methods and practices.

This also led to O’Shanter winning a FRPO award of excellence in 2008.

Although the company takes the environment and energy savings into consideration with every building it retrofits and to that end its standard practice is to address the key areas such as chillers, boilers, and windows, Daiter said they went far beyond the basics with the Briarhill project.

“We have been walking the walk for 20 or 30 years and so typically when we buy a building we do most of these energy efficiency initiatives any way,” he said.

“What we did in addition to this particular building in retrofitting it and turning it around and repositioning it in the marketplace was that we added sizzle in terms of the décor. We retrofitted all of the common areas in addition to the mechanical and electrical systemics of the building. We have worked on the architectural elements as well with the décor.”

Although most said the overall transformation of the building was fairly routine, it did take careful planning and consideration given that

the heavy lifting and extensive renovations were all done with almost half of the tenants still living in the building.

The quality of living for the existing tenants was taken into consideration while also being mindful of the fact that the empty units were not generating revenue.

“It was actually beneficial because it was a good chance for us to upgrade all of the vacant units, which we in fact did,” said senior property manager Ernie Puguon.

Despite the inconvenience which the long-term project may have caused the tenants, Puguon said the work was justified.

“I am very happy. I really am very happy with what we have done with the building,” he said. “I know that it will result in an increase in the rent that will be passed on, but I can tell you everything is justified.”

And with the Briarhill experience fresh in its mind as well as the lessons learned from past projects, Krehm said they will not deviate from the company’s game plan of buying and holding buildings in the desirable areas of the city.

“We are not going to change our philosophy; we just have to be careful. You have to pick your situation.”

28 www.canadianapartmentmagazine.ca

11189_CAM_January_2012.indd 28

12-01-13 4:05 PM

Untitle

Congratulations on your current retrofit and looking forward to your continued success We are proud to have a dynamic and close relationshi p with O’Shanter Development Company for over 60 years

Celebrating over 60 years of excellence 11189_CAM_January_2012.indd 29 Untitled-4 1

12-01-13 4:05 PM 12-01-04 3:09 PM

Insurance

Retrofit – Same word, different meaning Andy Schwartze, BSc., MBA, CIP, is an insurance broker specializing in property management and real estate. He is a former President of the Insurance Institute, has taught in the community college system and provides continuing education to other brokers. He can be reached at andy@ takecover.ca. For any comments, you can go to www.takecover.ca and post them on their new blog.

We insurance people don’t really have much involvement with active hands on management of real estate assets. Ours is an erudite role of sitting back, taking a look, muttering a few choice invectives and then guessing at what would be a sensible insurance premium. Sometimes we turn away, disenchanted by neglect and disrepair; at other times we salivate because a well-maintained and managed building represents good business for our insurance company suppliers. Most of the time, we are working with product that is somewhere in between. This has been the reality for many years; it really has not changed materially, but there may well be dark clouds on the horizon. It is certainly time for us to retrofit our approach to risk and I suggest there may be changes coming that are, at this point, difficult to predict as to timing and severity.

Just a week before this article began taking shape, I received a call from the president of a small 35-unit condominium nestled in a sleepy town in southwestern Ontario. This is an older, solid brick four-storey, apartment building that was converted into a condominium about 12 years ago. The one-bedroom units had been sold by the developer, to first time owners, for about $75,000 each. A bargain, you say? Not so ‌ just recently, a bank that had foreclosed on

30 www.canadianapartmentmagazine.ca

11189_CAM_January_2012.indd 30

12-01-13 4:06 PM

Insurance

one of the units sold it for $13,000. A current resident, attempting to sell in order to move, cannot find anyone willing to put down even $20,000 for her unit. Values have collapsed.

The demand for homes in this small town of 4,500 residents seems to have dried up.

One does not have to look far to see what road we may be going down in the coming years. Crime rates are down because older people can’t run from the scene as easily as the younger ones can. Older folks don’t expand their lives by applying for credit and spending on expanding lifestyles. The baby boom generation is just in the early beginnings of a massive downsizing, as it begins to prepare for the “golden years”. Seniors are not economy builders, they are service users, and they want those services for free; after all, they’ve been paying taxes for years.

The succeeding generation is too small. It will not have the buying power to soak up and maintain the numerous assets that their parents’ generation is just now beginning to unload. Communities with little to offer will find the supply of buyers drying up. Assets, including buildings that once had a purpose in a growing localized economy, will be left unattended like old cars rusting in a field.

Look at Detroit City struggling in the wake of a crashed auto industry. Banks will see their savings deposits go up and their loan applications go down. Life insurance companies are already beginning to get out of individual products, as they cannot guarantee that long-term income will cover the guarantees that are written into their products. Just before Christmas two big names made such announcements.

Governments are tapped out and taxes are at an all-time high. We’re pushing up against some serious limitations.

So the economic expansion that began to percolate in the early 1970s will start reversing into the next decade. Young people build economies and old people dismantle them.

Nobody knows this better than Japan … others are beginning to follow. Having said that, there are offsets that can take place.

Immigration is the favourite filler for a low fertility rate and, in Canada we can expect the long-term world demand for natural resources

“

There may well be dark clouds on the horizon. It is certainly time for us to retrofit our approach to risk …”

S u i te Co l l e c t i o n s Ca n a d a I n c.

i s t h e o n l y Co l l e c t i o n s Ag e n c y i n O n t a r i o t h a t s p e c i a l i ze s i n

R e s i d e n t i a l B a d D e b t Co l l e c t i o n s.

O u r p r i m a r y fo c u s i s to re cove r u n p a i d re n t fo r l a n d l o rd s, f ro m b o t h c u r re n t a n d p a s t te n a n t s.

One Goal…. One Focus…. Great Results

Co n t a c t :

Ta s h a M o r t o n

M a n a g e r, Le g a l & Co l l e c t i o n s

S u i t e Co l l e c t i o n s C a n a d a I n c.

284 Richmond St., E, Suite 300 To ro n t o, O n t a r i o M 5 A 1 P 4 t.416.642.0291 x364 f. 4 1 6 . 3 4 0 . 0 8 5 5 w w w. s u i t e c o l l e c t i o n s. c o m

January 2012 31 Untitled-6 1

11189_CAM_January_2012.indd 31

12-01-12 1:24 PM

12-01-13 4:06 PM

Insurance

“

Where there is good access, good schools, a wide range of activity options and a strong underlying sense of community, there will be a better chance for growth”

Your Expert Partner™

MCAP offers the following CMHC and Conventional Multi-Family solutions: • Excellent service • Customized structures • Forward fix of rates • National lending program

• Competitive rates • Interim bridge loans • Terms of 1-5 and 10 years • Dependable closing process

Recent Financings $7,050,000

$14,900,000

$7,700,000

74 Units Refinance

151 Units Refinance

72 Units Refinance

Vancouver

Halifax

Montreal

$10,650,000

$11,000,000.00

$11,550,000

214 Units Refinance

140 Units Refinance

293 Units Refinance

Toronto

London

Hamilton

$14,900,000

$14,100,000

$3,850,000

267 Units Refinance

242 Units Refinance

21 Units Refinance

Kingston

Winnipeg

Vancouver

to remain strong. As of this writing, major newspapers are reporting that consumer debt is again at a record high, thanks to very low interest rates. So there’s not much room for the consumer to aid in any recovery … all levels of society are tapped out, and getting older and slower too.

For real estate owners, the exposure to downward trending values is going to be very much influenced by their favourite word – “location”. Values in communities that offer little will tumble. Where there is good access, good schools, a wide range of activity options (read water, skiing, golf, cycling etc.) and a strong underlying sense of community, there will be a better chance for growth. The rest will falter.

For insurers, a decade-long history of broadening and cheapening insurance protection will have to come to an end. Pricing and risk selection models will have to reflect new realities and insurance standards may well be raised. It’s well known among experts that hard times increase claims (the ones that in good times were quietly paid by the policy holder are now turned in) and, at the same time, they reduce premium flow as economic activity levels tail off. Just recently, major property/casualty insurers with headquarters in the EU zone were threatened with ratings downgrades by S&P (some familiar names came up). As banks and governments find themselves on the wrong side of revenue growth, insurers who buy their paper will be caught in the downdraft too. Like banks, insurers have statutory capital requirements and, when called to increase those, they tend to curb their enthusiasm for risk.

Every generation has its challenges … for the soon to be seniors these are probably just beginning. Retrofitting our understanding of the coming years is also very important.

How this plays out in the end is a huge, and perhaps a bit scary, unknown. One thing is for sure, however, it will affect almost every one of us in some way.

Contact us today to learn more about how MCAP can be your Expert Partner.

Toll Free: 1 800 387-4405 George Mejury: 416 368-8837 Leo St. Germain: 416 847-3870

Go online for more industry news

Derek Read: 416 847-3525 Vito Campisi: 416 591-2888

www.mcap.com

www.canadianapartmentmagazine.ca

32 www.canadianapartmentmagazine.ca Untitled-7 1

11189_CAM_January_2012.indd 32

12-01-03 12:01 PM

12-01-13 4:06 PM

Association

John Dickie is President of the Canadian Federation of Apartment Associations. You can contact him at president@cfaa-fcapi.org. The CFAA (www.cfaafcapi.org) represents the owners and managers of close to one million residential rental suites in Canada, through 17 associations across Canada.

In existence since 1995, CFAA-FCAPI is the sole national organization representing the interests of Canada’s $40 billion private rental housing industry, which provides quality rental homes for more than seven million Canadians.

Building retrofits are great ways to reduce energy costs. Depending on the starting point, savings of 20 per cent, 30 per cent or 40 per cent are often available.

The key is an energy audit of the building to evaluate where the best savings can be achieved. Qualified energy consultants or engineers can often suggest many approaches, while at the same time ensuring that the recommended changes will work together so that a landlord does not create new problems while solving old ones.

Governments are focusing much of their encouragement on energy audits. They recognize that the evaluation process is relatively high risk at that stage, while an owner does not know that savings are achievable.

A recent evaluation of its programs for Natural Resources Canada (NRCan) recommended providing substantial grants for the energy audits.

The evaluation also addressed one problem with some past grant programs, namely the time delays in processing the applications.

The federal government recognizes that delays for approvals are a serious impediment to the usefulness of grants in promoting energy conservation measures. Such delays took place in the Eco-Energy Retrofit Incentive Program for Buildings. Under that program landlords had to submit plans for energy savings from a qualified consultant along with an estimate of the energy savings to be achieved. The government

11189_CAM_January_2012.indd 33

Building retrofits gain incentives and attract discussion

assessed the likely benefit, and then entered into an agreement to pay a grant for certain work. That program concluded, and is unlikely to be revived in that format.

To avoid those delays, the Eco-Energy Retrofit Incentive Program for Homes (which applies to low-rise rentals as well as single-family homes) is based on providing rebates for specific work on a list. The energy consultant recommends work, the owner chooses and then the consultant certifies that the work has been done, thereby triggering the rebates for the listed items.

At the time of writing, that program is to conclude on March 31, 2012, but it could be extended, or end earlier.

Besides its grant or rebate programs, NRCan provides an on-line library of information to help owners understand the retrofit options that are available. Some of the information is at a basic level, but it can make a helpful starting point. The library can be accessed at http://oee.nrcan.gc.ca/ residential/personal/5842.

In its lending practices, CMHC attempts to encourage owners and builders to adopt energy

“

savings measures. CMHC will use estimates of post-retrofit utility consumption to estimate operating income. It also gives a 10-per cent discount on its insurance premiums when energy retrofits are being performed.

At the past two CFAA Canadian Rental Housing Conferences, delegates learned of several incentive programs and numerous methods to achieve energy savings. This year, there will be a little less focus on energy savings measures, but the 2012 CFAA conference will address costeffective building repairs (for low-rise buildings), leaky building solutions and innovations in facilities management. Those topics may well include significant retrofit options of interest to multi-family building owners and managers.

Also, the 2012 CFAA Canadian Rental Housing Conference is an opportunity to network and exchange information with rental owners and managers, on retrofits and on other topics. CFAA hopes to see you at the 2012 Conference in Vancouver on June 13, 14 and 15. For more information, see CFAA’s website at www.cfaa-fcapi.org

Governments are focusing much of their encouragement on energy audits. They recognize that the evaluation process is relatively high risk at that stage, while an owner does not know that savings are achievable” January 2012 33

12-01-13 4:06 PM

Portfolio Strategy

Reno opportunities abound in Canada Derek Lobo is the founder of DALA Group of Companies and Rock Advisors. Derek has been the Canadian rental apartment industry’s leading consultant for almost 30 years and is now one of the industry’s most active brokers. Derek recently brokered the sale of the ESAM portfolio to Minto Management in one of the largest multi-unit residential sales in Canadian history.

Retrofitting from outside in Owners of well-located buildings are spending $5,000 to $20,000 per unit to reposition older apartment buildings Renovate from “street to suite” Start with the curb appeal and work your way into the building Structural work is often necessary for the long-term health of the building Ontario and Quebec rent increases can be obtained for capital expenditures through the provinces’ rental boards Common area and in suite renovations usually result in higher rent increases

34 www.canadianapartmentmagazine.ca

11189_CAM_January_2012.indd 34

A couple of years ago, shows like Property Ladder and Flip this House played to the dream of buying a property cheap, fixing it up, and selling it for a substantial profit on the open market.

The American mortgage crisis has dampened enthusiasm for house renovation and re-sell techniques, but significant opportunities exist in the rental apartment industry – in fact, opportunities may be growing in Canada.

Thanks to economic conditions and changing government regulations, there are plenty of opportunities to achieve a good return on your investment by acquiring older properties, renovating them, and bringing in new tenants at higher rents. But the gold does not mine itself; you’ve got to do a lot of digging. And retrofitting older apartments to compete with higher-end newer ones requires repositioning them not just in terms of their quality and amenities, but also demographically.

An older building bringing in lower than average rents may not be at the low end of the market simply because it’s old. It’s possible that the target market the apartment building was originally built to serve has moved on. Unless you do your research and figure out who you will actually be renting to after repositioning your apartment buildings, you may not be able to increase your rents as high as you hoped.

A good example of these changing demographics is the city of London, Ont., which has a large and growing seniors’ population, and a large number of older, low and medium-rise walkup apartments. While there is relatively inexpensive stock that can be bought and renovated, investors will cut themselves off from a large portion of the local market if that renovation doesn’t include a new elevator to allow older tenants to bypass the stairs.

Student housing is another large and rapidly growing market offering opportunities for repositioning, but the needs of student tenants are distinct from those of average tenants.

Repositioned properties are increasingly in competition with purpose built student housing located closer to universities. Students expect high quality units, and are looking to share space (and costs) with friends, generally renting larger multi-bedroom units rather than smaller, single ones. Unless you think of your repositioning in terms of per-bedroom rather than per unit, you will only be able to compete with the newer spaces on cost, and that won’t provide the return on investment you are hoping for.

Deciding upon the market your repositioned property is to serve will affect the amenities you add during renovation. However, it goes without saying that if you decide to renovate a property to reposition it, you should do it very well. You are not the only repositioner in the marketplace and what you renovate and when you do it matters.

We generally recommend renovating from “street to suite.” Start with the curb appeal and work your way into the building. Sometimes structural work is necessary for the long-term health of the building (roof, risers, underground parking etc…). This structural work typically does not increase the value proposition for your residents but is necessary none the less. Ontario and Quebec rent increases can be obtained for capital expenditures through the provinces’ rental boards.

The purpose-built rental apartment industry in Canada is an exciting place to invest in.

There are also thousands of “shadow rentals” created by the condominium investors who rent individual condominiums. Decades of repressed supply have created a large demand that is keeping vacancies low and increasing rents. Smart investors know this, and have already started buying older, well located properties to their portfolios.

It is more important than ever to carefully study the market you are entering into and to renovate your properties right, with an eye to serving that market directly. Opportunities exist for a high rate of return, but only to those investors that know what they are doing.

12-01-13 4:06 PM

11035_IMSInsurance_2011_2.indd 1

Untitled-4 1

11189_CAM_January_2012.indd 35

11-05-05 2:31 PM

January 2012 35 12-01-03 11:48 AM

12-01-13 4:06 PM

Marketing

Things to consider before retrofitting an apartment website

Carissa Drohan-Jennings is the Director of Marketing and Communications at Landlord Web Solutions (www.landlordwebsolutions.com). If you would like to learn more about any of the topics mentioned above, please email Carissa at carissa@ landlordwebsolutions.com for more information.

Retrofitting often means adding new technology or features to older systems. In the world of apartment websites, this may mean adding new interactive features to a website, or updating a website’s technology to be more current with renter’s needs.

Before beginning a retrofit of any website, a landlord should always consider two things: (1) can the website be retrofitted successfully, and (2) what are the short-term and long-term goals for the retrofit?

Considering these two things before beginning a retrofit project will ensure the retrofit is cost effective and successful.

Can the website be retrofitted successfully?

How a website is built can drastically impact the viability of retrofitting. A landlord who has a static HTML-based website, for example, may find that a retrofit is too expensive. This is a direct result of the structure of the website.

Each page of a static HTML-based website is coded and the content appearing on the website resides in that code. For this reason it is more time consuming and difficult for a developer to retrofit the website, as any new functionality or modules that need to be added to the website will need to be programmed by the website developer, which may add to the cost or timeframe of the redesign. In most cases it’s more like a complete website re-design. In many cases landlords who

36 www.canadianapartmentmagazine.ca

11189_CAM_January_2012.indd 36

12-01-13 4:06 PM

Marketing find themselves in this situation may find it more beneficial to invest in a whole new website that resides on a content management system (CMS).

CMS is a type of backend that is often used to build a website and allows multiple users to easily add, change or administer website data. Overall it’s the most convenient and most economical backend structure for a website.

Because a CMS controls all of the content of the website in a database, and the navigational structure of the website is also governed by the CMS, making changes to the visual structure of the website is easy and significantly less costly than updating a static HTML-based website.

Once it has been determined whether the website can indeed be retrofitted, it’s now time to consider the goals of the retrofit.

websites to make them more accessible to mobile devices. While this is a great start, there is also another component to accessibility of which we must be aware.

There is a movement around North America to make websites more accessible to all individuals, especially those with a disability that hinders their ability to read a website without screen reading technology. Currently Ontario has introduced a law that requires websites to be screen reader compliant by 2015 or 2016, depending on the size of the organization.

While this law has not spread across Canada yet, it certainly will in the future.

This change should definitely factor into a website’s long-term goals, as there may be something that can be done now to achieve compliancy.

Many times, a website retrofit is just as important as designing the website itself. By laying out shortterm and long-term goals a landlord can ensure that the website will stand the test of time.

What are the goals for the retrofit?

The amount of new technical information floating in the development world is doubling every two years, which means that students starting a fouryear technical degree will discover that half of what they learned in year one will be outdated by the time they reach year three. If that is the case, then just imagine how quickly a website’s technology will become out dated.

To remain agile in the coming years, it is important to brainstorm both the short-term and long-term goals for the website, so the retrofit can mitigate financial costs over time. As discussed in the previous point, a static HTML-based website will continue to be a hindrance to growth in the future, and could be more costly to retrofit over time. However, a content management structure is flexible and can more easily incorporate new advancements in technology, especially if it is constantly being updated to remain current.

Here are some examples of possible short-term and long-term goals for a website retrofit: • Increase organic search engine traffic.

• Increase the renter’s user experience.

• Improve website accessibility.

• Increase traffic and/or conversions.

• Reduce long-term operational costs (administrative time, bandwidth charges).

• Integrate referrals, social media, and other free marketing initiatives.

• Achieve a higher rate of engagement with current renters.

One way in which many landlords are currently trying to improve their website’s accessibility is by adding mobile-friendly structure to their

Mind, body and soul.

You’ve been thinking about leaving it all behind, for some time now. You worked hard to get to this stage in your life, yet the challenge of keeping pace with the demands of today’s business is getting to the point of overwhelming. There’s nothing wrong with leaving while you’re on top of your game. In reality, it may be the very thing to bring your life back into focus. Whether a new business challenge, a more balanced lifestyle, or simply a leisurely ride along a sunny beach—you decide.

At MetCap Living, we’re always looking to add to our capital assets; so, if you feel you’re ready to exercise some options on your current property portfolio, give us a call—we’d like to talk to you.

After all, change is good... but, change with a solid return on your investment is even better.

Enjoy it. You’ve earned it.

For more information, please contact Stacey Kurck, Director of Business Development, MetCap Living 416.894.2377 or stacey.kurck@metcap.com

January 2012 37 Untitled-1 1

11189_CAM_January_2012.indd 37

11-05-02 10:50 AM

12-01-13 4:06 PM

Smart Ideas

Saving for the future Retrofitting an apartment complex provides the opportunity to update the building with an eye on energy savings. Here are four areas on which building owners concentrate:

New roofs Usually one tackles a project from the bottom up, but in the case of a building, it is better to take it from the top. With considerable heat lost through the roofs of buildings, property owners look to cap these losses with new and improved tops from white roofs to green roofs.

New toilets Every flush with old plumbing means dollars literally down the drain. Toilet flushing in a typical home accounts for up to 30 per cent of household water use.

Some 65 per cent of this water can be saved by installing a high efficiency toilet.

New windows Heat loss through windows can be a real pain as it accounts for up to 25 per cent of a building’s heat loss.

Owners are trapping in savings when they upgrade the windows in the units or improve the seals and weather stripping around the existing panes.

New lighting Every flick of the switch is cents added to the overall electricity bill and building owners are seeing the light when it comes to energy savings. By paying now and replacing existing lighting components with energy-efficient equipment they are realizing significant costs down the road.

38 www.canadianapartmentmagazine.ca

11189_CAM_January_2012.indd 38

12-01-13 4:06 PM

Untitl

Quick closings with competitive LTV. That’s our commitment to you.

First National is committed to working together to provide the ideal customized mortgage solution to meet your needs. We offer a wide variety of mortgage products, competitive loan to value, and one of the quickest closings in the industry. You can often receive your commitment documents in as little as seven days. Trust us to find the best financing solution for your property.

Make First National your first call. Contact us today.

www.firstnational.ca VANCOUVER

CALGARY

TORONTO

604.681.5300 800.567.8711

403.509.0900 888.923.9194

416.593.1100 800.465.0039

MONTREAL

HALIFAX

514.499.8900 888.499.1733

902.452.0776

First National is licensed under the Mortgage Brokers, Lenders and Administrators Act 2006 (Ontario) Licence No. 10514

11189_CAM_January_2012.indd 39 Untitled-1 1

12-01-13 12-01-05 4:06 5:30 PM PM

Their convenience Your return on investment

Coinamatic offers a wide range of products and services for all of your laundry needs.

•

We are Canada’s leading provider of smart card-operated and coin-vended laundry equipment

•

We have access to a wide variety of products to help maximize revenues and reduce operating costs

•

We are the only ISO registered route operator in North America

•

Our multilingual Customer Care Centre is available for building management and resident support 24/7

Coinamatic continues to transform the laundry business with services that both our Clients and their residents value.

For a FREE no-obligation survey of your laundry services call, 1.877.755.5302 info@coinamatic.com www.coinamatic.com

11189_CAM_January_2012.indd 40

12-01-13 4:06 PM