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 9 / NUM BER 2 / March 2012
www.canadianapartmentmagazine.ca
Mainstreet Equity Corp.
PM#40063056
Taming the Wild, Wild West
Annual Green Issue
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Editor’s Note
It’s not that easy being green … or is it? I never thought that one day I would be quoting a member of the Muppets to get my message across. But after reading this issue’s Marketing column by Carissa Drohan-Jennings and seeing how she playfully mingled Kermit the Frog’s famous “It’s not that easy being green” into her column, I realized that perhaps Kermit - and Carissa - had a point. Indeed, it is not that easy being green. Any company can claim to be green and many do give sustainability lip service to appear that they have the environment in mind, but often it amounts to nothing more than “greenwashing.” Being green takes time. It takes a plan. It takes a commitment from the entire organization. This issue of Canadian Apartment Magazine takes on the issue of being green and addresses the various ways in which a company can become more sustainable. Finance columnists Peter Cook and Robert Fleet encourage the use of an energy consultant and outline the incentive programs which are offered by the CMHC and designed to aid a building owner when embarking on the green path. They conclude that “by greening your building and making it energy efficient, you will save money in the long term. In a competitive market, the word ‘green’ may also be the deciding factor for eco savvy tenants.” Many multi-residential firms have taken great steps to make their units more energy-efficient. From retrofitting their buildings with energy efficient windows, lighting and plumbing to introducing green measures such as recycling programs, these companies have embraced the environment. The feature article profiles Western Canada’s Mainstreet Equity Corp. whose colourful founder Bob Dhillion claims was “green before green was popular” and documents the meteoric rise of the company. Meanwhile, the aforementioned Marketing column provides the dos and don’ts of a green marketing plan to help landlords promote their eco-friendly initiatives to skeptical renters. And she offers up a warning that should be heeded when touting your program. “It’s often tempting for a company to adopt the ‘green’ label for their units, but there should be some form of restraint taken prior to making such a claim, for it is important to ensure that the claim adheres to the laws set forth by the competition bureau.” With all due respect to Kermit, it may not be easy to be green, but it is possible. Scott Anderson
Quoteworthy “We are betting on commodities, we are betting on in-migration, we are betting on growth. You don’t have to be the sharpest pencil in the box to make money in apartments” – Bob Dhillon, founder Mainstreet Equity
Publisher
I an 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, Derek Lobo, Robert Fleet, Paula Gasparro, Carissa DrohanJennings, Andy Schwartze Lina Trunina
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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, $50* 2 years, $90* US $75 International $100 Single Copy Sales: Canada: $12* * 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
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contents Cover Story 14
Taming the Wild, West West
columns 8
By Peter Cook and Robert Fleet
Mainstreet Equity Corp. By: Scott Anderson
Finance Financing your green initiatives
12
CMHC Maximize your investment with CMHC-Multiple insurance By Paula Gasparro
22
Insurance Costa Concordia – What a mess! By Andy Schwartze
25
Maintenance Are electricity suite meters worth the investment? By Christopher Seepe
28
ortfolio strategy Co-brokering is about scaling your business P for the future By Derek Lobo
32
Marketing Green marketing – It’s not that easy being green By Carissa Drohan-Jennings
Departments 4
Editor’s Note
36
Newsline
37
New Products
38
Smart Ideas
Columnists Peter Cook, Robert Fleet, Carissa Drohan-Jennings, Paula Gasparro, Derek Lobo, Andy Schwartze
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Finance
Financing your greening initiatives 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
Over the last decade, the real-estate market has been adapting to a progressively “green” global attitude. Some of the biggest players in the industry are opting for energy efficiency, sustainability, and eco-friendly alternatives. Unfortunately, many apartment owners are still associating these words with complexity, confusion and extra costs. They’re not sure how to get started, what retrofits would best benefit their buildings and how quickly will they see a return on their investment? With assistance of a qualified energy consultant and the recent improvements to Canada Mortgage and Housing Corp.’s (CMHC) energy efficiency program, going “green” might actually be easier than it seems. So, you ask, is it really worth the effort and investment? Absolutely! Program details CMHC has had an energy efficiency program in place for a number of years. Recently CMHC decided to expand the program features further. The premise of the program has remained the same. Landlords will receive higher loan amounts and premium rebates subject to completing energy efficient upgrades relating to hydro, water, and gas consumption. The new program has been improved increasing the maximum amount of CMHC’s premium rebate from 10 per cent to 15 per cent. The new program also allows for greater flexibility in the underwriting providing higher property valuations and loan amounts. Table 1 Program features Premium rebate Required reduction amount Utilities Max. valuation consideration When can I make improvements?
8 www.canadianapartmentmagazine.ca
Old program 10% (maximum) 10% (minimum) Hydro, Gas 10% reduction of hydro and gas 12 months prior to advance & 12 months after advance
New program 1-15% 1-15% Hydro, Gas, Water 15% reduction of all utilities 12 months prior to advance & 12 months after advance
CMHC insurance premium savings The previous program required a minimum energy savings of 10 per cent to obtain a 10 per cent reduction in the CMHC premium. The revised program will allow borrowers to obtain a
Finance
premium rebate ranging from 1 per cent to 15 per cent depending on the energy savings projected for their building. CMHC will require a report from a qualified consultant detailing the necessary energy efficient improvements as well as the estimated percentage of savings once the retrofits have been implemented. If the improvements are completed 12 months prior to the loan advance the borrower will receive the premium reduction at the time of funding. If the improvements are completed within 12 months after the funding date, the premium will be rebated once CMHC receives a second report from the consultant confirming the recommended retrofits have been completed. Maximize loan amount: Improved underwriting flexibility on CMHC insured loans Further incentive to go green is CMHC’s recognition of up to 15 per cent in future utility savings during the valuation process. CMHC will reduce the historical utility expenses by the percentage of overall savings confirmed in the energy consultant’s report. With the report, CMHC will accept a higher value and approve a larger loan amount up to 85 per cent of the new lending value. If the retrofit work is completed post funding, the additional loan amount recognized by the reduction in utility savings will be held back from the initial loan advance. The funds will be released upon CMHC receiving the post report from the consultant confirming the retrofit items have been completed. How does the program work? To estimate the increased lending value and determine the amount of the premium rebate, lenders must provide the consultant’s energy report at the time of submitting the loan application to CMHC. The process involves a three- to four-hour site visit and the consultant’s review of 12 months to 24 months of utility bills. With this information the consultant can determine the expected utility savings for the project. The report takes approximately two weeks to complete. The cost of the audit report will vary amongst consulting firms. The estimated costs should fall into the ranges identified in Table 2 below. Table 2: Estimated audit report cost Units Cost (approx.) 0-25 units $1,100-$1,800 25-50 units $1,500 – $2,500 50-75 units $2,000 – $3,000 100+ units $2,500 +
“
By greening your building and making it energy efficient, you will save money in the long term. In a competitive market, the word green may also be the deciding factor for eco-savvy tenants”
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.
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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
March 2012 9 AD Redesign Half Page Island 2011 Jan 012.indd 1
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Finance
CARMA_CondoBusiness_01-19-2009_CS2--F.pdf
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According to energy consultant Steve Herzog of Greener Solutions Inc., (www.greensolutions.ca) by completing the recommended improvements owners can realize a decrease in utility costs anywhere from 10 per cent to 30 per cent. Some older buildings can realize a savings as high as 50 per cent. Herzog explains, “Owners will receive a detailed report providing an understanding of how electricity, natural gas, and water are currently being used in their buildings. The report may also identify waste management savings, as well as insights into future maintenance suggestions. Energy reports are extremely important for running your building at optimal efficiency levels.” Greener Solutions is also aware of a variety of provincial and municipal rebate programs and will take care of the application process for their clients. Here is a list of some possible improvements and their estimated return on investment. See Table 3 below. Table 3 Estimated return on investment Windows 3-8 years Variable speed fans 1-2 years Toilets/shower heads 1-2 years Replace lighting 1-2 years Replace boilers 3-7 years Thermostatic controls 2 years Defective taps 1-4 years Seal cracks in exterior walls 6-10 years
10 www.canadianapartmentmagazine.ca 11002_Carma_2011.indd 1
So, is it all worth it? Absolutely! Greening your building is truly a winwin investment. With the professional guidance of an energy consultant, owners not only reduce their energy consumption, they will receive higher loan proceeds and a CMHC premium rebate to offset a portion of their implementation costs. By greening your building and making it energy efficient, you will save money in the long term. In a competitive market, the word green may also be the deciding factor for eco-savvy tenants. With CMHC interest rates at all-time lows more and more clients are taking advantage of the CMHC energy audit program to finance their greening initiatives.
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CMHC
Maximize your investment with CMHC Multiple insurance 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.
CMHC Mortgage Loan Insurance for multi-unit properties (five-plus units): If you’re looking to maximize your return on an investment property, Canada Mortgage and Housing Corp. can help you achieve that goal. CMHC is Canada’s provider of mortgage loan insurance for the construction, purchase and refinancing of multi-unit residential properties, including rental buildings, licensed care facilities and retirement homes. It provides borrowers with greater choice and financing options. Borrowers can obtain mortgage funding from CMHC at lower interest rates than might otherwise be required for conventional mortgage financing, and receive increased lending of up to 85 per cent of the multi-unit property’s value. CMHC’s Mortgage Loan Insurance for multi-unit buildings allows investors to purchase a property with a lower down payment – as little as 15 per cent for buildings with five or more units. By offering the lower rate and providing a lower down payment, a CMHC-insured mortgage loan allows borrowers to maximize their return on investment sooner. The CMHC Mortgage Loan Insurance for multi-unit buildings is broken down into the following areas. Following are a few basic provisions, guidelines and requirements: Rental, licensed care and retirement facilities: CMHC mortgage loan insurance is available to approved lenders for loans to construct, purchase or refinance, with or without improvements, rental, licensed care and retirement facilities in Canada. First and second mortgages are available. The loan relating to residential property may not exceed 85 per cent of the lending value, as determined by CMHC. The loan relating to any non-residential components of the building may not exceed 75 per cent of the lending value attributed to the non-residential component, as determined by CMHC.
Go online for more finance articles
www.canadianapartmentmagazine.ca 12 www.canadianapartmentmagazine.ca
CMHC-insured condominium construction mortgages: First mortgages are available for the construction of new condominium buildings in Canada. The maximum insurable mortgage loan amount is the lesser of 75 per cent of estimated market value or 85 per cent of the estimated total cost to complete. Requirements for any of these loans are discretionary and, on a case-by-case basis, CMHC may need additional documentation or may impose more restrictive underwriting norms than those listed in CMHC materials or the website. Flexible repayment terms are available, including extended amortizations, and fixed or floating interest rates. There is also an option for rolling application fees and insurance premiums into the mortgage loan.
CMHC
“
By offering the lower rate and providing a lower down payment, a CMHC-insured mortgage loan allows borrowers to maximize their return on investment sooner”
The fees and premiums pay for themselves – generally they are substantially offset by the savings from lower interest rates. There are even enhanced underwriting flexibilities available in support of affordable housing and energyefficiency initiatives. Affordable housing: Among the general conditions are enhanced underwriting flexibilities for new additions to affordable rental housing stock, including new construction, conversion from non-residential to residential and replacement of affordable units as a result of demolition. Also, units must be modest in size, design and amenities in relation to other rental units in the market. The project must have a minimum of five units. Energy-efficiency: When energy efficiency improvements are being undertaken, CMHC multi-unit insured financing for new construction, refinance or purchase is available. To qualify for the CMHC energy-efficient premium reduction/refund, borrowers are to submit the required documentation to the approved lender within one year after the loan has been finalized. When retrofit improvements have been completed within a 12-month period prior to the current mortgage loan advance, the borrower will have the opportunity to demonstrate a reduction in energy consumption and qualify for the CMHC energy-efficient reduction/ refund. Borrowers are to provide evidence that the improvements have been made within the last year through capital investment reports. CMHC will continue to include the anticipated lower energy costs when calculating net operating income to determine property lending value. To take advantage of CMHC’s Mortgage Loan Insurance, contact Paula Gasparro, Manager, Business Development, Multi-Unit Mortgage Insurance at 416250-2731 or via e-mail at pgasparr@cmhc.ca.
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For more information, log on to www. cmhc.ca/mult-unit. March 2012 13 Untitled-6 1
12-01-12 1:24 PM
Cover Story
Taming the Wild,
Wild West
one building at a time By Scott Anderson
There’s another Dhillon in town and he’s also making a mark on the Wild, Wild West. Just like Marshall Matt Dillon from the fictional series “Gunsmoke”, Mainstreet EquityCorp.’s founder and largest shareholder Bob Dhillon is also striving to make a name for himself in the West – that being the real estate market of Western Canada.
March 2012 15
Cover Story
Westview Terrace - Calgary, Alberta
Boutique apartments, Montrose Manor – Saskatoon, Saskatchewan
“I will go wherever the money is. I will go to Timbuktu if I have to to make a buck, but commonsense is if you are an amateur economist like me is that the West has a lot of things to offer,” he said. What Calgary-based Dhillon saw in Western Canada – where his family moved from Asia some 30 years ago – was a booming economy, in-migration, burgeoning job growth, a favourable landlord tenancy act, and lowest unit count per capita based on CMHC data. Encouraged by the so-called “petro dollars” and the benefits of resource-based jobs in Saskatchewan and Alberta, Dhillon sees endless potential in Western Canada unlike the limited opportunities of central Canada where influential families and institutional money control the market. “Western Canada is the Wild West. It is a closed shop. In Toronto there are a lot of rich families; third generation and fourth generation. How is a punk like me going to break into that market? Instead, I have created my own niche and my own opportunities.” This niche is mid-market apartment buildings with less than 100 units in areas of Western Canada where the economy is booming, jobs are plentiful and 90 per cent of the apartment universe is mid-market. “We are betting on commodities, we are betting on in-migration, we are betting on growth,” he said. “You don’t have to be the sharpest pencil in the box to make money in apartments.” These bets have helped Dhillon and Mainstreet, which he founded in 1998 and took public on the Toronto Stock Exchange eleven years ago, to become the No. 10 top gaining stock on the TSX in 2011. This is an impressive feat indeed considering resource stocks were the only game for many years on Canada’s dominant stock index. “The ‘Blue Sky stocks’ consisting of the mineral companies and oil companies are shooting out of the park and then you have this crazy real estate company in Western Canada that is competing with these oil and mining companies with Blue Sky returns from all over,” Dhillon said of his company’s meteoric run up the equity charts. A look at the financials from 2011 tells the tale of the incredible growth for Mainstreet. Funds from operations (FFO) before financing were up 47 per cent from 2010. FFO including financing costs was up 44 per cent from 2010.
“
I will go wherever the money is. I will go to Timbuktu if I have to to make a buck, but commonsense is if you are an amateur economist like me is that the West has a lot of things to offer”
16 www.canadianapartmentmagazine.ca
- Bob Dhillon, founder Mainstreet Equity
Cover Story
Vintage Squared - Calgary, Alberta (renovation materials direct from manufacturer in China)
Net operating income (NOI) climbed 23 per cent from 2010 to $41 million, while same asset NOI increased by 11 per cent. Mainstreet’s assets also grew in 2011 adding almost 950 residential apartment units – representing a growth in portfolio of 15 per cent - in its core geographic locations. Mainstreet’s total portfolio now includes almost 7,800 residential apartment units valued at more than$950 million. The growth in 2011 – some $120 million of acquisitions in total – was achieved with no equity dilution. Instead, it funded this organic growth through cash flow, refinancing matured mortgages and financing properties after stabilization. “We grew this company all through internal cash flow. Every time we buy a building, we don’t go back to the market and raise $20 million or $50 million to buy real estate. We are doing it all through internal generated cash flow,” Dhillon said. “We built the company from zero to a billion dollars with limited equity dilution. How many guys have done that ever in the history of real estate? Zero to a billion without going to the market. That is a testament to a business model working.” “Regardless of the market conditions we keep going to the market and buying buildings through internally generated cash flow.” Humble beginnings From zero to an almost billion-dollar company is impressive, but even more so when you trace the path that its founder who was born in Japan with Sikh roots took to get to where he is today. “Real estate was part of my DNA because I came from a real estate background although I’m an immigrant to Canada. My religion was capitalism and as an immigrant that was part of my DNA to be successful here at any cost,” he said. Real estate is the only game Dhillon has known over the years - he started flipping houses when he was about 19 years old and has never looked back. “I fixed up two houses, sold them for a profit and that was the beginning of my career in residential estate,” he said “Right through MBA school I paid by flipping real estate, adding value to real estate, buying real estate, holding real estate, cash flow in real estate paid for my schooling and right through my MBA.” During the process when he was flipping real estate, he accumulated 272 units. “It was like inventory for a merchant.” And with a bit of swagger he jumped wide-eyed and fearless into the deep end of the real estate shark tank early in the new millennium. “For all the wrong reasons I took those 272 units and went public with it. March 2012 17
Cover Story
Strategic investing (Cluster: 63 properties / 1,614 units) – Edmonton Central and NAIT
“
The beautiful thing about social media is it is in its infancy for business. It is a wide open field and there is no real endgame. You have never arrived…” - Michael Birklein, Mainstreet’s director of marketing and communications
The day I got listed on the Junior Capital Pool, the day I got listed is the day the real estate index crashed. The day! Literally the day!” But the hard and cruel lesson of the business world did not end there. Fast forward a few months and the tech bubble blew up on Nasdaq bringing in the recession. This also ushered in a new phenomenon, in the form of Real Estate Investment Trusts (REITS), largely a “unique phenomenon” in Canada. “These financial engineers came to the scene with a different matrix, a different formula, endless capital, so they weren’t negotiating as hard as I would or some of the old time real estate guys would. It was more of a game of consolidation. It was more of a game accretive to their financial model and not as accretive to the market place. It was more accretive to their cost of capital. They were buyers from Mars. It was a totally, totally different time, which we never anticipated.” “I was up against the REITS on acquiring assets who had a lower cost of capital. So everything possible that could have gone wrong went wrong. The real estate index crash. The tech bubble blew up and the REITS came on the scene that were from a different planet. They were gobbling up everything on a different matrix than I was used to.” But instead of folding up his tent and going home, Dhillon dug in his heels and decided to carve out a niche for himself in an area that would be unaffected by the REITs. “We rolled up our sleeves. I knew we couldn’t raise any capital in the marketplace because capital markets were tough and I wasn’t a REIT and I was the only non-dividend paying, non-REIT on the multi-family real estate index. I still am.” Instead, he saw a niche in Western Canada in mid-market, add-value opportunities and developed the Mainstreet Value Chain. Mainstreet scours the market for smaller buildings with less than 100 units that generally need work. These units are typically avoided by both the institutions and REITS who do not have the time, the patience, or systems in place for the mid-market. It acquires the underperforming assets, renovates them to a higher standard and retrofits them with energy-efficient features to further lock-in savings. It then repositions them in the market at a higher rent. Mainstreet’s platforms are British Columbia’s lower mainland, Edmonton, Calgary, and Saskatoon. In these geographic areas some 80 per cent of the landscape is midmarket, which kept the REITS away. “I created this unique niche for myself that I couldn’t compete with the low-cost of capital of the REITs which stayed away from the geographic platform of Western Canada, and generally they didn’t want to buy buildings that needed a lot of work,” he said. Although each of these areas have slightly different appeals for Dhillon and Mainstreet, he said all boast common and attractive similarities. These include a landlord tenancy act that enables landlords to dictate the rental price depending on the market, strong in-migration numbers as job seekers flock to the West in search of jobs, and low Canada Mortgage and Housing Corporation rates. The company’s success can be attributed to its “Six pillars” which it has built over the years and has allowed it to fly under the radar of the institutions and is unseen or unattainable by competing ‘mom and pop’ operations. • Acquire underperforming assets at attractive prices • Limited to no competition from REITs and pension funds in the mid-market sector • Internalized construction capabilities • Renovation supplies direct from manufacturers in China • Internalized operations platform • Internalized marketing and effective branding “We have developed six pillars within Mainstreet that are not easy to replicate unless you have lots of resources,” he said.”
18 www.canadianapartmentmagazine.ca
The cluster effect Key to Mainstreet’s success in each of the geographic areas is its concentration. The company looks to maximize efficiencies and achieve economies of scale through the clustering of assets.
Cover Story By clustering its properties within a fiveblock radius, the company has been able to reduce human resource costs by retaining fewer superintendents, reduce property maintenance costs, increase margins consistently and reduce advertising expenses. And by concentrating on certain areas, the company believes that the entire area benefits from the attention. “We don’t only transform the building, we are transforming the neighbourhood,” Dhillon said. (watch video at www.mainst.biz) One needs to look no further than Edmonton to see proof of the success of this “strategic investing.” Mindful that the city was mulling development of the inner core including a new sports arena, significant expansion of Grant McEwan University, a proposed light rail transit line, and a new plan for the city centre airport, the company began gobbling up apartment buildings in the area. In the process it accumulated 63 properties with some 1,600 units in the area. (Please refer to map on page 18) “We looked at all of the plans and all of the factors and said if half the things didn’t go ahead, we would be ahead. But you know what all of them went ahead. You can call it luck, or you can call it strategy,” Dhillon said.
Key to the company’s success is also its effort to internalize many of its services and costs. From renovations to marketing and branding, the company has brought in house the work in a bid to shave costs. “We are continually developing pillars within our organization that are going to be very hard for a startup company to replicate,” Dhillon said. “Everything we developed and internalized. We internalized our operations. We internalized our construction, our advertising, our communications, nothing is outsourced. We can proudly say that we have one of the best margins in the marketplace because of that.” Dhillon also notes that mid-market properties don’t have the structural operating fixed costs to contend with, such as: building amenities, elevators, and underground parking. A unique scheme sees the company sourcing a portion of its building supplies direct from manufacturers in China. By purchasing materials such as cabinets, wood laminate flooring and lighting it has cut its capital expenditures tremendously. This has resulted in a 60 per cent reduction in the cost of cabinets and a 200 per cent decrease in flooring tiles. Building the brand Clustering also allows the company to develop its brand by maintaining a heightened presence in the communities. “We are really pushing and we have got a long ways to go yet, but we are trying to create a brand for mid-market space, because this brand is totally obsolete. Nobody has a brand yet developed for the mid-market space,” Dhillon said. Social media and the associated technologies will play a huge part in branding for Mainstreet. Through the use of vehicles such as Twitter, YouTube and various smartphone applications, the company is looking to take advantage of society’s reliance on all things electronic. “The beautiful thing about social media is it is in its infancy for business. It is a wide open field and there is no real endgame. You have never arrived. You can get in there and do interesting things,
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12-03-12 2:34 PM
Cover Story but there are always ways that it is going to change - how you are using and who you are contacting. It is a really exciting area,” said Michael Birklein, the company’s director of marketing and communications. A recent push to move its advertising online saw the company slash its advertising budget by 75 percent, resulting in an increase in inquiries and coinciding with a drop in vacancy rates. By using the popular Internet site YouTube the company has expanded tremendously its advertising content. Under traditional print advertising methods it was limited to a few words and a picture, but now you can go online and post multiple digital assets and actually engage the viewer. “It is a natural fit and people expect it,” said Birklein. “If you look at our demographic it is the younger set anyway.” He notes that the company’s YouTube postings receive on average 180 viewings per day. “To me that is 180 showings that aren’t on the book. The more video we produce, the more it is going to explode.” The company is also eyeing the use of quick response (QR) codes on its buildings. These barcodes give potential tenants the ability to scan them for an instant link to video and other information. “It is giving them another access point,” said Birklein. “They can drop by anytime and not have to wait for somebody to show them a suite. They can actually watch a video of it right there.” The company is also eyeing social media to communicate with its existing tenants with the use of tools such as Twitter and Facebook to communicate. “Twitter is a really good source of tenant retention. It is a touch point for them. They will use Facebook and Twitter if they have an issue,” he said. “You can really turn a situation around. When things are going well people don’t generally talk to you, but when they have an issue they will talk to you. If you are responding to them and dealing with them then they are happy. You can turn a situation around pretty quick.”
“
Real estate was part of my DNA…My religion was capitalism and as an immigrant that was part of my DNA to be successful here at any cost” - Bob Dhillon
20 www.canadianapartmentmagazine.ca
A perfect storm Dhillon sees a perfect storm brewing for the company in 2012 as the ongoing economic strength in its core Western Canadian markets and favourable macro-economic conditions like low interest rates - expected to remain at 60-year lows - and a new accounting standard benefit real estate companies like Mainstreet. Mainstreet, like other real estate companies, is preparing for the adoption of International Financial Reporting Standards (IFRS) for the 2012 fiscal year. For the first time the market value of a company’s assets will be reported on its balance sheet and will more accurately reflect the shareholder value. “We are value creators in the mid-market apartment business, for the first time the value that we have created will be reflected in the new accounting standards, which in turn validates our business model,” said Dhillon. The best strategic move was the share buyback as reported in the 2009 annual report when the company repurchased some 4.1 million shares representing 28.5 per cent of the float at an average share price of $6.35 – the stock at the time of this article is in the $23 range. Forecasts suggest that Western Canada, where more than 90 per cent of Mainstreet’s portfolio is situated, will also continue to thrive. Commodity prices show promise with oil prices projected to average $95.75 per barrel in 2013/14 and billions of dollars in private sector investment is seen flowing into Alberta’s energy sector. Demographic trends also tilt in Mainstreet’s favour with in-migration set to continue to flourish in Alberta on the back of another energy sector boom. Migration to B.C. and Saskatchewan is also not expected to slow. Landlord-friendly tenancy acts will allow Mainstreet to raise rents as market conditions allow. All these factors point to a bright future for Dhillon. “I learned early in the game that you have to continue to swing every day and occasionally you will hit a home run. You are going to hit a lot of singles on the way and occasionally you are going to strike out,” he said. “The bases are loaded right now. I am up to bat and I think the pitcher is sending me the perfect ball - where am I going to hit it?.”
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Insurance
Costa Concordia – What a mess! 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.
22 www.canadianapartmentmagazine.ca
Who could not have witnessed the unfolding of one of the most bizarre marine accidents in recent memory in the media? If it were not such a tragic occurrence this event would be comical and, without a doubt, fodder for every sharp witted comedian out there. For the management of one of the largest cruise ships, plying the blue waters of planet Earth, to have even risked getting so close to a land form is unthinkable. For the management to then get off the ship and pretend to be handling the evacuation from the comforts of a bobbing lifeboat is even more unbelievable. This disaster brings to mind an event that took place on Nov. 23, 2007 and which ended on a much happier note. Doing its usual adventure cruise to the Antarctic Peninsula, apparently under the command of a new captain, the MS Explorer, a small Canadian owned and Norwegian flagged cruise ship, hit some ice and went down near the South Shetland Islands. The entire passenger group and crew (approximately 150 people) found their way to the lifeboats and were rescued roughly five hours later. This vessel too ultimately wound up on its side prior to sinking. The unfortunate event happened on the same voyage that one of my sons and I had taken, on this ship, earlier that
Insurance
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Estimating the impact on the insurance world is tricky, but insurers have to set money aside. They are statutorily obligated to do so”
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On the financial side of world insurance news, it looks like 2011 will have turned out to be the second worst year on record for economic losses resulting from natural catastrophes”
year. The manner in which the ship was evacuated was lauded by experts. The Antarctic waters, even in mid-summer (being the end of December) rarely rise above 36 degrees Fahrenheit. It is very hard to guess what will be the final financial result in the case of the Costa Concordia. This has already put the captain in danger of being charged with a capital crime, one that can result in a stint as a featured guest in one of Italy’s penal institutions. That can then trigger an avalanche of civil actions against the cruise line; clearly the estates of those unfortunate souls that died having significant leverage to work with. Those who survived have already been offered compensation and, as is always to be expected, some will take it and others will opt to go for more. Estimating the impact on the insurance world is tricky, but insurers have to set money aside. They are statutorily obligated to do so. Most of the world’s cruise ships, and their operations, are insured by what are known as “P&I Clubs”. These are groups of pooled insurers (no doubt with Lloyd’s being a big part) that have been primarily set up in Belgium for this very purpose. Unlike conventional insurance sources, they operate more as low profit fraternities. When they need money, their “premiums” are adjusted; much as the real estate world deals with its issues via the cash call. Early indications point to settlement reserves that need to be set aside, which range from between $500 million to a not insignificant $1 billion. Interesting is the fact that most cruise lines carry large deductibles. Carnival, the apparent owner of this vessel, allegedly carries deductibles in the $25 million area, perhaps as much as $40 million. At the end of January, a $460-million class action suit had already been filed in a Florida court. The hit that Carnival’s balance sheet will take is far from clear; but there’s more to the story. This vessel was carrying 500,000 tons of heavy fuel in its tanks. Sitting on rocks that are right by the harbour mouth of Giglio Island, any errors in retrieving that fuel will have an unimaginable impact on the local waters and shorelines. This fuel doesn’t have to go very far. Should foul weather shift the wreck, which as of this writing could still slip into deeper waters, the recovery challenge would grow exponentially. On the financial side of world insurance news, it looks like 2011 will have turned out to be the second worst year on record for economic losses resulting from natural catastrophes. The year 2005 appears to have been the worst. Of last year’s estimated $350 billion in losses, most of which stemmed from the Japan earthquake, the insured portion amounts to
less than one-third. Earthquake insurance is still not universally offered and thus the property loss portion was to a large extent uninsured. One can only imagine the premium levels in areas where the risk is real. Not yet clear, of course, is the inevitable impact that will be felt on North American west coasts when the debris finally arrives. Certainly the satellite images are disturbing. Mother Nature never ceases to remind us who is really in charge. I cannot wrap this up without a quick comment on what insurers are thinking for the year 2012. This year is beginning to look like it will be a “swing” year. At such times, we typically see a few new insurers getting into unfamiliar territory. The mild winter has certainly reduced the water and slip/fall events that apartment building owners are all too familiar with. This will entice a few novice underwriters to enter the rental realty insurance arena. Experience shows us these entrants tend to abandon ship as soon as their loss ratios go bad. After all, this winter will be followed by next and it will, no doubt, be back to what is normal for this time of year. Insurance rates for revenue producing buildings have basically remained at stable levels for 30 years. Claims treatment, on the other hand, can be all over the map. So, be careful and remember that, if it seems too good to be true, it probably is.
March 2012 23 Untitled-1 1
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Maintenance
Are electricity suite meters worth the investment? Christopher Seepe is a commercial realtor at The Behar Group Realty and maintains www. multiresidentialexpert.com, a website dedicated to providing expert advice and sharing his personal investment and ownership experiences to those investing, or looking to invest, in multi-unit residential properties in southern Ontario, Canada. You can contact him at cseepe@thebehargroup.com
Suite metering, sometimes called sub-metering, is where the energy consumption, rated in kilowatt-hours (KwHr), of each tenant is monitored by a separate meter. In most cases, a sub-metered tenant is responsible for paying their own utility costs, and is empowered with energy use feedback so that they can manage their energy consumption. How many property owners have driven past their investment property in the mindnumbing cold days of February and seen tenants with their windows and/or a balcony door wide open and the heat in their apartment cranked up to the max? Energy costs continue to increase, sometimes exponentially, and especially electricity. Time-of-use pricing has added to the energy consumption costs of the building. The 13 per cent HST levied on energy services, which cannot be passed on to the tenant, had a huge impact on landlords, often causing landlords to compromise on the quality of service that was previously provided to the tenants as well as to the general maintenance of the property. The coup de grace was delivered in 2011 with the government’s 0.7 per cent maximum rent increase. Landlords have been reeling from the devastating impact of these green movement and economic/social policies and reforms. Before the scares of energy shortages in the early 1980s, many apartment buildings were designed with a single meter, generally called a bulk meter. The landlord either factored the utility costs into the rent, or prorated the single bill among all the tenants. In the former case, landlords wound up absorbing rising energy costs since rent controls and the Residential Tenancies Act (RTA) in Ontario prevented, and still prevents, landlord/ owners from passing on increased utility expenses to tenants, except in an extreme situation. In the latter case, a single retiree could be paying the same utility as a five-member family. In all cases, there was inequity. However, the escalating costs of utilities, especially electricity, combined with the rapid growth in energy conservation awareness, have fueled all kinds of incentive programs and cost-cutting measures. Unfortunately, like many new initiatives from government March 2012 25
Maintenance authorities, there are some implementation challenges and pains that have arisen between government agencies like the Ontario Energy Board and conservation authorities, who are driven by certain mandates and ideologies that do not always take into consideration the practical business costs of implementing such programs, versus the utility companies that manage the end-user relationships, provide the actual service of energy delivering, and carry the mandate of finding practical business approaches to implementing a government’s mandates and policies. Consider an average 11-plex that is converted from one bulk meter to 12 individual meters (11 suites + 1 house meter). Instead of one bill to the landlord, who is a very low-risk client that always pays their bill, and most likely on time. Individual metering now requires the utility company to install 12 new meters (but not the infrastructure, to be discussed further below), create 12 separate business accounts, check credit references, sometimes collect and be accountable for deposits, bill each person separately every month or two, collect and process 12 separate payments, provide individual support and maintenance for each new account, and take on a notable relative increase in the risk of payment delays and defaults. Until utility companies are legislated to take on this extra administrative and operational burden, there is little incentive for them to incur these additional costs for virtually no directly-correlated profit. Nevertheless, in Ontario, these issues are being worked out and progress is being made. It took me about six months to have the issues addressed with my utility provider, but once the challenges were resolved, the utility company was ready to do the conversion within a couple of days’ notice and a small application form that was completed by the meter installer/electrician. Not all utility companies and certainly not all situations would have the same types of challenges. You may be pleasantly surprised by the quick response and painless process of suite meter conversion. Now, having provided caveats regarding cooperation of the utility companies, there remains the issue of “converting” tenants. If a landlord installs a suite meter, a tenant does not have to start paying their own utility costs. An existing tenant must be empowered by the landlord to make an informed decision about how they are charged for electricity. The process is arduous - no surprise there - and, if the tenant consents, the landlord must lower the rent according to a prescribed formula. Currently, my tenants do not enjoy the creature comfort of an air conditioner or freezer. I tried to entice them to add these amenities. None of my 11 tenants took the offer and frankly, if I was a tenant, I probably wouldn’t either. There’s little upside for the tenant. If they’re already frugal energy users, the rent decrease is hardly compelling. Also, make certain you notify tenants in writing of the conversion. Prepare them for a full day’s power outage. Keep refrigerator/freezer doors closed and don’t buy food on that day. Let them know that the landlord will not be responsible for food spoilage. After installation, likely, the best time for you to make the billing conversion is when an existing tenant moves out. The Residential Tenancies Act (RTA) is structured such that you can negotiate any new terms you like in your new rental agreement, provided it does not “contract out” existing legislation, for example, no pets allowed. This is one of those rare conflict-of-interest situations where you hope that your tenants will move out so that you can start billing electricity separately and recover some of the lost profit from the financial hammering the government has been doling out to landlords. While I was waiting to sort out the municipal issues regarding the installation of suite meters, I changed my monthly (I never do one-year) 26 www.canadianapartmentmagazine.ca
rental agreement to indicate that the unit would eventually have a separate utility meter, and that when the installation took place, the tenant agrees to immediately contact the utility company to pay their own utility bill. Between the time I made that contract change and the time the meters first became operational, I had three tenants move out, and were replaced by three tenants who now pay their own electricity bill. So, despite the potential long tenant-turnover timeframe, here’s why you should still do it. From a return on investment and return of investment perspective, it could possibly be the best investment you’ll ever make in your property. In my case, when I purchased the building, all 11 tenants had their electricity costs included in their rent. The electricity bill was about $14,000 per year. Once I had the go ahead from the utility company, I obtained six quotes for installation. Prices ranged from $10,000 to $28,000. I learned from several independent sources that I should be looking at about $1,000 to $1,100 per meter installed. This cost does not include the actual meter; only the wiring, back plates, wall mounts and other assorted infrastructure requirements. The utility company will install the actual meters. Every utility company has a different cost recovery policy. In my case, my utility company provided all the meters themselves for free (which it should) and charged me a one-time $50 fee for each installed meter above the first four (three apartments + the house meter). They also charge a one-time fee of $30 for each tenant that is transferred from your bill to the tenant’s own bill. The tenant would pay this service fee. The business case (roughly speaking): • Total invoice, including HST = $11,550 to install 11 suite meters plus a house meter (about $960/meter installed) • Average annual electricity bill = $14,000 • Cost reduction strategic objective: convert eight of 11 units (73 per cent) within three years to having tenants pay their own electricity bills • Cost reduction financial objective: = $14,000 x 73 per cent = $10,220 • Multi-residential investment properties are currently selling at between a five per cent and six per cent capitalization rate • $10,220 / five per cent (cap rate) = $204,400 or $10,220 / six per cent (cap rate) = $170,330 I didn’t factor in/out the common area costs, just to keep the premise of the business case simple. The financial result is substantial any way you slice it. Business case summary There’s more to determining the total return on the value of the investment but, in the simple math above, adding between $170,000 and $204,000 to the value of your property for an investment of $14,000 should be a pretty obvious inducement if you have the upfront $14,000 to do it. Energy management I now also have a very useful record of the energy consumption of every unit. I created a meter record sheet to record all the individual kilowatthours, and created a spreadsheet that not only tracks usage on a per unit basis but also automatically colour-codes every unit to instantly identify the heavy users relative to total consumption of the building.
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Portfolio Strategy
Co-brokering is about scaling your business for the future 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.
28 www.canadianapartmentmagazine.ca
Portfolio Strategy
A lot of the green revolution that’s sweeping our industry lately has been about efficiency. How do we heat and power our buildings using less energy? How do we build using more recycled materials? How do we design to use the most floor space in the smallest footprint? While efficient thinking takes a lot of effort, it pays off directly on our bottom line. Realtors looking to grow their business face similar concerns about growing efficiently. They entered this business because they wanted to sell real estate, but it seems that if they want to sell more real estate, other things get in the way. There’s the paperwork. There’s the need to be up-to-date on the governmental regulations and legislation. Very quickly, realtors need to hire support staff to help, but that also is a drain on their time, having to market for, interview, hire and train new people to work for them. This is a problem for many brokers seeking to grow. When our companies are small, they don’t scale up well. If only there was a way that one could purchase the services and personnel one needed quickly to give just the assistance that was needed, without the cost and trouble of hiring one’s own support staff. Well, such an option does exist. It’s called co-brokerage. A company offering co-brokerage services has gone through that growth period, has hired support staff and provided the training. It now seeks to monetize its back rooms by offering its research and analysis skills to other brokers willing to work with them. By partnering with a co-broker, an up-and-coming realtor benefits from the cobroker’s experience in the industry, as well as the skills and infrastructure in its back room. The co-broker shares in the realtor’s successes as the realtor focuses on selling his or her properties. This arrangement allows mid-market realtors to compete directly with much larger companies for bigger deals, building their reputations within the wider brokerage community. Some realtors may be wary of taking up the services of a co-broker and sharing their deals with such a company. That’s understandable. There’s always a certain amount of uncertainty when it comes to sharing such business arrangements, but the rewards are tremendous. If you have an active co-brokerage arrangement, you’re not only paying for backroom services but you’re likely to obtain similar deals in your area from your partner, which would not have come your way and earned you commissions. Moreover, the realtor can limit his or her risk in this arrangement by keeping a few rules in mind when establishing a relationship with a co-broker. Remember that a co-broker’s role is to support the realtor in selling his or her buildings. They are obliged to stay out of the personal client/broker relationships that the realtor has established in his or her sales process. A co-broker will not contact your client without first clearing the interaction with you. The contract should state this clearly. March 2012 29
Portfolio Strategy
Co-brokering benefits: By partnering with a co-broker, an up-andcoming realtor benefits from the co-broker’s experience in the industry With an active co-brokerage arrangement, you’re not only paying for backroom services but you’re likely to obtain similar deals in your area from your partner A co-broker’s role is to support the realtor in selling his or her buildings. They are obliged to stay out of the personal client/broker relationships By signing with a co-broker, a realtor takes advantage of the co-broker’s skills and experience in the industry, and this is an excellent way to broaden one’s portfolio A good co-broker should also have an advanced and robust database of active buyers, sellers and sales information, which their back-room staff updates daily
Specialists in….
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Marble/Granite Restoration
30 www.canadianapartmentmagazine.ca
Co-brokerage helps realtors enter into asset classes they may not be 100 per cent familiar with. By signing with a co-broker, a realtor takes advantage of the co-broker’s skills and experience in the industry, and this is an excellent way to broaden one’s portfolio. A good co-broker should also have an advanced and robust database of active buyers, sellers and sales information, which their back-room staff updates daily. This information is critical to help realtors make informed decisions about potential deals. So, be sure to ask what the co-broker logs in its database, and don’t be afraid to ask for a tour of the co-broker’s facilities before you commit to a deal. If you are not going to be spending the money for an equipment room of your own, you should get the best from your co-broker. With a co-broker, a realtor will receive assistance with the preparation of comprehensive sales packages, an online marketing plan, print flyers, and more. Direct target marketing services are also available, getting the realtor’s properties in front of qualified buyers through e-mail blasts, fax-outs and telemarketing. The key to managing a successful real estate brokerage is effective delegation. Without back room support, realtors work too hard growing their business. A co-broker can take that task off a realtor’s hands, allowing them to concentrate on the joy of selling.
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Marketing
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.
32 www.canadianapartmentmagazine.ca
Green marketing - It’s not that easy being green
Marketing
Kermit the Frog put it best in his song when he lamented “It’s not that easy being green.” Being green in a world of marketing, where advertisers are able to create an image of their brand and create messaging with virtual freedom, has led to problems for anyone claiming to be green. Consumers are becoming increasingly skeptical of green or ecofriendly claims made by companies, and legislation has still not caught up in Canada. One thing remains certain: it’s not that easy being green. Landlords are faced with an abundance of energy saving incentives in today’s market. Whether it’s a light bulb that saves electricity or a smart lighting system that reduces lighting usage during low demand, there is no shortage of ways to save on operational expenditures. So once these efficiencies are introduced, it’s often tempting for a company to adopt the “green” label for their units, but there should be some form of restraint taken prior to making such a claim, for it is important to ensure that the claim adheres to the laws set forth by the competition bureau. “Environmental claims: A guide for industry and advertisers” is produced by the Canadian Standards Association to provide advertisers and consumers with a best practice guide to the application of environmental claims in the Canadian marketplace. Landlords can find the full document at: http://www. competitionbureau.gc.ca/eic/site/cb-bc. nsf/eng/02701.html#pdfreader. Within this document landlords will find guidelines that govern the usage of green labeling to ensure that all labels and declarations are accurate, verifiable, relevant, and not misleading. Once it is determined that claiming ecofriendliness is acceptable, it is now time to market that status to the public. Here are a few strategies that will help landlords to promote their eco-friendly initiatives to skeptical renters.
Four green marketing strategies to overcome skepticism 1. E nlist the support of third parties Align with suppliers or third party organizations that can lend credence to the claims. Perhaps they perform independent life-cycle inventories, certify claims or award ecoseals. Any way that the product can be certified will lend credibility to the environmental messages. When choosing eco-labels, choose wisely based on how relevant the label is to the brand’s image.
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
March 2012 33 Untitled-1 1
11-05-02 10:50 AM
Marketing
2. Avoid the logical approach Purchasing is an emotional decision, rarely a logical one. Consumer decisions are made because a product is perceived to have a higher value to them. Consider the question, “What’s in it for me?” It’s better to sell deep emotional benefits. Just think about marketing for beer; they promote improving sex appeal rather than how great the beer tastes. When selling a unit try to focus the image around status or improving family life. 3. Promote responsible consumption The first step is to make the product greener, but the next is to continue to promote eco-friendly practices throughout the product’s life cycle. If you are replacing incandescent bulbs for energy efficient ones for example, make sure that residents can dispose of them in an efficient manner. Supporting responsible consumption is a sure-fire way to build credibility and reduce risk. 4. Be transparent A skeptic is always looking for any hint of deviation from the claim. Be transparent and offer links to the supplier’s website, or additional information about the eco-friendly practices that have been implemented. Educate them on environmental issues and the specifics of their company’s processes so they can fuel authentic communications about your company’s green initiatives. A recent episode of the popular show Marketplace took a look at a product that claimed to be eco-friendly. A particular brand of toilet paper had a label claiming it came from sustainable logging. Once Marketplace dived into the details of that label, it was quickly discovered that the logging practices were far from sustainable. These types of shows only help to fuel consumer’s skepticism when it comes to green marketing, but one way marketers can circumvent this skepticism and arrive ahead is to provide information. In short, there are many motivations for purchasing eco-friendly products, and not all of them involve saving the planet. Some people buy energy efficient appliances to save money, while others may pay a premium for natural cosmetics because they are perceived as safer than conventional products. Although only some seven per cent of consumers are motivated by altruism, the majority are motivated because they see the product as better in some way for themselves (such as health, lower energy cost, or safety). In many cases, the green product is the tiebreaker or the cherry on top, thus green consumers must see the product as the same, or better, than the competition. Being green may simply provide an advantage when deciding between similar apartments; however, promoting the green angle is still worth the effort. 34 www.canadianapartmentmagazine.ca ambient.indd 1
12-03-07 11:01 AM
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CHOOSING THE RIGHT TENANTS IS NOW THIS EASY. CREA sees flat 2012 home sales across country The Canadian Real Estate Association (CREA) has updated its quarterly forecast for home sales activity via the Multiple Listing Service (MLS) Systems of Canadian real estate Boards and Associations in 2012, and extended it to 2013. National home sales activity for 2012 and 2013 is projected to remain roughly on par with the 10-year average for annual activity, as interest rates remain low and further economic and job growth continue to support Canada’s housing market. National resale housing activity is forecast to reach 458,800 units in 2012, representing an annual increase of 0.3 per cent compared with 457,305 sales in 2011. Rising demand in Alberta, Saskatchewan, and Nova Scotia, is expected to offset softer activity in British Columbia, Ontario, and New Brunswick. “The continuation of low interest rates is good news for housing and for the economy,” said Gary Morse, CREA’s president. “Local housing market outlooks differ according to their respective economic prospects, so buyers and sellers should talk to their local realtor to better understand housing market prospects in their area.” In 2013, national sales are forecast to ebb by 0.3 per cent to 457,200 units, with modest gains in all provinces except Ontario as economic and job growth picks up later this year and builds into 2013. Multimillion-dollar sales activity in Vancouver caused the national average price to temporarily spike in early 2011. This phenomenon is not expected to recur in 2012. As a result, while prices are projected to hold steady near current levels, the national average price is forecast to dip by 1.1 per cent in 2012 to $359,100. Prices are expected to rise modestly in 2013, with the national average inching upward 0.9 per cent to $362,300 at the national level. “CREA’s updated housing market forecast reflects recent and prospective trends for provincial home sales activity coupled with prevailing provincial economic outlooks,” said Gregory Klump, CREA’s chief economist. “Risks to the Canadian economic outlook remain elevated owing to the European sovereign debt quagmire, but the continuation of low interest rates is the silver lining. As long as the European debt crisis is contained and a global economic recession avoided, low interest rates will support Canadian home sales and prices. Recent trends are reassuring, but interest rates remaining low for longer will no doubt keep the Canadian housing market under scrutiny for signs of overheating.”
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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.
New Products Homazooma helps users take charge of real estate decisions Created to give consumers unprecedented privacy and control over their real estate needs, financial planning and mortgage decisions, Homazooma.com empowers Canadians to make the most of their biggest and proudest investment: their home. A free public resource with no industry biases or affiliations, Homazooma.com provides its members with all the calculation tools and professional expertise required to make confident, informed choices – anonymously and hassle-free. In addition to browsing (or posting) real estate on Homazooma’s search engine or crunching numbers with superior mortgage calculation and credit management tools, members can solicit the advice and opinions of as many real estate and financial professionals as they wish without having to reveal their own identity. For licensed real estate agents, financial planners and mortgage professionals, Homazooma represents the opportunity to connect with – and impress - potential clients in a neutral, permissionbased context. “The whole idea behind Homazooma is that you can go about your business and get the information you need, when you need it, anonymously and with no strings attached. Your identity remains confidential until you decide to reveal it to the professionals of your choice,” said co-founder Tracy Thomas. Donat Plenter, also co-founder, adds that Homazooma’s level of privacy has advantages most consumers don’t even realize. For example: every time homeowners shop a mortgage in the hopes of finding a better rate, they lose points on their credit rating and must spend time completing forms and dealing with multiple agents or lenders. At Homazooma, applicants are provided the opportunity to pull their own credit without penalty and encouraged to submit their score, anonymously. Following almost two years of research and development by parent company, DataAbacus Inc, Homazooma offers tools and features not available anywhere else including: • The most advanced mortgage calculation tools on the internet today • A robust and detailed alternative to MLS • Anonymous home market evaluation • Home match system • Anonymous applications • Client reviews • Anonymous 24/7 live chat. “The real estate and mortgage industry has lagged behind how consumers get their information. Homazooma was created to help Canadians get their business done, on their own terms, and in the medium they are accustomed to using,” Thomas said.
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Real Estate Investment: Here’s an app for that If you have an iPad or an IPhone, you know that there is an ever increasing number of fun, interesting, entertaining and inexpensive apps you can download. The Real Estate Investor Formulator app created by veteran Apple developer Marc Schulman at Multieducator, Inc. New Rochelle, N.Y. allows you to make an incredible number of important real estate, financial, and property management calculations. It’s a powerhouse in your pocket. This handy little program can calculate the market value property, vacancy loss, rent multiple, total net operating income and much more. Real Estate Investor includes 45 important formulas. Sections include capitalization, debt ratios, depreciation, interest, investment returns, mortgages, rent multipliers, valuation and a variety of formulas for calculating rental income on various types of properties. You just finger touch an item on a menu screen, enter the data required to do the calculation, and click to calculate the results. All the formulas are programmed and each key formula element is defined. All formulas can be saved and printed. You can also quickly access recent formulas and tag formulas Congratulations! Berkley Property Management on all of your success. as favorites. also be e-mailed. We feel Results fortunatecan and privileged to be working and associated with the professionals of the Berkley Property Management team. All the staff of C.H.A.M.P. Engineering Limited wish Berkley Property Management many years of continued success.
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March 2012 1:36 37PM 12-03-07
Smart Ideas
What’s green on the inside? Eco-savvy building owners are realizing the benefits of a living wall in their buildings. Here are five benefits of choosing one for your building:
Indoor air quality A green wall can contain more than 1,000 plants, all of which filter air and create energy-rich oxygen. Research undertaken by the National Aeronautics and Space Administration (NASA) proves that plants are capable of cleaning indoor air of the toxic chemical soup that is common in modern buildings.
Property value
Courtesy of Green over Grey - Living Walls and Design
Living walls are also great marketing tools that can be used to promote a company’s green image. A living wall can increase property values of homes and businesses. By simply having plants in and around a building or home can increase real estate values by up to 20 per cent. A living wall is a unique way to add more greenery to the interiorscape design or exterior landscaping plan and attract more people interested in purchasing your property. A green wall is a great way to provide the greenery that people want. If they feel less stress, become more relaxed, they will end up staying longer.
38 www.canadianapartmentmagazine.ca
LEED credits Installing a living wall can be used to earn LEED credits. A living wall qualifies directly for two LEED credits and helps gain an additional 30 points. The categories include sustainability, energy savings, indoor air quality, health and wellness, and acoustics.
Energy savings Studies have shown that the surface of an exterior green wall is up to 10°C cooler than an exposed wall, therefore, considerably less heat is radiated inward. Not only do green walls reduce cooling requirements but they also help to mitigate the urban heat island effect. Interior green walls also help to save energy during the summer. During the winter a living wall system acts as extra insulation.
Building protection Living walls protect buildings by reducing temperature fluctuations of the envelope. A constant flux in temperature leads to the expansion and contraction of building materials resulting in cracks, fractures and general deterioration. Covering an exposed vertical surface with a green wall shields it from precipitation and wind as well as from harmful UV radiation and corrosive acid rain. This in turn increases the integrity and longevity of a building’s exterior.
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.
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