CPM August 2015

F O R B U I L D I N G O W N E R S , A S S E T A N D P R O P E RT Y M A N A G E R S

VOL. 30 NO. 4 • AUGUST 2015

Ready and Steady Through an Economic Downturn

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editor’snote THE OTHER SIDE of the tracks is now a prestigious Toronto business address. New development has pushed out the traditional boundaries of the financial district, turning the former frontier of Front Street into a two-way anchor between the iconic bank towers to the north and a burgeoning commercial-residential area south of the city's main train station.

Downtowns are similarly evolving in other major Canadian cities as the first buildings of the latest construction boom are completed and occupied. New towers are rising at a pace and volume not seen in more than two decades, offering corporate tenants some fresh options in what had become a predictable field of players.

Market analysts typically call it "flight to quality" – a term that always seems rather harsh to those of us who identify with the vintages of the former queen bees – which is simply a convenient précis of 20+ years of technological advances that are given features of new construction. New buildings are also designed to accommodate denser occupancies, as spaceto-worker ratios continue to shrink from 20th century norms.

"New buildings are really quite different," affirms Sandy McNair of Altus InSite, in our lead feature story. "But the other meaning of 'flight to quality' that's just as valid is the quality of the management."

Indeed, witness Montréal's 84-year-old Sun Life building, which, JLL reports, is 96.4% occupied and commanding rents of $43.24 per square foot – on par or surpassing much of the younger competition in that market. The bloom of youth boosts every building's stature at some point in time, but it's never a lasting advantage. From there, it becomes a matter of staying competitive.

Elsewhere in this issue, we ask our industry watchers for insight on the economic downturn and potential spinoff repercussions for real estate investors, owners and their tenants. Thus far, they report minimal fallout.

"From a real estate perspective, our view is that it's not a true recession unless it significantly impacts jobs, and we have yet to see that," says Chris Langstaff of LaSalle Investment Management. "In fact, year-to-date job growth has been almost twice as strong as in the same period a year ago."

Looking in from her U.S. vantage point, Jeanette Rice of CBRE Research suggests that prospective foreign buyers are most frustrated by the lack of available product when the exchange rate could be working in their favour.

Barbara Carss barbc@mediaedge.ca

VOL. 30 NO. 4

AUGUST 2015

Editor-in-Chief Barbara Carss barbc@mediaedge.ca Publisher Sean Foley seanf@mediaedge.ca Contributing Writers Chris Langstaff, Arthur Nahas, Aliza Premji, Paul-Michael Rebus, Jeanette Rice, Kavita Sabharwal, Dawn Shoemaker Senior Designer Annette Carlucci Wong annettec@mediaedge.ca Designer Jennifer Carter jenc@mediaedge.ca Production Manager Rachel Selbie Ricca rachels@mediaedge.ca Production Coordinator Karlee Roy karleer@mediaedge.ca National Sales Sean Foley seanf@mediaedge.ca

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contents

Focus: Financing, Value Enhancement & Returns 10 Flight to Quality: A spate of new downtown office towers are luring blue chip tenants to greener pastures.

12 Falling Dollar Fallout: Market analysts report that investors remain committed to Canadian real estate.

16 Major Markets Respond to Change: New supply coincides with a down cycle in Vancouver, Calgary, Toronto and Montreal.

21 Project Financing: Traditional and nontraditional borrowers look to alternative capital.

24 Green Bond Principles: International Capital Market Association offers guidance to issuers, investors, banks, investment banks, underwriters and placement agents.

28 Repositioning Retail Space: Strategies to capture and accommodate the omni-channel shopper.

Articles: 32 Corporate Social Responsibility: RICS and UN Global Compact tag real estate as a delivery agent of key principles.

36 Cleaning Chemistry: Mix of negative and positive ions can diminish effectiveness of disinfectant.

38 BOMEX 2015: The annual conference and exposition will mark its 25th anniversary in QuĂŠbec City.

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valueenhancement&returns

FLIGHT TO QUALITY SHAKES UP THE OLD ORDER New Supply Reshaping Downtown Dynamic

By Barbara Carss

For market trends and analysis, go to

10 August 2015 | Canadian Property Management

SOME OF CANADA'S most iconic office towers look poised to be uncharacteristic casualties of the next real estate downturn. Top-echelon buildings that had little or no new competition for decades now share skylines with newcomers capable of luring blue chip tenants to greener pastures.

As reported in JLL's recent 2015 Skyline Review, (see story, page 16) many longstanding prestige buildings in Canada's largest cities face challenging leasing exercises as major tenants prepare to move out. Meanwhile, emerging new types of tenancies in the technologies sectors don't necessarily fit comfortably into the financial/ insurance industry footprint.

"It's the Oldsmobile problem – they don't want to be seen driving their

grandfathers' cars," quips Sandy McNair, President of the market research and analytics firm, Altus InSite. "All those buildings we would have thought were the top-of-market are the buildings that are hurting the most.

The pool of tenants that can move into these buildings is relatively small."

Older towers already faced retention challenges before the market pendulum most recently started swinging in tenants' favour. A spate of new prestige buildings in the downtowns of major Canadian cities respond to tenants' demand for buildings that can effectively accommodate the technology and occupant densities their businesses require, along with design features, such as facades and floor plates that maximize delivery of natural light and personal HVAC controls, typically

valueenhancement&returns

unavailable in their existing quarters.

"Despite slower economic growth, there is a sizable wave of new office supply being delivered in the downtown markets in cities like Montreal, Toronto and Vancouver, and also Calgary and Edmonton despite their current problems," reports Chris Langstaff, Senior Vice President, Research & Strategy, with LaSalle Investment Management. "Pre-leasing for these new buildings has been strong and, once completed, demand for these modern, well-located, transit-oriented buildings has also been strong. We see in the leasing statistics that this is happening at the expense of older, lower quality buildings."

INVESTOR AGENDA The trend that market analysts

commonly call "flight to quality" also applies to the developers of new buildings. Market dynamics – low cap rates, product scarcity and the growing dominance of pension funds seeking stable, long-term assets – has prompted some key investors to build new stock that surpasses what they could buy, even if they pull tenants from their own buildings.

McNair notes, for example, that British Columbia Investment Management Corporation (bcIMC) owns Commerce Court, a stalwart of Toronto's financial district, and is also a major investor in the burgeoning South Core, which has now pushed out the frontier of the city's traditional prestige office area. "The reasoning is: if we don't do this to ourselves, someone else will," he suggests.

"Large institutions have been quite active in culling what, for them, are non-core assets and redeploying that capital into larger, even more core or trophy assets," Langstaff concurs.

"Canada Pension Plan Investment Board, Oxford Properties and Ivanhoé Cambridge are recent examples."

Tenants, and the workforce they employ, have likewise evolved since the older competition first came onto the market. Until the recent building boom, even the newest high-status buildings dated back to the early 1990s – an era in which today's Gen Y professionals were preschoolers and energy and environmental performance did not register with the wider public.

Formerly non-existent sustainability certification programs have become almost a prerequisite for tenants' corporate sustainability and responsibility compliance, while urban growth and infrastructure pressures create other dynamics. McNair ties South Core's allure in part to transit patterns and the perceived untapped capacity of Toronto's commuter train service versus an overcrowded subway system.

"In Toronto, centre ice has effectively moved from King & Bay to Union Station," he asserts. "The new buildings tend to be just a little bit on the edge of

centre ice so there's sort of a different vibe to them and the areas where they are located."

NATURAL SUCCESSION Overall, it leads to a package of concerns McNair sums up as the "battle for talent" and the role a company's quarters can play in employees' work satisfaction. "New buildings are really quite different, but the other meaning of 'flight to quality' that's just as valid is the quality of the management," he submits.

Class A buildings outside the financial district's epicentre, Class B and brick-and-beam office buildings may be better positioned to withstand the double-whammy of economic downturn and an influx of enticing new competition due to their smaller and more varied occupancies. The buildings that have been colloquially dubbed bank towers in reference to their major occupants now face the emptying of large blocks of space, and departing tenants may be less likely to backfill it with their own workforce in a sluggish economic climate.

"In the past, even in a soft market, those towers would have experienced less vacancy than the rest of the market and would have had higher rents than the rest of the market," McNair notes. "This new scenario will get solved. It's just a question of how long and at what price."

A recession could complicate that process, but market watchers see the flight to quality as a separate dynamic that's more tied to a natural reordering of status. Clearly, though, addresses at or near centre ice will continue to have market cachet. There has already been plenty of investment in staying competitive, and a marked emphasis on management and relationship building.

"I think we're in an era of concurrent big winners and big losers. A recession just ups the pressure to get it right," McNair muses. "The pain isn't evenly distributed. The pain is in significant pockets." zz

Canadian Property Management | August 2015 11

valueenhancement&returns

Chris Langstaff, Senior Vice President, Research & Strategy, LaSalle Investment Management

Jeanette Rice, Americas Head of Investment Research, CBRE Research

DOWNSIDE PROTECTION TO

WEATHER THE STORM Little Apparent Pullback on Investment in Canadian Real Estate

The Bank of Canada's recent downward adjustment of its key interest rate for the second time in 2015 signals concerns about stalled economic growth and harsher than initially projected fallout from the drop in oil and gas prices. As Bank of Canada Governor Stephen Poloz maintains "Canada's economy is undergoing a significant and complex adjustment," Canadian Property Management asks two leading real estate analysts for their perspectives from inside and outside the country – Editor.

CPM: Does the decline in value of the Canadian dollar ($CAD) have implications – positive or negative – for real estate?

Langstaff: That will depend on whether it’s from an investor’s or a tenant’s perspective, but ultimately, real estate is about tenants. Whatever affects tenants, affects real estate.

Tenants who are in export-oriented businesses should benefit from a lower $CAD to the extent that an improving U.S. economy should spur demand for Canadian goods. However, we have yet to see strong evidence of this in the headline data. We have had record trade deficits thus far in 2015, but only because of oil. Exports in sectors other than oil have been positive year-over-year.

A falling dollar usually goes hand-inhand with lower oil prices, putting more 12 August 2015 | Canadian Property Management

money in the pockets of consumers and potentially boosting retail sales, though some of that can be offset by more expensive import prices. So in that sense those are positives.

It also depends on geography. A lower dollar and lower oil prices is obviously a big negative for Alberta, but stronger non-oil exports benefit the manufacturing sector, which is largely a central/eastern Canada activity and benefits those markets.

An important point is that a lower $CAD should make Canadian real estate more attractive to U.S. and potentially other international investors to the extent that their local currency is worth more than the Canadian dollar.

Rice: The falling dollar should be good for tourism and for U.S. investment in

Canadian property. In terms of U.S. investment in Canada, it totaled $651 million in the first half of 2015 according to RCA (Real Capital Analytics) data – more than double the $299 million a year ago.

Some of this could be attributed to the dollar, but it’s difficult to really say. I think U.S. companies would like to buy more in Canada, but have a hard time finding product.

The low amount of Asian investment in Canada this year is a surprise to me.

There’s been only one transaction to date – a development site in Toronto by a Hong Kong developer – while Asian, particularly Chinese, capital sources are rising in the U.S. It’s possible that the weaker Canadian economy is a factor, but I think it’s more a case of difficulty finding the opportunities.

valueenhancement&returns In turn, you might think that this is a good time for Canadian investors to be selling their U.S. assets. Those that play cycles – be they property market or otherwise – might be doing that. There is an ample amount of selling going on, but I don’t see a big sell-off.

That said, given the amount of capital being invested in the U.S., it would be a good time to be a seller if one had some place else to invest the capital.

CPM: If we're in a recession, what are real estate's strengths and/or advantages compared to other asset classes? How does that affect investor behaviour?

In a recession, interest rates will be kept low, thus having a positive effect on the capital market side of real estate. The spread between cap rates and bond yields, which had been slightly elevated before the current softening in the economy, provides cushion for cap rates to rise, while still offering an attractive spread to bond yields.

Lower cost of debt, expectation of rising incomes and continued investor demand for real estate all drive an escalation of capital value, pushing cap rates down. While cap rates usually rise during a recession, the turnaround point comes when investors have some visibility that a trough has been reached, real estate space demand starts to return, leasing momentum returns and income starts to rise.

Canadian real estate has historically provided good downside protection and weathered recessions relatively well, in part because of the high degree of institutional ownership. These large well-capitalized owners are patient with a long-term investment horizon. In the 2008-09 recession following the global financial crisis, for example, they were able to wait out the softening in demand and were not in financial distress or forced to sell, nor were their capital values significantly impacted.

Related to this, Canadian real estate has historically been less volatile than other countries. Again, during the 2008-09 period, average capital values in Canada declined by only 9%, while declines of around 25% to 30% were recorded in both the U.S. and the U.K. While one could argue that has provided more upside for those markets in recent years, Canada tends to be more stable.

There is less upside, but also less downside.

“The low amount of Asian investment in Canada this year is a surprise to me. It’s possible that the weaker Canadian economy is a factor, but I think it’s more a case of difficulty finding the opportunities.”

Langstaff:

14 August 2015 | Canadian Property Management

Rice: In terms of Canadian investment in the U.S., the numbers this year suggest that the erosion of the Canadian dollar does not matter that much. According to Real Capital Analytics, in the first half of 2015, U.S. investment by Canadian groups totaled U.S. $8.94 billion vs. $3.55 billion in the first half of 2014, or more than double. So obviously, Canadians are still finding long-term value in U.S. real estate.

I’ve had the opportunity to discuss this very same topic with a couple of Canada’s leading pension funds, which represent a big portion of the investment dollars. Their response is that, for them, the currency fluctuation doesn’t matter that much since they are investing for the long-term. That may involve hedging, but not all funds do that due to the cost of hedging.

It is possible that medium-size investors may have pulled back, though it’s hard to see that in the numbers. The REITs, however, are far more sensitive to moves in exchange rates.

The Canadian pension funds are certainly looking beyond the U.S., not necessarily due to the poor currency exchange or concern over markets reaching their peak performance – most forecasts are favorable for property market performance over the next few years – but for diversification and growth opportunity.

The economy of Western Europe seems to be gaining strength, and I would think these markets would have some appeal to the Canadians, just as they do to U.S. investors. Going beyond the U.S. may be too much of a reach for the REITs, however.

CPM: Where are the potential vulnerabilities?

When a full recession hits, sectors that are initially impacted the most are: office, due to job layoffs, o ff i c e s p a c e b e i n g r e t u r n e d t o landlords or being put on the sublet market; then industrial, as declining domestic demand for retail goods etc. affects warehousing and distribution.

Fewer jobs undoubtedly impacts retail sales and retail real estate generally, but grocery, drug and other ‘necessity’ retail tends to be the most resilient in a downturn.

Apartments are generally the least impacted, as people still need a place to live. However, some tenants may be forced to move in with family or share apartments. Apartment vacancy rises on the margins. For example, there has recently been an increase in bachelor and one-bedroom apartment vacancies in Alberta – presumably as unemployed oil sector workers have been forced to move back home – while 2- and 3-bedroom units have maintained low vacancy.

Local factors are coming into play. In the past, cap rates tended to generally move at the same pace for all of the major cities in Canada. In the last nine months, however, we have seen investors’ cap rate expectations move up in the Alberta markets by anywhere from 25 to 100 basis points, while, in Toronto, cap rates have remained flat on average, with continued modest compression for the most core assets.

A full and widespread recession would likely trigger a move up in cap rates in all sectors and all markets. zz

Langstaff:

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valueenhancement&returns

NEW PRESTIGE

OFFICE BUILDINGS CAPTURE Influx of Inventory in Vancouver, Calgary, Toronto and Montreal

ECONOMIC DOWNTURN in sync with an influx of newly constructed towers heralds empty space in the traditional prestige office buildings of Canada's major cities. Although longstanding landmarks in the Toronto, Montreal, Calgary and Vancouver skylines now command average rents 18% higher than less iconic competition can muster, real estate analysts predict an emergent tenants' market will change that picture.

"With 7.5 million square feet of office space due to come to market, there will be a flight to quality. Tenants will flock to the new buildings which offer quality, customizable and efficient space," says Brett Miller, President of JLL Canada. "As a result, the current skyline buildings which have traditionally been in high demand will be left with available space, driving the skyline vacancy rates up."

JLL's recently released 2015 Skyline Review looks at Class AAA and A office buildings (which it categorizes as skyline buildings) in the central business cores of 47 U.S. and Canadian 16 August 2015 | Canadian Property Management

cities, drawing somewhat differing conclusions about trends in the two countries. In Canada, pension funds are identified as the major driver of development – also wielding influence that reaches south of the border where "foreign capital has been a key factor in the current competitive environment."

Yet, while the rise of Class B buildings as "viable contenders" is one of the five overarching themes of U.S. markets, Canadian landlords see threats from the upper end of the scale. Since 2012, 3.5 million square feet of new prestige office space has come onto d o w n t o w n m a r k e t s i n To r o n t o , Montreal, Calgary and Vancouver, and this quality inventory will grow by 14% in the four cores over the next three years. Availability rates have already climbed from 6.8% in 2012 to 9.5% at the end of March 2015, and JLL reports "downward pressure" on rents in Calgary and Vancouver Even the youngest of the existing buildings were constructed in the early 1990s creating challenges, and necessitating capital investment, to

compete with new arrivals. "This is particularly noticeable in the areas of floor plate design and efficiency, energy performance and amenities offered," JLL reports.

Ironically, developers are introducing this new market-beating product because they can't secure the more lacklustre competition. Real estate arms of pension funds underpin 3.3 million square feet of prestige office buildings scheduled to be delivered over the next three years.

"A driving fact to the current construction boom is the absence of skyline properties for sale, which has prompted pension funds and other institutional investors to turn to new development in order to meet their real estate allocation needs," the JLL report states. "With the spread in yields between existing skyline buildings and new towers at an all-time low, institutions are increasingly viewing development as being a more viable option on a risk-adjusted basis to purchasing when, and if, skyline properties come to market."

valueenhancement&returns

CONDO SUPPLY REPERCUSSIONS

By Kavita Sabharwal

E MARKET LEASING CHALLENGES IN CALGARY AND TORONTO The report examines 23 prestige office buildings in C a l g a r y, o f w h i c h f i v e , representing more than 3.8 million square feet of space, are still under construction. Of these, the 1.4-million-squarefoot Brookfield Place East, slated for completion in 2018, is fully leased. Meanwhile, falling oil and gas prices have affected both sitting tenants and prospective lessees in a market where the energy sector supplies three quarters of office occupancy.

More than 2.3 million square feet of sublease space is now in play, accounting for more than half of all available space in Calgary's business core.

Would-be tenants have also waived options for space rights in three of the five buildings under construction.

Nevertheless, JLL analysts

defer to history in predicting a turnaround within eighteen to 24 months, and call the current down cycle advantageous for tenants despite their business woes. " S u blease space creates downward rental rate pressure on all CBD buildings, including the skyline, and presents tenants with the opportunity to upgrade their premises and buildings at discounted rates," the report maintains. "When oil rebounds, vacancies in the skyline buildings will be the first to decrease. A similar flight to quality was witnessed in the last financial collapse in 2009."

The overview of Toronto's prestige office stock likewise focuses on 23 buildings, of which three, equating to more than 2.7 million square feet, are under construction. Six of the 20 existing towers are currently fully occupied with vacancies of less than 5% in five others.

In a recent report, The Many Faces of the Canadian Housing Market, CIBC economists Benjamin Tal and Andrew Grantham discuss Toronto's supply of condominium units and the possible increase of purpose-built rental units. They note that the number of available condo units in Toronto has helped create affordability for first-time home buyers who found the low-rise market to be increasingly pricey.

“In this sense, the condo market is acting as a stabilizing, rather than destabilizing, force on the market as a whole,” Tal and Grantham stated in the report. “But is it too much of a good thing?”

The authors are referring to the long list of new condo developments in Toronto since 2007. Since then, almost all of the city’s growth in rental units has come from condo rentals, as demand stayed elevated thanks to condos’ relative affordability compared to houses.

According to the authors, however, this will soon change, as Toronto’s housing demand peaked in 2012 and is slowly declining.

“Based on demographics, we estimate that demand for rental units in the GTA will average 12,000 a year in 2015 and 2016. And that could fall a little short of upcoming supply,” wrote Tal and Grantham. “According to different sources, we estimate that the supply of rental condo units will top an annual average of 14,000 units in 2015 and 2016 – suggesting excess supply of just over 2,000 units a year.”

The market has already experienced some moderation with a plateau in rent inflation and the lease-to-listing ratio dropping to 64.3% from 70% in 2014. These numbers can cause trouble for investors planning on renting out suites, whom CIBC analysts estimate are responsible for 70% of presales and 50% of final sales.

“That’s where the vulnerability is. We estimate that roughly half of the stock of rental units belong to this category. To the extent that higher rates and/or lower rent inflation challenge the economics of rent, we might see a wave of sales in the resale market that will directly compete with the upcoming influx of new units,” said Tal and Grantham in the report.

In addition, purpose-built rental construction has seen a resurgence, with institutional groups financing apartment construction. CIBC projects an increase in purpose-built rental supply for 2017. Tal and Grantham foresee high-rises will face an adjustment, but that it will be due to “the degree of integration and coordination between condo rental activity and the upcoming increased supply of purpose-built projects.”

The complete text of the CIBC report can be found at http://research.cibcwm.com/economic_ public/ download/feature3.pdf. Kavita Sabharwal is an Online Editor with the REMI network.

See www.REMInetwork.com.

Canadian Property Management | August 2015 17

valueenhancement&returns However, JLL notes that a shift is coming as 12.5% of existing space is now listed as available for lease even though only 7.4% is vacant.

"Older inventory is experiencing a spike in available lease space, above 20% in the case of Scotia Plaza, Brookfield Place, EY Tower and Royal Bank Plaza," the report states.

"With 4.3 million square feet in recent and near-term skyline additions, large

tenants have imminent plans to leave the old for the new, driven by consolidation and preference for LEED designed buildings."

Notably, too, the frontier of Toronto's skyline is moving – now encompassing five buildings south of the traditional Front Street cut-off – and stretching to the south side of the once perceived barriers of Union Station and the Gardiner Expressway.

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"The next wave of development will continue to push the skyline south of the tracks and solidify an expanding downtown core," the JLL report predicts.

CONTIGUOUS SPACE IN VANCOUVER AND MONTREAL Similarly, the boundaries of Vancouver's skyline territory are pushing outward with the recent completion of Telus Garden and two other towers in the planning stages on Thurlow and Howe Streets, while JLL tracks a somewhat complementary change in tenants' profiles as technology companies increasingly join the longstanding mix of professional services. The 20 buildings covered in the survey collectively have a direct vacancy rate of 4.8% — up from 1.1% in 2012.

"Large occupiers have been afforded more options compared to recent years as a significant amount of full-floor opportunities have become available," the report states. "Compared to the 2012 Skyline Report, in which the largest contiguous vacancy was 5,500 square feet, there are currently 13 full-floor direct vacancies, five full-floor sublease and nine future full floors coming available."

In Montreal, three buildings comprising more than one million square feet are now under construction, while the 240,000-square-foot AIMIA Tower opened last year. This responds to tenants' demands for more modern LEED-certified space despite the 11.6% vacancy across the 20 buildings in the skyline survey. Indeed, JLL forecasts vacancies will rise to 13 per cent over the next two years.

With nine major landlords holding large blocks of contiguous space in excess of 50,000 square feet, there are opportunities for tenants to consolidate and take advantage of market conditions and competitive rates. However, they aren't looking for the same kind of space they're vacating.

"New developments are giving tenants additional eco-friendly alternatives," JLL reports. zz

The complete text of the JLL 2015 Skyline Review can be found at http://www. jllcampaigns.com/skyline. The preceding article is reprinted from the REMI network. See www.REMInetwork.com.

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ALTERNATIVE CAPITAL PRIMED FOR PROJECT FINANCING Basel III Banking Reforms Reverberate in Many Sectors

By Paul-Michael Rebus, Aliza Premji and Arthur Nahas

TRADITIONAL AND non-traditional borrowers are searching for alternative capital structures for commercial real estate development and other kinds of projects and infrastructure. In the aftermath of the 2008 global banking crisis, individuals and entities face new laws, rules, regulations and accords pertaining to financial institutions. Basel III – the new set of banking regulations agreed upon by the Basel Committee on Banking Supervision – represents one the largest and most fundamental changes.

Basel III is a comprehensive set of capital and liquidity reforms to be implemented in an agreed phase-in period in order to provide greater stability, improved risk management and governance and provide more transparency in disclosure with respect to banks and other deposit taking institutions. It is important, however, to recognize that Basel III has, and will continue to have, a pervasive impact on all sectors and parties that deal with deposit taking institutions.

The increased cost of compliance in the global banking sector will have significant ramifications on a wide number of sectors including commercial real estate development, oil and gas, power and electricity, renewables, automotive, aviation and general corporate and commercial. Already, the new capital, liquidity and leverage standards are causing financial institutions to look at their origination and distribution models to optimize their capital structures to ascertain how they want to focus their resources and product lines.

To quote Wayne Gretzky, “a good player plays where the puck is, while a great player plays where the puck is going to be.” The Great Canadian Property Management | August 2015 21

valueenhancement&returns One’s statement is not only applicable to that great Canadian pastime, hockey, but also applicable to the business and finance community.

Great companies and institutions alike are anticipating where the market is going based on the paradigm shift due to the financial regulatory changes and already asking themselves how their capital structure will look now, in a year, in five years and in ten years. Many are recognizing the need to assess their corporate and project financing needs through a different lens. Many borrowers will find it useful to take the opportunity to look at alternative capital as an important source of financing.

The market has seen a rise in alternative capital structures and is expected to continue to see a rise in these structures in three respects. Firstly: an increase in the volume of debt capital markets and specialist debt capital markets products being issued in North America and in Europe.

According to Fitch, of all corporate debt in the U.S., approximately 70% is

It is estimated that the project bond market will grow from as much as 10 to possibly 20 times its current size by the end of the decade. funded through the debt capital markets and specialist debt capital markets and up to 80-85% of the U.S. corporate debt for American large cap companies is funded through the debt capital markets and specialist debt capital markets. It is widely expected that given the above regulatory changes and the resultant de-leveraging by deposit taking institutions, Europe and Canada will follow the American model.

NEW PRODUCTS, INCREASING UPTAKE Secondly, the types of debt capital markets and specialist debt capital markets products being offered are

expected to metamorphose somewhat.

While there is an increase in the number of straight debt capital markets products, there are also a larger number of bespoke, specialist debt capital markets products being offered, especially in the U.S. and in Europe. The market has been seeing the larger number of specialized debt capital markets products in the form of bespoke funding platform products, convertible products, contingent convertible products, high-yield products, credit-linked notes, assetbacked securities and asset-backed commercial paper.

Thirdly, there is a significant uptake in

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valueenhancement&returns debt capital markets and specialist debt capital markets products being used in a broader spectrum of the market with companies that historically may have relied upon traditional lending facilities from deposit taking institutions. For example, in the infrastructure and renewable energy sectors, project bonds have already become a prevalent form of alternative financing.

This is unsurprising as long-term funding of projects in asset based finance makes these sectors particularly vulnerable to the new Basel III liquidity requirements and therefore a prime contender for funding through the debt capital markets. It is estimated that the project bond market will grow from as much as 10 to possibly 20 times its current size by the end of the decade.

A d d i t i o n a l l y, d u e t o o t h e r intervening factors such as exceedingly low oil and gas prices, industries that traditionally don’t use debt to finance themselves are looking at alternative

capital structures including a wide variety of debt capital markets and specialist debt capital markets products. On December 10, 2014, KKR Co-founder and Co-Chairman Henry Kravis, speaking at a conference, described the drop in oil prices as “a real opportunity”. “There’s a need for alternative capital right now,” Craig Farr, KKR’s head of credit and capital markets, said in an interview at the firm’s New York headquarters.

Although, this expansion of the debt markets presents new opportunities, it also exposes borrowers to a palette of complex and often unknown alternative debt capital markets and specialist debt capital markets products. Finding the right financing strategies and structures that will fit the unique business needs of a borrower in areas as diverse as energy, projects, infrastructure, commercial real estate and the renewable energy sector, among others, will require creativity and strategic planning. zz

Paul-Michael Rebus is a Partner and Head of National Debt Capital Markets with Borden Ladner Gervais LLP. Aliza Premji is an Associate, and Arthur Nahas is an articling student. The preceding article is reprinted from the BLG Debt Capital Markets Alert, May 2015. For more information, see the website at www.blg.com.

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valueenhancement&returns

GREEN BOND GUIDANCE Transparency Supports Evaluation of Environmental Benefits

The International Capital Market Association has taken the lead in developing Green Bond Principles to codify the basis for capital market participants to fund investment activities in new and existing projects with environmental benefits. The following is drawn from the second edition principles, released in March 2015 – Editor.

24 August 2015 | Canadian Property Management

valueenhancement&returns

GREEN BOND ISSUANCE grew substantially during 2014, confirming the validity of this approach for raising funds for new and existing eligible projects with environmental benefits. The Green Bond Principles (GBP) are voluntary process guidelines intended for broad use by the market that recommend transparency and disclosure, and promote integrity in the development of the green bond market.

They are intended to provide the informational basis for the market to increase capital allocation to environmentally beneficial purposes without any single authority or gate keeper. Initially driven largely by multilateral development banks (MDBs), issuance has extended to new issuer categories such as other public institutions, utilities, corporates and financial institutions.

This process benefits from the growing involvement of a wider universe of investors that have different levels of capacity to evaluate environmental projects. To date these investors have especially focused on those green bonds that have allowed them to gain transparent access to a diversity of underlying environmental projects while providing them with the simplicity of credit exposure to a clearly identified issuer with an established risk profile.

The second edition of the GBP aims to provide further clarity on what can be expected from issuers. A comprehensive high level definition of green bonds has been included and the recognized broad categories of eligible projects have been updated. A particular effort has also been made to define and clarify assurance.

The GBP provide issuers guidance on the key components involved in launching a credible green bond; they aid investors by promoting availability of information necessary to evaluate the environmental impact of their green bond investments; and they assist underwriters by moving

the market towards standard disclosures which will facilitate transactions.

The GBP recommend a concrete process and disclosure for issuers which investors, banks, investment banks, underwriters, placement agents and others may use to understand the characteristics of any given green bond.

This has four components: Use of Proceeds; Process for Project Evaluation and Selection; Management of Proceeds; and Reporting.

DEFINING & ASSURING The cornerstone of a green bond is the utilization of the proceeds of the bond, which should be appropriately described in the legal documentation for the security. All designated green project categories should provide clear environmentally sustainable benefits, which, where feasible, will be quantified or assessed by the issuer.

There are several categories and sets of criteria defining eligible green projects already in existence in the market that can be used as a guide. The GBP explicitly recognize several broad categories of potential eligible green projects aiming to address key areas of concern such as climate change, natural resources depletion, biodiversity conservation and/or pollution. These broad categories are including, but not limited to: • Renewable energy • Energy efficiency (including efficient buildings) • Sustainable waste management • Sustainable land use (including sustainable forestry and agriculture) • Biodiversity conservation • Clean transportation • Sustainable water management (including clean and/or drinking water) • Climate change adaptation.

FOUR TYPES OF GREEN BONDS Green Use of Proceeds Bond: a standard recourse-to-the-issuer debt obligation for which the proceeds shall be credited to a sub-account, moved to a sub-portfolio or otherwise tracked by the issuer and attested to by a formal internal process that will be linked to the issuer’s lending and investment operations for eligible projects. Pending such investment or disbursement, it is recommended that the issuer make known to investors the intended types of eligible investments for the balance of unallocated proceeds.

Green Use of Proceeds Revenue Bond: a non-recourse-to-the-issuer debt obligation in which the credit exposure in the bond is to the pledged cash flows of the revenue streams, fees, taxes etc., and the use of proceeds of the bond goes to related or unrelated Green Project(s). The proceeds shall be credited to a sub-account, moved to a sub-portfolio or otherwise tracked by the issuer and attested to by a formal internal process that will be linked to the issuer’s lending and investment operations for eligible projects. Pending such investment or disbursement, it is recommended that the issuer make known to investors the intended types of eligible investments for the balance of unallocated proceeds.

Green Project Bond: a project bond for a single or multiple green project(s) for which the investor has direct exposure to the risk of the project(s) with or without potential recourse to the issuer.

Green Securitized Bond: a bond collateralized by one or more specific projects, including but not limited to covered bonds, ABS and other structures.

The first source of repayment is generally the cash flows of the assets. This type of bond covers, for example, asset-backed securitizations of rooftop solar PV and/or energy efficiency assets.

The issuer of a green bond should outline the decision-making process it Canadian Property Management | August 2015 25

valueenhancement&returns follows to determine the eligibility of projects using green bond proceeds. This includes, without limitation: • a process to determine how the projects fit within the eligible green projects categories identified in the green bond principles; • the criteria making the projects eligible for using the green bond proceeds; and • the environmental sustainability objectives.

In addition to reporting on the use of proceeds and the temporary investment of unallocated proceeds, issuers should provide at least annually a list of projects to which green bond proceeds have been allocated including – when possible with regards to confidentiality and/or competitive considerations – a brief description of the projects and the amounts disbursed, as well as the expected environmentally sustainable impact.

PERFORMANCE INDICATORS & MEASURES The GBP recommend the use of 1 8/4/15 2:25 PM qualitativeBomexAd.pdf performance indicators and, where feasible, quantitative performance

The GBP welcome and encourage initiatives to help establish a model for impact reporting that others can adopt and/or adapt to their needs. measures of the expected environmental sustainability impact of the specific investments (e.g. reductions in greenhouse gas emissions, number of people provided with access to clean power, reduction in number of cars required, etc.). Where confidentiality agreements or competition issues limit the amount of detail that can be made available, information can be presented in generic terms.

The GBP acknowledge that there are currently no established standards for impact reporting on green projects, and welcome and encourage initiatives, including those by leading green bond issuers, to help establish a model for impact reporting that others can adopt and/or adapt to their needs. Until more

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harmonization is achieved, transparency is of particular value, including disclosure of methodologies and key underlying assumptions.

It is recommended that issuers use external assurance to confirm their alignment with the key features of green bonds. Such guidance and assurance might include second party reviews and consultation, audits or third-party certifications. zz The Green Bond Principles are voluntary process guidelines developed by the International Capital Market Association. For more information, see the website at http:// www.icmagroup.org/Regulatory-Policy-andMarket-Practice/green-bonds/green-bondprinciples/

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valueenhancement&returns

RETAIL ADAPTS TO NEW CONSUMER AGE Flagships and Connection Points Replace Strength-by-Numbers Formula

Omni-channel retail, employing physical stores, websites, mobile devices and social media for customer-retailer communication, is changing traditional shopping activity – creating consequences for retail real estate. A new report from GWL Realty Advisors' Portfolio Analysis & Research Services examines the impact and concludes that Canadian owners, managers and investors will need to adapt, but that the sector remains stable. The following is an excerpt – Editor.

THE GROWTH of omni-channel retailing has had a noticeable effect on retail property in recent years, foremost being the impact of online shopping and reduced space demand.

However, while bricks-and-mortar stores face the most headwinds in an omni-channel environment, they are still relevant. The key trend is that retailers are now using them in more strategic and efficient ways, 28 August 2015 | Canadian Property Management

particularly in the facilitation of consumer experiences and product movement.

The concept of omni-channel retailing is important for retail property leasing and investment in that it marks a new way of thinking for both retailers and consumers. Consumers are now connected to retail products more than ever, but these connections are no longer through a single channel such as store

browsing or going to a website. Instead, these connections are made at a variety of overlapping levels, be it digitally, socially or physically.

As a result of this trend, retailers’ business efforts are now directed towards leveraging these connection points to drive sales, with retail property no longer the only channel, but one of many. Retail property investors today should look at real estate as a means to facilitate these connections.

Although growing, the market share of online sales in Canada is smaller compared to the United States (U.S.) and the United Kingdom (U.K.) where online sales make up 6%-12% of total retail sales and is much larger in real terms at approximately (CAD) $290

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valueenhancement&returns

The amount of retail property in Canada has grown in line with population growth with overall shopping centre vacancy rates averaging 5% in the last decade. billion and $127.2 billion respectively as of 2013. On a per capita basis, online shopping accounts for approximately $916 and $1,984 in sales in the U.S. and U.K. respectively, compared to $552 in Canada. This demonstrates the relatively small size and immaturity of Canada’s e-commerce market relative to other global markets, as well as the sheer size of regular bricks-and-mortar sales activity.

From 2002 to 2012, online sales accounted for 15% of the total retail sales growth in Canada, and from 2007 to 2012 accounted for 25%. Over the next five years, online sales could reach upwards of $40-$50 billion in Canada by 2019, according to several estimates, pushing the share of purchases made online to more than 10% of the total retail market.

The growth of online sales, estimated to average 13% annually from 2014-2019, is expected to significantly exceed the pace of in-store sales which is projected to grow at less than 4% per year. Estimates vary on how large and how fast e-commerce will grow in Canada, but in other global markets where e-commerce is at a more mature stage such as the U.K., online sales represent 10%-12% of sales and are forecast to stabilize at 20-25%.

PHYSICAL PRESENCE EVOLVING Recently, retailers have started to shift their expansion plans away from physical stores and towards omni-channel integration and technology. Despite being capital intensive, some of Canada’s largest retailers over the last few years have expanded their online offerings, upgraded websites and invested in technologies and infrastructure to better manage product inventories.

Although there are many retailers only thinking about omni-channel retailing currently, more groups continue to make the transition. The overall result has been a retail market that is more proficient with omni-channel activities, something that 30 August 2015 | Canadian Property Management

was limited to only a handful of retailers prior to the 2008-2009 recession.

For much of the last century, retailers’ growth strategies centred on a “strength by numbers” approach – gaining market share and competitive advantage through more store locations. Today, the cost efficiencies brought on by omnichannel retailing and more purposeful shopping trips by consumers suggests some retailers no longer require as many or as large stores to generate sales in a market.

There are cost efficiencies generated through online shopping, as well as the reduced need for back-up inventories in physical storerooms given improvements in product inventory tracking and logistics. Retailers are also using stores more efficiently. In some cases, larger format suburban stores with lower rents are emerging as storage and distribution points for smaller, more expensive urban locations.

A direct leasing risk from retailers right-sizing their store portfolios is the potential for reduced space demand. As retailers start to right-size their store portfolios, they are also turning several of their existing stores into flagship locations.

Flagship locations may not carry a retailer’s entire inventory, but instead feature specific or highly desired product lines. Flagship locations reinforce the concept of “endless aisles", where not all the products are physically in the store. Rather, it uses online platforms and product supply chains to support product offerings by having rapid delivery and different pickup options for online orders.

The role of retail property in online delivery has also emerged, creating new opportunities for real estate managers.

Some retail landlords and retailers are building on-site product pick-up

locations for online orders at shopping centres to drive more shopping visits and alleviate shipping costs for retailers.

Layouts and site configurations of these shopping centres are changing, focusing on quick vehicle access and convenience.

SECTOR STABILITY The Canadian retail market has performed relatively well from a vacancy standpoint over the last decade, driven by controlled development and stable demand from existing and new retailers. Canada enjoys a relatively low retail space per capita ratio, estimated at 14.6 square feet per person, and relatively high sales performance, estimated at $605 per square foot for major shopping centres.

This trend is contrary to the U.S. retail market, which has characteristically been oversupplied with retail space, and has felt the effects of online sales growth to a larger and more negative degree. For the most part, the amount of retail property in Canada has grown in line with population growth with overall shopping centre vacancy rates averaging 5% in the last decade.

Investors that employ a combination of defensive leasing strategies with offensive omni-channel initiatives are best suited to thrive. Those who continue to take a traditional view on retail property – including the way it is leased, designed, marketed and managed – will face more challenges ahead.

Strong property management and operations, careful consideration of lease covenants, and proactive tenant management all continue to be critical for retail property investment. In terms of acquisition and development considerations, rental rates, strong demographics and location remain highly important.

Omni-channel retailing brings new risks and new opportunities, most of which are focused on qualitative aspects of retail property such as tenant programming, branding/marketing and amenities. For already well-managed retail assets, omnichannel strategies could help to reinforce tenant and consumer demand. zz For the complete text of Omni-Channel Retailing and the Rise of the Digital Consumer: Evaluating the Opportunities and Trends for Canadian Retail Property and other reports from GWL Realty Advisors, see the website at www.gwlrealtyadvisors.com/ NewsReal.aspx

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corporatesocialresponsibility

CORPORATE SOCIAL RESPONSIBILITY OUTREACH

Global Asset Status Makes Real Estate a Worldwide Delivery Agent

By Barbara Carss W I T H E N V I R O N M E N TA L sustainability now entrenched in the definition of corporate social responsibility, leading advocates for international development and industry standards urge real estate owners, managers and lessees to likewise consider human rights, worker protection and anti-corruption principles in all stages of buildings' life cycle. Newly released guidance from the United Nations (UN) Global Compact and the Royal Institution of Chartered Surveyors (RICS) identifies key action areas to anchor real estate in a broader scope of ethical business conduct that promotes stewardship, transparency and legal compliance.

The resulting document, Advanced Responsible Business Practices in Land, Construction, Real Estate Use and Inv e st m e nt , e x a m i n e s h o w t h e development, operational tenure and decommissioning of a building reverberate in the economy, environment and human health and well-being.

Beyond investors, owners/managers and occupants, workers in the construction sector and supply chains and communities within a building's sphere of influence are tagged as stakeholders.

32 August 2015 | Canadian Property Management

"With this resource we want to show businesses how to operate responsibly and sustainably, generating substantial social, environmental and reputational value and long-term financial success in the process," says Sean Tompkins, Chief Executive Officer of RICS, which counts a worldwide membership of 118,000 urban planning, construction, real estate and property valuation professionals.

UN GLOBAL COMPACT PRINCIPLES The UN Global Compact's ten principles in support of human rights, labour, the environment and anti-corruption provide the foundation for a holistic methodology.

The guide helps users to track business practices and decisions that have environmental, social and governance

repercussions, see elements that may be missing in their existing corporate social responsibility policies and recognize shared interests with other sectors and groups.

Many real estate organizations are already proponents of: a precautionary approach to environment challenges; initiatives to promote greater environmental responsibility; and the d e v e l o p m e n t a n d d i ff u s i o n o f environmentally friendly technologies — as the ever widening reach of initiatives like the Global Real Estate Sustainability Benchmark and REALpac/ IPD Green Property Index demonstrate.

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Real estate's status as a generator of wealth, employment and environmental impacts, venue of economic growth and space for human security, interaction and ingenuity would seem to inherently complement the UN's mandate.

"There is a tremendous opportunity for real estate to become a driving force for a more sustainable financial, economic, social and environmental system through collaboration and collective action," asserts Georg Kell, Executive Director of the UN Global Compact.

Businesses that have voluntarily agreed to uphold and enact the ten principles must first be committed to protect human rights and vigilantly avoid any complicity in human rights abuses. The four labour related principles are closely aligned, calling on signatories to respect the right to collective bargaining, while disassociating from forced labour, child labour and discriminatory employment practices. Finally, businesses are expected to work against corruption, including extortion and bribery.

The RICS-UN joint project is one of the first efforts to

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tailor the application of the principles, which were introduced in 2000, to a specific economic sector, but real estate's status as a generator of wealth, employment and environmental impacts, venue of economic growth and space for human security, interaction and ingenuity would seem to inherently complement the UN's mandate. That said, both proponents stress that the industry doesn't need another vague vision statement.

MIX OF STAKEHOLDERS The guide's authors also want to reach real estate end-users and their service providers who are less attuned to corporate social responsibility factors outside their core business. "Within those companies for which real estate is not a core business, the resource will be of particular interest to: chief executive officers, boards of directors, chief financial officers, chief operational officers, human resources directors, senior risk and compliance executives, communications and marketing directors, and CSR and sustainability officers," the guide's executive summary promises.

Checklists for self-assessment are central to the exercise. The guide sets out five key issues, each with several related concerns and recommended measures, for the three stages of a building's life cycle. Similar overarching themes appear in each stage – development, in-use and recovery/redevelopment – while addressing different circumstances and parties.

This is designed to prompt all stakeholders to see clearer connections between their roles, and the overlapping outcomes of their actions. The development phase, for example, looks at the process of land acquisition, the integrity of construction costing, treatment of workers, environmental stewardship and assurances of the quality of the end product – factors that will later bear on how users experience the building.

Ultimately, too, the RICS-UN process could help companies comply with their own corporate social responsibility reporting requirements and/or better position landlords to attract tenants with corporate social responsibility mandates.

"This is particularly true for real estate users," the guide notes.

"This group of stakeholders may occupy a building without taking an interest in or having an opportunity to access information about the building's history. This includes how the land was acquired, which suppliers and materials were used in its construction, or whether any human or labour rights were violated in the process of its development." zz The complete text of the RICS/UN Global Compact guidelines can be found at http://www.rics.org/ca/about-rics/responsible-business.

The preceding article is reprinted from the REMI network. See www.REMInetwork.com

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Canadian Property Management | August 2015 35

maintenance&housekeeping

QUAT BINDING IS BAD CHEMISTRY Cleaning Cloths Can Undermine Positive Ions in Disinfectants

By Dawn Shoemaker

QUATERNARY ammonium chloride – commonly called "quat" – is a major ingredient in disinfectants. Disinfectants with quat have been used for decades, and are popular because they are effective against a wide variety of pathogens that may find their way onto touchable surfaces. They are also less odorous and are long lasting when properly diluted and applied.

However, cleaning effectiveness can be undermined when positively charged ions in the disinfectant meet with negatively charged ions in a cotton cleaning cloth.

The positive attracts the negative and essentially absorbs it, but, in doing so, diminishes its own strength.

This reaction, known as quat binding, can compromise the disinfectant's performance. For example, in one study, a cotton cloth was placed in a pail filled with a properly diluted quat disinfectant.

After the cloth soaked in the pail for 10 minutes, the effectiveness of the quat solution had essentially been cut in half.

“When this happens, the disinfectant isn’t killing pathogens as it should,” says J. Darrel Hicks, author of Infection Prevention for Dummies. The label on an EPA-registered disinfectant will always state the types of pathogens it can eliminate, but quat binding undermines that assurance.

Nevertheless, quat binding is not a widely understood phenomenon. Hicks laments that many environmental services professionals responsible for preventing the transmission of disease within health care facilities are unaware and/or discount the extent of the possible impact on effective cleaning, sanitizing and disinfecting.

36 August 2015 | Canadian Property Management

Others do acknowledge the potential risk and cost.

“We spend a lot of money on cleaning supplies, so to render [them] ineffective is a waste of money," says Jonathan Cooper, an environmental services director at a Florida hospital.

"You think you’re cleaning but you’re really moving bacteria from one surface to another.”

As the professionals in the cleaning industry become more familiar with the problems posed by quat binding, they are developing different products and cleaning procedures to address the issue. These include: • Cleaning wipes made of materials that inhibit quat absorption; • D i s i n f e c t a n t s w i t h h i g h e r concentrations of quats so, even if the product is absorbed into the cleaning applicator, it retains levels to effectively disinfect surfaces where it is used; • Better training for cleaners on safer and more effective spray-and-wipe cleaning procedures, and spraying the disinfectant directly onto

surfaces to be cleaned when it is safe to do so; • Spray-and-vac cleaning systems where no cleaning cloths or mops are used, eliminating the possibility of quat binding. The machine applies disinfectant (or cleaning solution) directly to surfaces, rinses and then vacuums up all moisture and soils. In some cases, these machines can also be used effectively without cleaning solution or disinfectant, completely eliminating the problem.

“Our first step now, however, is just becoming much more familiar with quat binding,” says Matt Morrison, Communications Manager for Kaivac No-Touch Cleaning systems. “With awareness comes understanding and it helps us develop new ways to help ensure effective, hygienic cleaning that protects human health.” zz Dawn Shoemaker specializes in writing about the professional cleaning and building industries.

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events

BOMEX MARKS ITS SILVER ANNIVERSARY Québec City, September 15-17, 2015 THE HOST CITY exemplifies the theme – History Forms. Technology Transforms – of this year's 25th annual BOMEX, bringing together Canada's 11 local chapters of the Building Owners and Managers Association (BOMA). Three days of learning, networking and joie de vivre are set for Québec City, September 15-17, at the Québec City Convention Centre and other notable landmarks of the 400+-year-old city.

"It is an honour for us to welcome representatives of Canada's commercial real estate industry to our province's charming capital for the first time," says Bruno Turcotte, President of the BOMEX 2015 Organizing Committee. "We are particularly flattered that Québec City was selected to host the BOMEX Conference and Exhibition on its 25th anniversary."

An impressive and diverse lineup of motivators and dynamos will share market analysis, sustainability guidance, entrepreneurial insight and inspirational life experiences during the conference's two morning and afternoon plenary sessions, September 16 and 17. Speakers include: two-time Olympic gold medallist, Alexandre Bilodeau; Mike Harcourt, a former Premier of British Columbia and Mayor of Vancouver; business innovators, Éric Fournier and Dominique Brown; and senior real estate professionals addressing timely economic and industry issues in an engaging panel discussion.

The "Technology Transforms" theme comes through in four slates of concurrent workshops, providing delegates with a choice of learning opportunities about operational, design, management and human 38 August 2015 | Canadian Property Management

resources strategies. Delegates also have the opportunity for one-on-one dialogue with suppliers of innovative technology, products and services in the 80-exhibit on-site tradeshow, September 16.

Among the exhibitors will be the three winners of BOMA Québec's inaugural Real Estate's Cleverest contest, devised in cooperation with L'Université du Québec à Montréal (UQAM) Ivanhoé Cambridge Chair in Real Estate, as a showcase for young real estate entrepreneurs. The clever winners, who will also make 15-minute presentations to BOMEX delegates, emerged from a competitive field of nine finalists judged by a jury of senior managers from leading real estate companies.

Looking off-site, social activities will give attendees a view to both historic architecture and streetscapes and spectacular natural features. The popular BOMEX Golf Classic tees off September 15 at Golf Royal Québec – a classic course lined with 100-year-old evergreens and located near stunning Montmorency Falls, the 83-metre cascade measuring 30 metres higher than Niagara Falls.

Non-golfers can alternatively spend this traditional pre-conference leisure time on an afternoon guided bus tour to the city's historical sites. Both groups then meet up for the evening's welcome reception at Chappelle du Musée de l'Amérique francophone.

After a first day of studiousness, Wednesday night ushers in the annual BOMEX Fun Night. The Painchaud Family – four multi-instrumentalist siblings who have gained an international

following for their talented musicianship and spirited interpretation of popular songs – will animate the gathering at Terminal Dalhousie overlooking the St. Lawrence river.

Closing out the proceedings on a celebratory note, the annual BOMA Awards Gala unfolds at the venerable Fairmont Château Frontenac on Thursday night. Like BOMEX itself, 2015 marks the 25th year for the national awards recognizing excellence in building management and operations, and outstanding service to the industry.

"BOMA Québec has done an astonishing job putting together an amazing conference, and hosting it in beautiful Québec City is icing on the cake," says Benjamin Shinewald, President and Chief Executive Officer of BOMA Canada. "We are very excited to use BOMEX 2015 to launch the new brand for BOMA BESt, our flagship environmental certification program for existing buildings. There are tons of new and exciting things happening with BOMA BESt, and BOMEX is a great place to begin to unveil them. We are also thrilled that our colleagues from BOMA International, Rob Brierley and Henry Chamberlain, are making the journey to Canada to join us."

"Be it to strike new profitable relationships, to learn and recharge, or to have fun while doing a little bit of both, I assure you the three days will be worth the trip," concurs BOMA Québec President Dominic Gilbert. zz For more information about BOMEX 2015, see the website at www.bomex.ca or http://bomex2015.ca/

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