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News Canadian Real Estate Magazine   August 16, 2017   187   0   0   0   0   0
Real estate bonds are on the verge of shaking up the Canadian real estate investment landscape.Investors need more options and Canadian investment company SKYIRE has responded by launching a series of next generation real estate bonds that deliver growth participation and mortgage security.The firm’s RealProperty Bonds are one of the three new offerings. “RealProperty Bonds offer maximum long-term growth, optimum tax efficiency and bondholders are secured directly against the property via a collateral mortgage,” explains George Lawton, CEO, North American Home Finance Inc.“Profit participation is based on the realized growth in the underlying real estate development.” RealProperty Bonds have a time horizon of 66 or 90 months and contracted annualized returns of up to 8% over 66 months or 9.5% over 90 months.They provide a predictable return on investment and the growth rights – which make up about 75% of the total profit – are taxed as capital gains, at a lower rate than interest income.Tax-deferred rollover opportunities are also offered at a discount. “For significant returns with a choice of terms, RealProperty Bonds are a tax efficient choice,” Lawton says.“The returns have two components:interest on a collateral mortgage and growth rights providing a fixed return.” RealProperty Bonds invest in residential real estate developments and their structure provides the growth associated with limited partnerships and the security
A closer look at CREA’s numbers
News Canadian Real Estate Magazine   August 15, 2017   119   0   0   0   0   0
Canada’s average home price may have shown the most precipitous decline since the recession, but one industry veteran sees the silver lining “Despite all the stuff happening in the Greater Golden Horseshoe the numbers aren’t dramatically different than we expected.We’re pretty well on par,” Christopher Alexander, regional director with RE/MAX, told Canadian Real Estate Wealth.“There were significant changes the government introduced on April 20 and any time that happens sometimes drastic outcomes can happen.I’m actually pretty pleased.” Canada’s average home price dropped 1.5% to $607,100 month-over-month, which is the largest decline since 2008’s recession. Toronto led the charge with its own 4.7% month-over-month dip. The reason for the GTA’s cooling, according to many pundits, is the Ontario Fair Housing Plan, introduced in April, which included a foreign buyers tax and other measures meant to address affordability issues. That, coupled with increased mortgage rates, has many Canadians sitting on the sidelines and waiting to see how it all shakes out. However, some – including the Canadian Real Estate Association – believe the most precipitous declines may have already been felt in Toronto. “July marked the smallest monthly decline in Greater Golden Horseshoe home sales since Ontario’s Fair Housing Plan was announced in April,” said Gregory Klump, CREA’s Chief Economist.“This suggests sales may be starting to bottom
Home equity in red-hot markets impelling consumer spending—study
News Canadian Real Estate Magazine   August 15, 2017   156   0   0   0   0   0
Canadian consumer spending in the country’s hottest real estate markets is on an upward spiral once more, a trend propelled by mounting home sale prices despite slower transaction volumes. “The sharp appreciation in home prices in Ontario and British Columbia fuelled by extremely accommodative monetary policy have undoubtedly encouraged some homeowners to tap into their home equity in order to support a spending binge,” National Bank chief economist Stéfane Marion told BuzzBuzzNews. Canadians are taking advantage of home equity lines of credit (HELOCs) to feed this hunger for spending.In the previous quarter alone, consumer-credit grew at the fastest rate since 2010. Approximately 3 million HELOCs are currently active nationwide, according to data from the Financial Consumer Agency of Canada. The country’s sixth largest bank stated that HELOCs currently comprise around 45 per cent of consumer credit. The average outstanding balance on these loans was $70,000. “We estimate that HELOCs at Canadian chartered banks have surged by close to $20 billion in the past year, accounting for close to 60 per cent of the growth in total consumer credit,” Marion noted. However, these developments—while beneficial for GDP growth—do not bode well for the system’s long-term stability. “So, the resurgence in consumer credit may ring some alarm bells at the Bank of Canada
TJX Flexes Brick-and-Mortar Muscles in a Digital World: Gadfly
 
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Canadian Real Estate StreetSmartREI   August 15, 2017   139   0   0   0   0   0
(Bloomberg Gadfly)—It's back to business as usual at TJX Cos. Inc. And by that I mean the company is once again serving a slice of humble pie to the long list of retailers that are bemoaning declining store traffic and slowing sales. TJX, the parent of off-price powerhouses T.J. Maxx, Marshalls and HomeGoods, reported on Tuesday that comparable-store sales in the latest quarter were up 3 percent over the same period a year earlier. It also raised its earnings guidance for the full year. That likely came as a relief to investors, who got skittish last quarter when the company recorded only a 1 percent increase on this measure after a long streak of more robust growth. And it again positions TJX as a standout in a bleak retail landscape in which the likes of Macy's Inc., Kohl's Corp., and JC Penney Co. Inc. are in a desperate fight to remain relevant. It is a testament to TJX's leadership that the company has been thriving in such a challenging moment. But investors should not let the company's success get in the way of asking some hard questions about its strategy to keep the momentum going. TJX already has a huge fleet of stores, and it is betting that there's appetite for more of them -- a roughly 50 percent increase, in fact. The company says it can grow to some 5,600 outposts over the long term. In North America alone, TJX has projected that there...
2017 Top Brokers | National Real Estate Investor
 
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Canadian Real Estate StreetSmartREI   August 15, 2017   128   0   0   0   0   0
For nearly a decade and a half, CBRE Group has topped NREI’s ranking of the top brokerage firms. This year marked the 14th consecutive time CBRE has topped the list, which is based on the total value of each firm’s leasing and investment sales transactions. CBRE cracked $300 billion in transactions for the second consecutive year in 2016—$110.8 billion in leasing deals and $211.4 billion in investment sales. The firm’s volume of deals increased 3.7 percent over 2015. (That’s a bit smaller than the 9.0 percent growth it had experienced the previous year.) Looking back further, however, CBRE Group has doubled its deal volume in just six years compared with the $159 billion in deals in posted in 2011. Slower growth was a theme among many firms this year. Many saw slower paces of growth than they did a year ago. Some firms even experienced year-over-year decreases in deal volume. Overall, six firms cracked $100 billion in deals, 13 were exceeded $20 billion in volume and 18 were over $10 billion. This version of the ranking features additional data, including breakdowns of volume by leasing and investment sales globally and in the U.S in 2016. It also includes the number of transactions closed, the number of brokers employed and revenue figures for some firms. * JLL chose to only submit a figure for its global investment sales volume. It did not submit a value for its leasing transactions. Corfac International chose not to submit information in this...
10 Must Reads for the CRE Industry Today (August 15, 2017) | National Real Estate Investor
 
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Canadian Real Estate StreetSmartREI   August 15, 2017   115   0   0   0   0   0
10 Must Reads for the CRE Industry Today (August 14, 2017) Aug 14, 2017 10 Must Reads for the CRE Industry Today (August 11, 2017) Aug 11, 2017 10 Must Reads for the CRE Industry Today (August 10, 2017) Aug 10, 2017 10 Must Reads for the CRE Industry Today (August 9, 2017) Aug 09, 2017
Some Apartment Markets Are Facing Challenges Estate Investor
 
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Canadian Real Estate StreetSmartREI   August 15, 2017   147   0   0   0   0   0
In a few overbuilt downtowns, apartment rents are starting to fall. But experts claim that demand for apartment units continues to be so strong, the trend won’t last for long. “The story in these markets is the apartment story writ large: the high levels of apartment construction are not enough to house the 1.2 million or so new households[1] formed each year without increased single-family construction,” says John Affleck, research strategist with the CoStar Group. Apartment rents are still growing, but not as quickly as they had been, in markets across the country, according to research firm RealPage Inc. Rent growth is slowing the most in a handful of cities where developers have opened thousands of new apartments recently. Rents fall in Houston In Houston, rents dropped by 1.6 percent on average over the past year, according to RealPage. In the top “urban core” neighborhoods where developers have opened the most new apartments, rents have fallen by more than 10.0 percent. Apartment occupancy rate in the city averaged 92.9 percent in mid-2017, down 180 basis points from the high of 2015. “There is still some pain immediately ahead for Houston, mainly reflecting that another 22,000 or so apartments will be delivered in the coming few months,” says Greg Willett, chief economist for RealPage. However, the outlook for Houston is strong. “Once we get past early 2018, however, the completion pace will slow to a trickle in a metro likely to be experiencing robust employment growth,”...
Canadian home sales continue slide
News Canadian Real Estate Magazine   August 15, 2017   115   0   0   0   0   0
Home sales fell once again in July, according to the Canadian Real Estate Association. National home sales fell 2.1% from June to July and 11.9% year-over-year.Home sales are now down 15.3% from the record set in March.  The average home price, meanwhile, decreased 0.3% year-over-year to $478,696. Sales were down in nearly two-thirds of all markets, including Calgary, Halifax, Ottawa, and the Greater Toronto Area. “July marked the smallest monthly decline in Greater Golden Horseshoe home sales since Ontario’s Fair Housing Plan was announced in April,” said Gregory Klump, CREA’s Chief Economist.“This suggests sales may be starting to bottom out amid stabilizing housing market sentiment.Time will tell whether that’s indeed the case once the transitory boost by buyers with pre-approved mortgages fades.” Newly listed homes dropped 1.8%, led by a decline in the GTA. “Many other markets in the Greater Golden Horseshoe region have also seen new supply pull back recently after having jumped immediately following the Ontario government’s announcement of its Fair Housing Plan in late April,” CREA said.“New listings were also down in Calgary, Edmonton, Montreal and northern British Columbia, with the lattermost region having been hit by wildfires.” Country-wide, the real estate market is considered balanced, with the sales to new listings ratio sitting at 53.5%. Based on
Mall REITs Grappled with Tenant Closures in Second Quarter | National Real Estate Investor
 
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Canadian Real Estate StreetSmartREI   August 15, 2017   137   0   0   0   0   0
At 2017’s halfway mark, mall REITs continue to manage the fallout from anchor store closures, in-line tenant bankruptcies[1], single-digit NOI growth and a stock market determined not to overvalue their underlying properties. Regional mall REITs delivered a negative year-to-date return of 11.7 percent[2], according to NAREIT’s analysis of how 30 retail REITs performed by July 31. However, mall REIT’s chief executives remained optimistic that they still had solid strategies to deliver value to shareholders and property investors. PREIT: Changing Course in a Difficult Environment Philadelphia-based PREIT is one year into its strategy to transform its portfolio into a collection of high-end mall properties with a growing assortment of dining and entertainment options to appeal to Americans’ changing shopping habits. PREIT’s same-store NOI rose to $60.2 million in the second quarter of 2017, compared with $60 million for the same period one year ago. The REIT attained $468 in same store sales per sq. ft. for the year ended June 30, and CEO Joe Coradino said the company was approaching another high mark in same store sales, of $525 per sq. ft. The company expects non-anchor occupancy to range between 93 percent and 94 percent. PREIT currently owns 22 malls that comprise 23 million sq. ft. of retail space. “We are not in a catastrophic environment,” Coradino said about the retail environment during a conference call about the company’s results. “This is simply a redirection, and it is likely as bad as it is going to be.” ...
News Canadian Real Estate Magazine   August 14, 2017   160   0   0   0   0   0
Don’t be concerned if you haven’t heard about real estate bonds yet, not many investors have.But as Canadian investors look for alternative ways to generate income, growth and maximize their tax savings on their investments, secured real estate bonds are destined to take off. Real estate bonds are different from traditional real estate investments, like residential income properties, REITs, limited partnerships, syndicated mortgages and MICs, in some fundamental and crucial ways.They represent a new opportunity for investors who see the long-term benefits of real estate investing but want a more well-rounded and efficient vehicle with which to invest in the market. “Despite this wide range of choices, the available options may not meet every investor’s specific requirements,” says George Lawton, CEO, North American Home Finance Inc.“Because investors have differing priorities – such as security, income, return on investment, and tax treatment – each investor’s needs are specific.In response to those needs, real estate bonds are evolving to provide more options with unique elements that expand the potential of real estate investment.” Traditional real estate investments are a familiar tool amongst the investor community and although real estate bonds are not aiming to replace these options, they do represent a much-needed evolution in real estate investment options.“SKYIRE has launched three separate next-generation real estate bonds that provide growth participation as well
10 Must Reads for the CRE Industry Today (August 14, 2017) | National Real Estate Investor
 
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Canadian Real Estate StreetSmartREI   August 14, 2017   120   0   0   0   0   0
U.S. Tax Change Proposals Anger Builders, Real Estate Agents, Charities[1] “Looking for an easier legislative win ahead of the 2018 midterm elections, most lawmakers in the Republican majority want to cut individual incomes taxes. President Donald Trump has been pushing hard for tax changes this year. Still, proposed changes to the personal tax code have already stirred opposition from real estate agents, home builders, mortgage lenders and charities. These groups say proposed changes will hurt home sales and cut charitable contributions.” (CNBC) How to Insure Your First Investment Property Isn’t a Bust[2] “Investment property is a prime way to start your real estate portfolio and get in on the rental game. While it can be easy to get caught up in the excitement of making your first property purchase, it is important to take it slow and proceed with some caution. Jumping the gun on a property can be a costly lesson for buyers to learn. You could end up with an investment that costs far more than you bargained for.” (Forbes) Chicago’s Grocery List Gets Shorter: Fewer Stores in Area[3] “Grocers aren't stocking up on new stores in Chicago, leaving many shoppers with fewer places to fill their cart. There are 262 grocery stores in Chicago and close-in suburbs, the lowest number since 2009, according to an urban grocery report by retail brokerage Mid-America Real Estate Group. Grocers occupy just over 9.3 million square feet of space, also an eight-year low.” (Chicago Tribune) Meridian, Rockefeller Partner on DC-Area Office Tower[4]...
Wait for U.S. Inflation Pickup Drags On, Clouding Fed Outlook
 
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Canadian Real Estate StreetSmartREI   August 14, 2017   117   0   0   0   0   0
(Bloomberg)—It’s becoming an endless wait for U.S. inflation to pick up. And the fifth straight miss on core-price forecasts adds to the burden on Federal Reserve policy makers to explain why they’re moving toward a December interest-rate increase. Consumer prices continued to be subdued in July, a Labor Department report showed Friday, pushing against the idea that unemployment at a 16-year low will help inflation accelerate. Declines in hotel rates, vehicle prices and child care accompanied a continuing drop in wireless-phone service costs that some Fed officials have labeled as transitory. Highlights of Consumer Price Index (July) Consumer price index rose 0.1% m/m (est. 0.2%) after no change the prior month; up 1.7% y/y (est. 1.8%) Excluding food and energy, so-called core CPI rose 0.1% m/m (est. 0.2%); up 1.7% y/y (matching est.) Five-month gain in core CPI is weakest stretch since 2010 Hotel costs fell record 4.9% m/m; new vehicle prices dropped 0.5%, most since 2009. Economists also cite retailers’ lack of pricing power and still-tepid wage gains as factors keeping price pressures subdued, with the July results another sign inflation may take longer to reach the central bank’s goal even as it prepares to wind down asset holdings. The report adds fodder to the debate among policy makers over whether price gains are indeed making clear progress toward their 2 percent goal. “This is a string of five weak prints in a row -- it is not just noise, it’s the trend, and it reflects...
Which Product Types Will Be the Most Profitable in Seniors Housing
 
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Canadian Real Estate StreetSmartREI   August 14, 2017   140   0   0   0   0   0
With all the talk about aging baby boomers and life-extending health care advances, it might be a bit bewildering deciding which seniors housing assets are best primed for success. Lee Everett, managing consultant at research firm CoStar Portfolio Strategy, might be able to provide some clarity. Two product types—active adult communities and continuing care retirement communities (CCRCs)—will be the winners in the seniors housing race both in the short and the long term, Everett says. Everett and his CoStar colleagues are bullish about active adult communities, which are age-restricted developments that offer an independent lifestyle and relatively maintenance-free housing. Growth in this segment is “just around the corner,” with more baby boomers getting older and seeking alternatives to traditional homes and apartments. “We’re looking at a period where there’s going to be a lot of fast and explosive growth in active adult communities,” Everett says. The amount of growth in active living communities will depend on how the projects are developed, says seniors housing consultant Andrew Carle, an adjunct professor at George Mason University. For instance, baby boomers aren’t inclined to live in a community anchored by a golf course. They do, however, feel comfortable in community settings, since many of them attended big high schools and colleges, and have worked at big corporations, Carle says. “What we know about baby boomers—and I’m one, by the way—is we actually will congregate. We’ve never been alone; we’re probably the most social demographic in history,” Carle says. One...
What Will Hosting the 2028 Olympics Do for Los Angeles’ Reputation?
 
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Canadian Real Estate StreetSmartREI   August 14, 2017   82   0   0   0   0   0
I was proud and excited about the recent announcement that my hometown Los Angeles will be hosting the 2028 Summer Olympic Games. Los Angeles joins Paris and London as the only cities to have hosted an Olympics three times, though Los Angeles will set a milestone as the first city to host twice in the modern era. Los Angeles aspires to share another critical designation with Paris and London – joining the upper echelon of elite global cities. Los Angeles’s thriving[1] commercial real estate market is leading to robust growth in infrastructure and office space, boosted by an infusion of tech, entertainment and other growing businesses. A decade of preparation for the 2028 Olympics, and the economic influx and added post-event revenue that this will likely bring, should catapult Los Angeles into a higher ranking of dominant world cities. A world city (also called a global city or a world center) is a critical nerve center of business, innovation, economic output and cultural capital. World cities propel global finance, political stability, quality of life for its citizens and information exchange. Some of the key metrics used to quantify global influence, as in AT Kearney’s annual global cities report[2], include infusion of trade, international business, innovation and multiple major industries (including the presence of industry leaders), network centers and strategic regional hubs, as well as intrinsic value to the global community at large. Higher ranking global cities often dictate[3] where businesses choose to build major hubs and headquarters. A rise in world...
Which Product Types Will Be the Most Profitable in the Seniors Housing Sector?
 
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Canadian Real Estate StreetSmartREI   August 14, 2017   111   0   0   0   0   0
With all the talk about aging baby boomers and life-extending health care advances, it might be a bit bewildering deciding which seniors housing assets are best primed for success. Lee Everett, managing consultant at research firm CoStar Portfolio Strategy, might be able to provide some clarity. Two product types—active adult communities and continuing care retirement communities (CCRCs)—will be the winners in the seniors housing race both in the short and the long term, Everett says. Everett and his CoStar colleagues are bullish about active adult communities, which are age-restricted developments that offer an independent lifestyle and relatively maintenance-free housing. Growth in this segment is “just around the corner,” with more baby boomers getting older and seeking alternatives to traditional homes and apartments. “We’re looking at a period where there’s going to be a lot of fast and explosive growth in active adult communities,” Everett says. The amount of growth in active living communities will depend on how the projects are developed, says seniors housing consultant Andrew Carle, an adjunct professor at George Mason University. For instance, baby boomers aren’t inclined to live in a community anchored by a golf course. They do, however, feel comfortable in community settings, since many of them attended big high schools and colleges, and have worked at big corporations, Carle says. “What we know about baby boomers—and I’m one, by the way—is we actually will congregate. We’ve never been alone; we’re probably the most social demographic in history,” Carle says. One...
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