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KPMG Weekly Newsletter – For the Week Ending January 28, 2007

January 29, 2007

The following information was obtained from newspaper articles appearing
in the Globe and Mail and the National Post for the week ending January 28, 2007:

Homburg Invest Inc. increased its stake in Alexis Nihon REIT from 8.6% to 19.5% by acquiring 2.96 million shares in a private placement. Cominar REIT sweetened its bid for Alexis Nihon to $18.50 from $17, with the extra $1.50 coming in cash. Cominar also extended the deadline to vote on the offer to February 22.
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Toronto-based FirstService Corp. invested a total of US$14-million to acquire controlling interests in two consulting companies. First Service purchased an 80% interest in the San Francisco-based hotel consulting group PFK Consulting Corp. and its PFK Hospitality Research. First Service also bought a 60% interest in Ottawa-based MHPM Project Managers.
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According to a prospectus filed by Column Canada Issuer Corp., the owners of the West Edmonton Mall, the Ghermezian family, are raising $600-million through the issuance of mortgages secured by the mall’s assets. The $600-million in proceeds received through the sale of multi-class pass-through certificates of Column Canada represent a stake in a first mortgage bond issued by West Edmonton Mall Property Inc. West Edmonton Mall is estimated to have an appraised value of $926-million, a 54% increase from the appraised
value of $603-million in April, 2003.
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In the fourth quarter of 2006, mortgage-backed securities transactions in Canada included $386.3-million by Canada Mortgage Acceptance Corp., $553.6-million by Merrill Lynch Financial Assets Inc. and $787.6-million by Real Estate Asset Liquidity Trust.
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Imperial Oil Ltd. will begin talks with Calgary City Council regarding the purchase of a laneway between two pieces of property it owns, as part of a potential plan to build a new office tower in Calgary. Imperial is considering building a 35-storey, 700,000-square-foot tower to house employees now working in three buildings.
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Vancouver-based Concord Adex Investments Ltd. is planning to build 20 condominium towers with nearly 4,000 units on about 40 acres of land near the southwestern corner of Sheppard and Leslie in Toronto. Concord purchased the land from Canadian Tire Corp. for $149.7-million in October, 2006.
According to N. Barry Lyon Consultants, 9,995 new condominium suites along the Sheppard corridor will go on the market in 2007.
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According to J.J. Barnicke Ltd., the office vacancy rate in the Broadway Corridor in Vancouver is 3.4%, compared with about 6% in 2006. The vacancy rate for light-industrial tenants in the area is below 1%. By 2009, two new projects in the area will add 420,000 square feet of retail and office space occupied largely by national retailers. Vancouver-based PCI Group’s Crossroads project will redevelop the site of the former Fairchild Plaza mall with about 98,000 square feet of office space, 122,000 square feet of retail space and 98
condo units. Grosvenor Canada is developing a $150-million mixed-use project on a 2.2- acre site that will include big-box retailers, such as Home Depot.
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According to Canaccord Adams, the Canadian REIT sector is expected to produce a 12% to 15% total return in 2007.
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According to Demographia International, Canada’s housing market is the most affordable among six countries that include the U.S., Ireland, Britain, Australia and New Zealand. Regina was tied for first place with Fort Wayne, Indiana, and Youngstown, Ohio, as most affordable among 159 major urban housing markets. It would take a worker earning the average wage in Regina two years to make as much as the average home price in that city. Winnipeg and Quebec City placed ninth at 2.5 years. Vancouver made the list of the top 25 least affordable cities at 7.7 years of annual income to equal the average price of a home. The most expensive cities were Los Angeles at 11.4 years and San Diego at 10.5 years. Australia had the least affordable housing market of the six countries.
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According to Re/Max, residential housing values in Canada rose 264% to an average of $276,824 in 2006 from $76,021 in 1981. Nationally, the compounded annual rate of return was 5.3% over the past 25 years. The largest gain occurred in Barrie, where the average home value soared 372% to $244,000 in 2006 from $51,665 in 1981. Prices climbed 297% to $257,481 from $64,854 in Ottawa, jumped 290% to $351,941 from $90,203 in the GTA,
and increased to $203,178 from $59,366 in Halifax-Dartmouth. Increases of 292% were reported in Montreal, 242% in the Greater Vancouver Area, 229% in Victoria and 227% in Calgary.
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According to Statistics Canada, homeowners’ replacement costs increased 8.2% in December from a year earlier.
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According to Urbanation Inc., more than 3,000 new condominium units were sold in the Toronto Census Metropolitan Area in the fourth quarter of 2006. Total new condominium apartment sales reached more than 113,000 units in the past 10 years.
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Blackstone Group LP raised its bid for Equity Office Properties Trust to US$22.4-billion, or US$54 a share from US$48.50. Including debt, the offer is valued at US$38.3-billion. The revised bid tops Vornado Realty Trust’s offer of about US$21.6-billion or US$52 a share.
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The value of takeovers of property companies in the U.S. doubled to nearly US$200-billion in 2006. Blackstone Group LP’s real estate funds have generated annual returns of 35% to 40% since 1992. Blackstone reportedly plans to raise another US$8-billion to US$10-billion real estate fund by June, 2007.
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Los Angeles-based Coastal Resources LLC purchased two adjacent Santa Barbara County cattle ranches from Bixby Ranch Co. for a price reportedly very close to the combined asking price of US$155-million. Both the 8,580-acre Cojo Ranch and the 15,814- acre Jalama Ranch are categorized in California as noncommercial properties.
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According to the National Association of Realtors, sales of existing homes in the U.S. fell 0.8% to a seasonally adjusted annual rate of 6.22 million units in December from November. Sales of condominiums rose 2.1%, while sales of single-family homes dropped 1.3%. Sales of existing homes for all of 2006 fell 8.4% to 6.48 million units from 2005, the biggest annual decline since 1989. Sales of single-family homes dropped 8.1% to 5.68 million, while sales of condominiums and cooperatives were down 10.4% to 803,000 units. Sales dropped 15.5% in the West, 7.1% in the South, 5.5% in the Northeast and 5.8% in the Midwest. The existing-home median price increased 1.1% to US$222,000. The NAR forecasts sales will decline 1.2% in 2007, while Fannie Mae projects a drop of 7% to 8%.
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According to Merrill Lynch, office vacancy rates in New York City are 10.3%, down 112 basis points from 2006. Rents are climbing 30% year-over-year in New York, making it the top office market in the U.S.
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According to the UK property Web site Rightmove, house prices are expected to rise 6% across the UK in 2007. The number of properties for sale is down 18% from January, 2006, helping to boost average prices 0.5% so far in January of this year. The price of an average home in the U.K. rose 13.5% in the past year and reached £222,859 in January. Prices in the top end of the London market climbed 22.4% last year to a record £356,192 ($826,353) and Savills forecasts a gain of 15% in 2007. The biggest increase in a London borough was seen in Kensington and Chelsea, where the average price grew 61.8% to £1.15-million over the year.
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According to Standard and Poor’s, Macau reported that earnings from gambling activities climbed 22% to US$7-billion in 2006 from the previous year. Earnings from gambling activities on the Las Vegas Strip are reportedly expected to reach about US$6.6-billion for 2006. Macau’s earnings are projected to reach US$10-billion by 2010.
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Richard Branson, owner of Virgin Group Ltd., reportedly may open his first casino in Las Vegas or Macau and is seeking possible partners.
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Real Estate Blog, Re/Max Report, and more!

I recently came across a real estate blog which some of you may find interesting. It’s called Ken’s Blog. Ken has written some very interesting articles. He also highlights some of the things they are doing at his office and at the local Board. I encourage you to check it out!

Then there is all this ‘news’ about the growth in the Toronto market over the past 25 years. 290%!! Wow! Wow! Wow! To view the Re/Max Canadian report click HERE. It’s a very interesting report and will no doubt fuel even more real estate activity. Hmmmm….Re/Max fuelling more activity as mortgage rates climb (although slowly), layoffs at major corporations start to happen, and also while companies start to fall short of market expectations. Interesting to say the least.

For a quick coast-to-coast take on this article go HERE.

To read the Toronto Star’s take on the report click HERE.

The Globe and Mail also has an article on the report. You can find it HERE. There is also some very interesting commentary on the report from readers across Canada. Check it out HERE.

CBC.ca, Canada News Wire, and Canada.com also reported on Re/Max’s findings.

Now what would you say if I told you that someone once told me that what goes up usually come down? I’m just the messenger. But check out THIS REPORT about a ‘downturn’ in resale prices.

Ever wonder why you get confused about owning a home and the masive debt/mortgage that keeps you up at night? Check THIS out.

KPMG Weekly Newsletter – For the Week Ending January 21, 2007

January 22, 2007

The following information was obtained from newspaper articles appearing
in the Globe and Mail and the National Post for the week ending
January 21, 2007

Brookfield Asset Management Corp. has agreed to purchase Mills Corp. for US$1.35-billion in cash, or US$21 a share. With debt and preferred stock, the total value of the deal is about US$7.5-billion. Brookfield will provide debt financing for Mills until the transaction is completed, probably in the second half of 2007. Brookfield’s long-term goal is to bring institutional partners into the acquisition.
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Kentucky-based Ventas Inc. is offering $2.14-billion (including debt), or $15 a unit, for Sunrise Senior Living REIT. A special committee of the Canadian REIT’s board is recommending acceptance of the offer.
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Chartwell REIT will spend $52-million on new acquisitions, mezzanine financings and the expansion of a nursing residence. Chartwell purchased a retirement home in Ontario for $22-million from Spectrum Seniors Housing Development LP and its partners. The REIT also acquired a 50% interest in the Peninsula Retirement Residence in White Rock, British Columbia, for $14.6-million and is investing about $3.1-million to expand a five-storey building attached to Manoir Pierrefonds in Montreal.
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RioCan REIT closed a $151.5-million equity offering of six million units at $25.25 per unit through a syndicate of underwriters led by RBC Dominion Securities Inc. The proceeds will be used for acquisitions, including partially funding the recent $223-million purchase of the Yonge Eglinton Centre office-and-retail complex in midtown Toronto. The underwriters have the option to issue 600,000 additional units, which would generate additional proceeds
of about $15.2-million.
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The Greater Toronto Airports Authority plans to lease land for a new hotel development and two office towers as part of a $300-million development project on a 15-acre site now used for parking. The proposed project could include between 300 and 400 new hotel rooms, and up to 400,000 square feet of office space in buildings limited by regulations to a height of about 12 or 13 storeys, as well as conference, restaurant and retail space. A request for proposal has been issued to the real estate community and the winning
developer is expected to be named in April, with preliminary planning work beginning in the summer of 2007.
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Alcan Inc. has purchased the Salvation Army’s heritage-protected sanctuary and adjacent administrative building in Montreal, as part of a plan to expand its 25-year-old headquarters next door. Alcan plans to spend up to US$50-million to renovate and expand its head office complex.
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Summit REIT, owned by ING Real Estate, reportedly acquired its 19.9% stake in Alexis Nihon REIT by purchasing about 2.8 million units from Fidelity Investments. Halifax-based Homberg Investment Inc. has purchased an 8.6% stake in Alexis Nihon.
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Toronto-based Whiterock REIT announced last week that it is seeking a buyer or a merger partner.
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Former Royal Host REIT CEO Greg Royer and his brother Terry purchased Royal Host’s US$3.6-million U.S. hotel management business in December and plan to grow it to 125 hotels by the end of 2007.
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Magna Entertainment Corp. will cease operating the Great Lake Downs racetrack in Muskegon, Michigan, after the 2007 race meet. Great Lake Downs is expected to generate a pretax loss of about US$1.8-million for the year ended December 31, 2006.
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According to Royal Bank of Canada, Canadian REITs generated returns of more than 25% in each of the last two years. In 2006, the market capitalization of REITs listed on the TSE rose nearly 40% to $31-billion.
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According to the city of Vancouver’s recent jobs and land-use plan, downtown Vancouver will need about 65 million square feet of space to accommodate job growth over the next 20 years, which is about 10 million more square feet than the capacity under current land-use regulations. According to Cushman & Wakefield, Class A office vacancy rates in downtown Vancouver have dropped to 3.3% from 12.3% two years ago. There are currently 47 residential buildings under construction in the city’s central core.
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According to the Canadian Real Estate Association, sales of existing homes in Canada totalled 336,271 in 2006, down slightly from a record 336,513 units in 2005. Calgary, Edmonton, Saskatoon, Winnipeg, Sudbury, Ottawa, Montreal and Quebec all set records for sales activity last year. Sales in December increased 4.9% to a seasonally adjusted 29,077 homes from 27,707 in November. Sales rose to a record monthly high of 2,015 units in Calgary, up 18% from November. New listings fell 0.6% nationally to 46,482 units. Average
prices in major markets rose 10.6% to a record $294,270 in 2006. The average price in December climbed 8.1% to $294,190. Prices increased 9.2% in the fourth quarter from a year earlier. The average price of a home in Calgary rose 32% to $361,611 in December from a year earlier.
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According to Canada Mortgage and Housing Corp., construction starts on low-rise housing across the GTA fell 14% to 20,765 units in the period from January to November, 2006, from 24,247 units during the same period in 2005. The average price for a new detached home across the GTA increased 10.1% to $450,483 from $408,839. In Durham Region, the average price rose 11.9% to $341,853. In Halton Region, the average price climbed 20% to $507,920, with average prices of above $500,000 in Burlington and more than $650,000 in Oakville.
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According to the Toronto Real Estate Board, sales of existing homes in the GTA rose 6% to 1,592 units in the first half of January from 2006. The average price dropped 1% to $340,793 from December but was up 10% from the same period in 2006.
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Vornado Realty Trust teamed up with Starwood Capital Group Global LLC and Walton Street Capital LLC to offer US$21.6-billion, or US$52 a share, for Chicago-based Equity Office Properties Trust. This tops Blackstone Group LP’s offer of US$20-billion, or US$48.50 a share, accepted by Equity Office’s board on November 19.
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Morgan Stanley Real Estate will purchase CNL Hotels & Resorts Inc. for about US$4.2-billion, or US$20.50 per share, including debt to take control of 8 luxury hotels. CNL Hotels will sell its remaining 51 properties to Ashford Hospitality Trust for about US$2.4-billion in cash immediately before its transaction with Morgan Stanley.
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Investor Carl Icahn boosted his stake in Florida-based home builder WCI Communities Inc. to 6.1 million shares, or a 14.6% interest, from 1.7 million shares.
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The U.S.-based National Association of Home Builders/Wells Fargo index of sentiment climbed to a six-month high reading of 35 in January from a revised 33 in December.
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According to the Mortgage Bankers Association, applications for U.S. home mortgages have risen in seven of the past 11 weeks and are up 17% from their 2006 low in late October.
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According to the National Association of Realtors, the median price of a new home in the U.S. is projected to climb 3% in 2007 to US$248,900, following a 0.3% increase in 2006.
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California-based Mortgage Payment Deferral Inc. has launched a “no payment for 12 months” mortgage and plans to offer the product across the U.S. this year.
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According to Mitchell, Maxwell and Jackson Inc., the average sale price of Manhattan apartments fell 5.7% in the third quarter of 2006. The average price of a condominium in the fourth quarter dropped to US$1,079,363 from US$1,144,024 a year earlier. Sales of properties worth more than US$2.5-million climbed from 4.7% to 6% of all transactions in the fourth quarter.
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Real Estate News compiled by RealCash

Hello everyone!

I hope everyone is enjoying and benefiting from our online community here. The amount of news, views, facts and figures available at this blog is outstanding! I don’t beleive there to be a more comprehensive site for those interested in real estate as well as those invloved in the business of real estate anywhere!

So, I need your help! Let as many people know about this awesome site! Tell your freinds and family! Tell your Realtor, your Mortgage Broker and Banker! Tell your clients!

Why?

Because it will benefit them. If you have benefited from this blog, let others in on the Best Kept Secret in Real Estate.

Now, on to the news……

“There’s a lot of dumb people making a lot of money in real estate” – Brad Lamb

$810-million Real Estate Deal for 2 Canadians

RRSP Season vs. Real Estate

RRSP Season vs. Real Estate – Part Deux

Real Estate Bubble News

***Agent Inner Circle*** – Find Interesting Articles in this Issue HERE!

KPMG Weekly Newsletter – For the Week Ending January 14, 2007

January 15, 2007

The following information was obtained from newspaper articles appearing in the Globe and Mail and the National Post for the week ending January 14, 2007

RioCan REIT has cancelled its plans to expand into the U.S. through a US$1.45-billion joint venture with Michigan-based Ramco-Gershenson Properties Trust.
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ING Real Estate will pay $91-million, or $17.50 per unit, for nearly 2.8 million units of Alexis Nihon REIT, giving ING a 19.9% interest in Alexis Nihon when combined with its existing holdings. The investment is being made through Summit REIT, which is now controlled by ING. In early December, Cominar REIT had offered $17 a unit for Alexis Nihon in a cash and-units deal.
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According to Canada Mortgage and Housing Corp., the seasonally adjusted annual rate of housing starts dropped to 211,500 units in December from 229,300 units in November. Multiple family starts dropped 13.9%, while single family starts were down 3%. Starts dipped 19% in Alberta. Urban starts were down 20.5% in the Prairie region and 17.9% in the Atlantic region. Starts across Canada climbed to about 227,400 in 2006 and are expected to fall to 210,900 units in 2007.Starts were up 20% in Alberta in 2006 from 2005.
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According to Canada Mortgage and Housing Corp, in Calgary the average price of a new single-family detached home is forecast to increase by nearly 38% to reach nearly $500,000 in 2007 from $353,662 in 2006.
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According to Statistics Canada, building permits rose to a record monthly high of $6.3-billion in November. Non-residential permits increased substantially, while housing permits were down 2.2%. Total building permits for the first 11 months of 2006 reached $61.1-billion, up 0.5% from the previous record of $60.8-billion for all of 2005.
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According to the Toronto Real Estate Board, sales of existing homes in the City of Toronto through the MLS increased 1% to a record 34,404 properties in 2006. The average resale price climbed 5% to $378,775. Sales for the GTA region from Burlington to Newcastle and north to Lake Simcoe reached 83,084 units, slightly below the 2005 record of 84,145 units. Sales in December were up 4% from a year earlier, with a 54% gain in Don Mills and in the South Humber neighbourhood of Etobicoke. The average home price for the region was $351,941.
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According to the Greater Toronto Home Builders Association, sales of new homes and condos for 2006 are expected to top 40,000 units.
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According to RealNet Canada, sales of new condominiums in the GTA totalled 16,948 from January to November, 2006. In 2005, there were 17,693 units sold for the full year, compared with 13,750 in 2004.
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According to Urbanation, the overall index price for a new condominium apartment in downtown Toronto was $380 per square foot in third quarter of 2006, compared with an average of more than $600 in downtown Vancouver and US$1,120 in Manhattan. Sales of new condo units in the Toronto Census Metropolitan Area rose 1.9% in the third quarter of 2006 from a year earlier and unsold inventory fell 6% from the previous quarter to represent below 23% of total condominium inventory. The overall average index price for a new condo unit in the Toronto CMA was $337 per square foot in the third quarter, 2.1% higher than in the second quarter and 8.4% higher than in 2005.
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U.S. home builder D.R. Horton Inc. reported that net sales orders fell to US$2.3-billion for the fiscal first quarter ended December 31, 2006, from US$3.2-billion in 2005. The order cancellation rate dropped to 33% from 40% in the previous quarter.
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Meritage Homes Corp. reported net sales of 1,201 homes totaling US$356-million in the fourth quarter, down from 2,072 homes totaling US$723-million a year earlier. Fourth-quarter revenue dropped to US$821-million from US$1.04-billion in 2005.
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Cerberus Capital Management is reportedly preparing an offer for Equity Office
Properties Trust.
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Mills Corp., a U.S.-based shopping mall owner, will restate financial results for 2001 to 2004 and for the first three quarters of 2005. Errors in the results are expected to cost as much as US$354-million. According to a regulatory filing, Mills may seek bankruptcy protection if it can’t repay a US$1.1-billion loan.
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A majority of the approximately 500 owners of the Briny Breezes trailer park in Florida voted to sell their property to Ocean Land Investments for about US$510-million. Ocean Land plans to build a complex that will include luxury condos, a hotel, retail space and a marina.
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Hilton Hotels Corp. is building a 161-unit property on West 57th Street in Manhattan. Scheduled to open in 2009, it will be the first building in New York constructed specifically for time sharing. Hilton is selling shares of 78 units at its flagship hotel near Rockefeller Center for as much as US$70,000 each for seven days a year. Starwood Hotels & Resorts Worldwide Inc. has sold about half of its 22 four-week time-share blocks at the St. Regis Hotel in Manhattan for as much as US$750,000 each. Hyatt Corp. is considering adding time shares to a hotel it is planning for a former office building at Fifth Avenue and 42nd Street.
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According to PricewaterhouseCoopers LLP, New York hotel occupancy is 84% and the average room rate is US$241 a night.
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In 2005 and the first three quarters of 2006, U.S. residential mortgage lenders made US$900-billion in sub-prime loans. A total of 38% of all subprime mortgages in 2006 were for 100% of house price. In the third quarter of 2006, 12.5% of all subprime loans were delinquent on their payments after nine months. According to the Center for Responsible Lending, one out of every five sub-prime mortgage loans made in the past two years in the U.S. will go into foreclosure.
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French ski operator Cie des Alpes has reportedly made an offer to purchase Sofival, a private company that owns the lift complex at the Val d’Isere ski resort in France.