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KPMG Weekly Newsletter

Thanks to KPMG for the Following:

December 11, 2006

The following information was obtained from newspaper articles appearing in the Globe and Mail and the National Post for the week ending December 10, 2006:

Cominar REIT will purchase Alexis Nihon REIT in a $440-million transaction. Cominar will pay $17 a unit and Alexis Nihon unitholders have the option of receiving cash or 0.77 of a Cominar unit for every Alexis Nihon unit held. The merged company will be called Cominar
Nihon REIT. Paul Massicotte resigned as CEO of Alexis Nihon and Robert Nihon has been named executive chairman.
Morguard REIT will purchase three Ottawa office towers and land for $210-million in a joint transaction with a pension fund, reportedly the Hospitals of Ontario Pension Plan. The land has density approval to build an additional office building of 339,000 to 390,000 square feet. The seller is reportedly Northam Realty Advisers, which represents German
investors. The office buildings are 99% leased, with most of the space filled by government tenants.
King & Benton Development Corp. is proposing to build a $500-million commercial and industrial mega-complex on a 427-acre parcel of land at Highway 403 and Oak Park Road in Brantford, Ontario. The development calls for 4.7 million square feet of industrial buildings, an 800,000-square-foot commercial component containing several big-box stores and offices, a hotel and a shopping village.
Primaris Retail REIT will issue $100.44-million worth of units at $18.60 each, with an overallotment option for underwriters of up to 540,000 units. Proceeds will be used to repay debt and to fund acquisitions and redevelopment projects at its existing malls. Primaris will also increase its distribution to unitholders to $1.18 per unit on an annualized basis
beginning in January, 2007.
Construction of Toronto’s Trump International Hotel and Tower is expected to begin in the summer of 2007 and the development will be completed in 2010. About 70% of the suites have reportedly been sold.
According to Statistics Canada, the value of building permits rose 6.1% to $6.03-billion in October from September. Non-residential permits climbed 9.1% to a record $2.4-billion, spurred by a gain of 35.6% in the commercial sector. Residential permits increased 4.3% with single-family permits down 1.7%.
According to the Canadian Construction Association, non-residential building is expected to rise 7.2% in 2006, 3.25% in 2007, 2.2% in 2008 and 1.2% in 2009, compared with a 7.4% gain in 2005. Combined residential and non-residential investment activity is projected to
increase 3.4% in 2006 and 1.7% in 2007.
According to Canada Mortgage and Housing Corp., housing starts increased less than 1% in November to 225,000 units annually from 223,200 units in October on a seasonally adjusted basis. Urban multiple starts rose 5.7% in November from October, while single family starts fell 4.2%. Urban starts climbed 21.4% in the Atlantic region and 26% in the
Prairie region, while urban starts were down 11.7% in Quebec and 7.8% in British Columbia.
According to RealNet Data Services, the average cost of a high-rise condo suite in the GTA increased 11.5% to $350 a square foot in September, 2006, from September, 2005. In Vancouver, the average cost is more than $500 a square foot. Unsold units across the GTA increased to 12,433 suites in September from 11,808 in 2005. Sales between January and September, 2006, rose to 13,804 units from 13,388 in the same period in 2005.
According to the Toronto Real Estate Board, sales of existing homes fell to 6,281 units in November from 6,646 in November 2005. Sales are expected to reach 80,000 units in 2006. The average price dropped to $355,727 from $356,423 in October, but was up 4% from $341,177 in November, 2005. Over the past year, sales of existing condos in the
Scarborough Town Centre area rose 30%, semi-detached homes in York South climbed 53% and detached homes sold in Richmond Hill increased 29%. Total sales in 2006 are expected to drop 1.5% from the record pace in 2005.
According to the Realtors Association of Hamilton-Burlington, 972 homes sold in November, including 210 condo units. The average price increased 5% to $251,164 and the average condo resale price was $197,970. New listings are up 8% to 1,345. Unit sales are down 2% for the first 11 months of 2006, compared with the same period in 2005.
SL Green Realty Corp. has made an offer worth about US$4-billion, or about US$45.70 a share, for Reckson Associates Realty Corp. Financier Carl Icahn’s American Real Estate Partners LP ended his bid for Reckson, after two partners dropped out and investors didn’t accept a revised offer that included less cash.
Station Casinos Inc.’s management and Colony Capital LLC have offered to take the Las Vegas casino company private for US$4.7-billion, with a bid of US$82 a share.
Seminole Gaming will purchase Hard Rock International Inc. from Rank Organisation PLC of Britain in a US$965-million transaction. The acquisition includes 124 Hard Rock Cafes, two Hard Rock Casino Hotels, four Hard Rock Hotels, plus rock venues and rock memorabilia. Excluded from the deal is the Hard Rock Casino in Las Vegas. Seminole
Gaming plans to expand its hotel and casino operations in the U.S. and internationally.
Robotic Parking Systems is in talks to build automated parking garages at 30 sites in the New York City area. The parking spaces in automated garages cost about US$40,000 each to build, compared with US$30,000 for a space in a typical underground parking lot.
Melco PBL Entertainment Ltd. has filed a preliminary prospectus with the SEC, indicating that it plans to sell 53 million American depositary shares, or 14% of its company, through an IPO on the Nasdaq. Gross proceeds could be as much as US$954-million. Melco PBL is a joint venture between Hong Kong’s Melco International Development Ltd. and Australia’s Publishing & Broadcasting Ltd. that focuses on the gaming industry in Macau.
According to Bloomberg, more than US$26-billion in proposed U.S. casino deals have been announced in 2006, exceeding the combined total for the previous six years.
According to the U.S.-based National Association of Realtors, an index of signed purchase agreements fell 1.7% in October from September. Pending sales were down 13.2% from October, 2005.
IVG Immobilien AG will reportedly pay nearly £600-million ($1.35-billion) to purchase the landmark London office building, known as the Gherkin, from Swiss Reinsurance Co, according to The Sunday Times.
Dubai-based Limitless LLC plans to build a new Russian city on 17,800 hectares near Moscow. An US$11-billion investment in the Great Domodedovo project will be made in partnership with Russia-based Coalco Corp. Construction on the first 150,000 residential units, along with some commercial space, is scheduled to begin late in 2007.
The Dubai government investment agency Istithmar reportedly purchased the Shell-Mex building on The Strand in London for nearly £520-million ($1.1billion), according to Property Week magazine.

Real Estate Weekly Newsletter (from KPMG)

Thank you to KPMG for the following:

The following information was obtained from newspaper articles appearing in the Globe and Mail and the National Post for the week ending December 3, 2006:

Ivanhoe Cambridge will purchase a 93% stake in the Arcaden mall in Dusseldorf,
Germany, for $249.3-million. The mall is scheduled to open in 2008.
FirstService Corp. has purchased a majority interest in PGP Valuation Inc., a San Diegobased
commercial real estate appraisal and consulting firm. FirstService will rebrand its
Colliers CMN appraisal business in the U.S. as PGP Valuation.
According to CB Richard Ellis Ltd., Canadian companies and pension funds have invested
nearly $10-billion in foreign real estate in 2006, about twice the amount invested in 2005. At
the same time, foreign investors have purchased between $5-billion and $6-billion in
Canadian commercial properties in the past 12 months. In 2006, the total value of
commercial real estate transactions in Canada is expected to reach about $23-billion.
Developers expect substantial building opportunities to arise as the federal government
reorganizes its office space in Ottawa. The federal government’s Public Works department
expects to renew about 3.4 million square feet of space and replace about 861,113 square
feet of office space over the next three years. Also, BMO Nesbitt Burns and the real estate
division of RBC Dominion Securities are expected to release a report in December
recommending solutions for 40 government-owned buildings across Canada that are
underutilized, outdated or fail to comply with new environmental standards. Eighteen of
these buildings are located in Ottawa and comprise about 10.3 million square feet of office
According to Cushman & Wakefield LePage, class A and B office vacancy rates in Kanata,
Ontario, have fallen to 8% from 28.3% at the end of 2003.
According to Statistics Canada, new housing construction in Canada dropped 3.3% in the
third quarter and investment in residential structures fell 2.2%, or 8.2% at annual rates.
Canada Mortgage and Housing Corp. signed a memorandum of understanding with the
Federal Agency of the Russian Federation for Construction and Housing and
Municipal Services to promote the export of Canadian housing products and expertise.
According to the Canadian Institute of Mortgage Brokers and Lenders, the total
outstanding mortgage debt in Canada is expected to reach $730-billion by the end of 2006
and more than $800-billion by the end of 2007. In 2006, $197.7-billion in new mortgages will
be completed, with approvals projected to exceed $200-billion in 2007.
According to LaSalle Investment Management, global real estate funds raised a record
US$55-billion in 2006.
According to the Lower Manhattan Construction Command Center, about 50 Lower
Manhattan projects, costing US$20-billion, are planned or currently underway. These include
the Ground Zero construction, a new US$2-billion, 43-storey headquarters for Goldman
Sachs Group Inc., and new underground water pipes, subway stations, parks and
residential buildings.
Toll Brothers Inc. reported that orders for new homes fell 58% in the third quarter.
According to the U.S. Commerce Department, sales of new homes fell 3.2% in October
from September, increasing the supply to seven months’ worth of new homes. Sales in
October were down 25.4% from a year ago. Investment in housing in the third quarter
dropped 18% during the third quarter. Overall construction spending dropped 1% in October.
According to the National Association of Realtors, new-home sales in the U.S. are
expected to fall 17.3% in 2006 to 1.06 million.
According to the National Association of Realtors, sales of existing homes in the U.S.
increased 0.5% in October from September to a seasonally adjusted annual rate of 6.24
million, but fell 11.5% from October, 2005. The median selling price dropped 3.5% from a
year earlier.
Donald Trump is proposing to build a golf resort on a 566-hectare site near Aberdeen in
Scotland that will cost up to £1-billion ($2.2-billion). Plans call for a golf academy, two golf
courses, nearly 1,000 holiday homes, 36 luxury villas and a 450-bedroom luxury hotel.
State-run Qatari Diar Real Estate & Investment Co. is reportedly in talks with Britain’s
Ministry of Defense to purchase London’s Chelsea Barracks. In October, Westminster City
Council approved plans to demolish the tower blocks to allow for 1,500 homes, shops and
offices on the 13-acre property in the heart of London.
According to the Dutch Housing Ministry, there are almost 150 people seeking housing for
every 100 houses offered for rent in Amsterdam.
OAO Gazprom plans to build a 300-metre-high skyscraper in St. Petersburg’s historic
centre. The project, called “Gazprom City,” is encountering opposition from cultural leaders.
Dubai Property Ring is developing a US$109-million, 30-storey, 80,000-ton rotating
condominium tower, called Time Residences, in Dubai which is scheduled for completion in
Aldar Properties will begin construction of a US$40-billion island, known as Yas, off the
coast of Abu Dubai in 2007 that will feature a leisure complex including a Ferrari theme park.
The island will be completed in 2014.
According to JPMorgan Australia, foreign investment accounts for about 40% of all real
estate held through the Australian public markets due to limited product available in
According to the Sydney Morning Herald, housing prices in Australia climbed 2.2% in the
September quarter and increased 9.5% from September, 2005. Prices rose 10.1% in Perth
in the quarter and 45.9% annually. For the September quarter, prices were up 3.1% in
Darwin, 3.8% in Canberra, 0.6% in Adelaide, 1.5% in Hobart, 1.7% in Melbourne, 0.9% in
Brisbane and 0.2% in Sydney. On an annual basis, prices climbed 17.3% in Darwin, 10.5%
in Canberra, 6.4% in Adelaide, 9.4% in Hobart, 7.5% in Melbourne, 6.5% in Brisbane and
1.4% in Sydney.

News for Tuesday December 5th 2006:

Just a couple of days ago I posted here an report by Royal LePage that Canadians were flocking to ‘luxury’ real estate. Now I find out that an American Luxury Home Builder is having problems. Makes you wonder if Canada will see the Real Estate bubble burst like is happening in the U.S. of A.

Here’s what empty nesters are doing. Watch out first time home buyers! If I was licensed to give advice I would buy the homes these empty nesters are leaving….

***I think this is an important article for Real Estate Agents and their clients***

Now here’s a Canadian Success Story that is worth celebrating.

Another Canadian Success Story! Excellent!

Karim Kanji
Manager – Client Services
RealCash Bancorp Inc.
416.444.7790 and 1.800.265.2694

Real Estate News for Monday December 4th 2006:

Hey folks!

I’ve always wondered what role politics plays in Real Estate. Do you think the election of a new Liberal Leader will have an effect on our industry? Let us know if you have any thoughts.

Here is an interesting article:

The “O.J. Simpson” close. I’m not kidding…

Today, more and more real estate agents and other self-employed entreprenuers are looking to stay as healthy as possible. Here is an interesting article to help all of you. Maybe it can be a part of your New Year’s Resolution!

Mortgage Brokers NOW need a Licence (you mean to tell me that they didn’t before?!)

Carriage Trade Luxury Properties Report released by our pals at Royal LePage Real Estate Services.

Norm Edelmann is selling his 5 investment properties online – Does this mean Real Estate agents are going the way of the dinosaur?

U.S. construction continues to PLUNGE!

A Lean Green Athletic Machine for Living.