KPMG Weekly Newsletter – For the Week Ending February 11, 2007!

February 12, 2007

The following information was obtained from newspaper articles appearing
in the Globe and Mail and the National Post for the week ending
February 11, 2007

H&R REIT has signed an agreement to develop The Bow, the 1.9-million-square-foot future
headquarters of EnCana Corp. to be built in downtown Calgary. H&R’s subsidiary, Centre Street
Trust, has purchased the site for $70-million and EnCana has signed a 25-year lease for the
entire 59-storey tower. The $1.1-billion project is scheduled for completion in 2011.
Shangri-La Hotels & Resorts will build a $430-million, 65-storey luxury hotel and condominium
tower in Toronto with 353 condominium units on the upper levels and 220 hotel rooms on the first
17 floors. Scheduled for completion in the spring of 2011, the Shangri-La will be located at the
corner of University Avenue and Adelaide Street. Vancouver-based Westbank Projects Corp.
and Peterson Investment Group Inc. will develop the project.
Manulife Financial Corp. acquired a 28-storey, 582,000-square-foot office building at 1100
Peachtree Street in Atlanta for US$153.86-million from a joint venture of USAA Real Estate Co.
and Carter.
Houston-based Hines REIT Inc. is reportedly about to close a $252-million purchase of Toronto’s
Atrium on Bay office and retail complex from Brookfield Properties Corp. and its investment
partner, Phoenix real estate developer Steve Ellman.
RioCan REIT reported that profit for the fourth-quarter ending December 31, rose to $43.4-million,
or 22 cents a unit, from $37.3-million or 19 cents in 2005. Funds from operations increased to
$77.1-million, or 39 cents a unit, from $66.5-million or 34 cents. Rental revenue climbed to
$151.2-million from $138.9-million. Portfolio occupancy at the end of 2006 was 97.7%.
Brookfield Properties Corp. reported fourth-quarter net income fell to $21-million, or 8 cents a
share, from $47-million (20 cents) a year earlier. Fourth-quarter funds from operations dropped to
$125-million (52 cents) from $138-million (59 cents). Brookfield is planning a three-for-two stock
split. The stock split will be in the form of a stock dividend and shareholders will receive one
Brookfield Properties common share for each two common shares held.
Brookfield Asset Management Inc. is reportedly moving forward with plans to purchase the
property management and development business assets of Australia’s Multiplex Ltd.
Simon Property Group Inc. and Farallon Capital Management made an offer of about
US$1.56-billion, or US$24 per share, for Mills Corp., which has more than US$6-billion in debt
and preferred stock that the two partners would also assume. Brookfield Asset Management
Inc. struck an agreement in January to purchase Mills for US$1.35-billion, or US$21 a share.
MI Developments Inc. is paying Magna Entertainment Corp. $12-million for 34 acres of land in
Aurora and US$20-million for a 64-acre parcel of land at Laurel Park in Maryland. MI plans to
develop the Aurora site for residential use and the Laurel Park property for mixed use either on its
own or as a joint venture.
The City of Montreal, the Caisse de dépôt et placement du Quèbec and the Fonds de
solidarité des travaileurs du Québec are looking to sell the subsidized-rent Cité Multimédia
complex. The property is reportedly expected to attract a price of at least $200-million.
ING Real Estate Investment Management Australia Pty. Ltd. is reportedly considering making
a bid for Chartwell Seniors Housing REIT in the $19.50 a unit range.
According to Avison Young Commercial Real Estate, the vacancy rate for industrial buildings in
Edmonton is below 2%. According to Torode Realty Edmonton, there is very little vacancy for
industrial space under 10,000 square feet. According to WAM Development Group, rental rates
for industrial space have risen between 30% and 40% to more than $8 a square foot from as low
as $5.50 two years ago.
According to the Real Property Association of Canada, the commercial-to-residential property
tax ratio is currently 4.9 in Vancouver. In 2006, Toronto agreed to reduce the ratio from 5:1 to
2.25:1 over 15 years.
According to CresaPartners, the vacancy rate for the best class of office space in downtown
Calgary is 0.05%.
According to Statistics Canada, new-home prices in Canada were 10.7% higher on an annual
basis in December than a year earlier. New-home prices are increasing at a 38% rate in Alberta
on an annual basis, but fell 0.9% on a monthly basis in December.
According to Canada Mortgage and Housing Corp., housing starts rose 17.3% to 249,300 units
in January from 212,600 in December, on a seasonally adjusted annual basis.
According to Canada Mortgage and Housing Corp., construction of new homes is expected to
fall to 209,500 units in 2007 and 195,500 units in 2008 from 227,395 in 2006. Sales of existing
homes are projected to fall to 464,550 units this year and 449,200 in 2008 from 483,609 in 2006.
The average price of an existing home will climb to $302,181 in 2008.
According to Canada Mortgage and Housing Corp., housing starts in Ontario are expected to
reach 67,000 units in 2007 and 63,000 units in 2008. According to the Ontario Home Builders’
Association, starts in January fell 2% from a year earlier.
According to Canada Mortgage and Housing Corp., the average price of a new single-detached
home in Clarington rose 13.4% to $296,746 in 2006 from $261,767 in 2005. New Tecumseth had
an average price of $268,793 for a detached house in 2006, while Georgina reported an average
price of $283,330. The average price in Bradford climbed 23.6% to $361,312 in 2006 from
$292,271 in 2005.
According to the Toronto Real Estate Board, 5,173 homes were sold through the MLS in
January, up 13% from January 2006 and 6% more than January 2002. The average sale price in
the GTA was $353,724 in January, up 5% from December and 9% over January, 2006.
According to the Realtors Association of Hamilton-Burlington, the average sale price of all
residential properties in the Hamilton-Burlington area increased by nearly 6% to $255,753 in
January from $241,285 for January, 2006. The average price in January was $268,729 for a
home and $193,735 for a condo. The total number of residential listings rose 7.4% to 1,545 in
January from 1,439 a year earlier.
Blackstone Group LP’s offer of US$22.9-billion in cash, or US$55.50-a-share, for Equity Office
Properties Trust was approved by shareholders. Blackstone also assumed US$16-billion in debt.
HSBC Holdings PLC reports that it has had to raise its total provision for bad loans by 20% due
to defaults by sub-prime borrowers in the U.S. housing market.
NewCentury Financial Corp., a sub-prime mortgage lender in the U.S., will restate earnings for
2006 because it had not set aside enough to cover borrowers who can’t meet their payments.
According to FPL Advisory Group, more than 90% of U.S. real estate executives expect their
companies’ profits to increase in 2007. More than 80% believe the availability of capital will be the
same as or better than in 2006 and 54% said their biggest financial challenge will be finding
appropriate investments.
According to Colliers International, rents for prime U.S. downtown office space may climb an
average of 15% in 2007, compared with an average increase of 18% in 2006. In midtown
Manhattan, rents for prime space rose 33% in 2006.
According to the U.S. Census Bureau, there were about 2.1 million vacant homes for sale in the
final three months of 2006. The national homeowner vacancy rate increased to 2.7% from 2% a
year earlier. The homeowner vacancy rate was 3% in the South, 2.9% in the Midwest, 2.4% in the
West and 2% in the Northeast.
According to the National Association of Realtors, median homes prices in the U.S. were up
1.1% in 2006.
According to the Mexican Association of Real Estate Professionals, housing sales in Acapulco
fell 40% in 2006 from 2005 and prices have dropped by as much as 20%.
British home builder Barratt Developments PLC will purchase Wilson Bowden PLC for £2.2-
billion ($5.1-billion), or £22.57 in cash and stock for each Wilson share.
China Properties Group plans to raise as much as $320-million in a Hong Kong IPO to fund
building work in Shanghai. Hong Kong-based China Properties is selling 450 million new shares,
or a 25% interest, for 53 cents to 71 cents each.