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.