KPMG Weekly Newsletter – For the Week Ending April 8, 2007

The following information was obtained from newspaper articles appearing
in the Globe and Mail and the National Post for the week ending
April 8, 2007

Sunrise Senior Living REIT paid $55.3-million for an 80% stake in three retirement homes from U.S.-based Sunrise Senior Living Inc., which will retain the remaining 20% interest. Sunrise Senior Living REIT also reported a loss of $39.3-million in 2006, compared with a loss of $27.6-million in 2005. Revenue rose to $311.4-million from $171.3-million. Net operating income increased to $119.6-million from $65-million. Distributable income per unit was 18 cents in the fourth quarter, compared with 24 cents in the same quarter a year earlier.
Australia’s Publishing and Broadcasting Ltd. and Macquarie Bank Ltd. have teamed up to acquire Canada’s Gateway Casinos Income Fund for $800-million. New World Gaming Partners Ltd. will pay $25.26 in cash per unit for Gateway and also buy related private development and operating businesses, with a combined enterprise value of $1.37-billion. The transaction still requires approval from regulators and the holders of two-thirds of its units.
The US$3.37-billion sale of Four Seasons Hotels Inc. was approved by shareholders, after receiving support from 51.85% of minority shareholders and 69% of all shareholders.
Bazis International is undertaking a $500-million, 80-storey project at 1 Bloor St. E in Toronto, which is scheduled for completion in 2011. The plans call for a 120-room hotel, 500 condominiums as well as retail space. Bazis purchased the land from Kolter Property a few months ago and expects to start demolishing the buildings on the half-hectare site by the end of 2007.
Toronto-based ClubLink Corp. has purchased Club de Golf Islesmere in Laval, Quebec, for an undisclosed price.
Halifax-based Homburg Invest Inc.’s $539-million takeover offer was accepted by investors controlling about 70% of Alexis Nihon REIT’s units. Homburg now controls about 87% of Alexis Nihon, including units it already owned.
According to Statistics Canada, the value of building permits fell 22.4% to a seasonally adjusted $4.86-billion in February from January. The value of permits dropped in all provinces except Manitoba. Both residential and non-residential permits were down.
According to the Canadian Real Estate Association, housing sales dropped 0.9% to 42,997 units in February from the record set in January. On a seasonally adjusted basis, sales fell 2.9% from January. Through the first two months of 2006, sales are up 6.6% from a year ago. The average sale price rose 10.6% in February to $294,880 from a year earlier. In British Columbia, the average sale price was $412,847, up more than $10,000 from January and more than $43,000 from February, 2006. The average price of a home in the Prairies soared 31.1% to $305,450. In Alberta, the average price jumped 34.1% to $343,515.
According to the Royal Bank of Canada, 33% of Canadian homeowners who are planning to buy a home in the next two years are looking for smaller homes, compared with 20% in 2006 and 19% in 2002. Of Canadians planning to buy a house within two years, 58% plan to buy a home in 2007.
The Singapore-based UOL Group Ltd. has acquired Pan Pacific Hotels and Resorts from Tokyu Corp. of Japan. The new owners plan to expand in North America and are targeting new properties in Toronto, Los Angeles, San Francisco and San Diego.
Ameristar Casinos Inc. plans to purchase the Resorts East Chicago casino complex from an affiliate of Colony Capital LLC for US$675-million.
Barclays Bank PLC has purchased subprime lender EquiFirst Corp. for US$76-million.
New Century Financial Corp. has filed for protection from creditors under Chapter 11 of U.S. bankruptcy law. New Century will sell its loan servicing business to Carrington Capital Management LLC for US$139-million, subject to bankruptcy-court approval. New Century also lined up US$150-million of financing from CIT Group Inc. and Greenwich Capital Financial Products to continue operating while in bankruptcy, and agreed to sell Greenwich Capital some loans and other assets for US$50-million, subject to bankruptcy-court approval.
According to the National Association of Realtors, the index of pending U.S. home resales increased 0.7% in February to 190.3 following a revised 4.2% drop in January. The index fell 8.5% from February, 2006.
According to Bear Stearns Cos., the value of U.S. subprime loans granted in 2007 is expected to fall 30% from last year’s total of about US$600-billion. According to Inside Mortgage Finance, Alt-A loans packaged into securities for sale to investors totalled about US$366-billion in 2006.
British Land Co. PLC will oversee the £1-billion ($2.27-billion) redevelopment of the 15-acre Euston railway station site in central London after winning a tender to become Network Rail Ltd.’s preferred development partner. British Land’s proposals for the site include building about 2,500 homes, as well as adding 150,000 square feet of office space and 250,000 square feet of retail space.
According to Macau city officials, Macau’s 22 casinos generated 56.2 billion patacas (US$7.2-billion) in total gross gaming revenues in 2006, with revenue of 16.7 billion patacas (US$2.1-billion) in the fourth quarter. By comparison, more than 40 casinos on Las Vegas’s main strip generated US$6.6-billion in revenue last year.
Tameer Holding is building the 107-storey Princess Tower in Dubai. According to CB Richard Ellis Group Inc., the rental cost of prime office space in Dubai has jumped to more than 400 dirhams (US$109) a square foot, compared with 165 dirhams in May, 2005, due to a lack of office space. According to Colliers International, the annualized cost of new office space over a three-year lease could be 363 dirhams per square foot, compared with 160 dirhams per square foot three years ago.

Will new business models last? – by Stan Albert

Stan Albert: Will new business models last?

Apr 03, 2007

As I See it From My Desk this month has somewhat of a new paradigm.

Last month I was diagnosed with age-related macular degeneration. The “wet” variety, which, with new and advanced treatment, can be treated with injections of Avastin. Now I can only see out of one eye, as the left eye has no central vision. With the excellent treatment at Sunnybrook Ophthalmology Department, we know that the required procedures will work out.

If I play slow-pitch ball again this summer, and I don’t swing at a bad pitch and my teammates yell, “Good eye Albert,” I sure will appreciate their scrutiny! You have to have a sense of humour, regardless of any affliction, right?

I’m among 600,000 Canadians who are afflicted annually with eye disease. (For more information: The specialist says I will still be able to drive and continue on in my profession for many years to come, and my wife and I are much relieved.

Now I have to concentrate better with one eye on our industry. If you’re so moved, make a donation to the C.N.I.B. – they’ll truly appreciate it.

Some months ago I wrote, “What is your value proposition?” Is it a quality one? Is it one that you can be proud to put your name to?

During the past several years, we have seen some newer brokerages entering the playing field. Some of them are growing at phenomenal rates by offering zero per cent fees/shares in the brokerage, and nominal charges per transaction. They are certainly entitled to offer whatever fee structure they want to. Registrants are apt to opt for lower fees so that, quoting from a recent article in one of the Toronto newspapers, “they can offer a lower commission structure and spend more on promoting themselves.”

One has to wonder if this format is truly sustainable. It may be. But from this viewpoint, we’ve seen new approaches come and go. Some stay around a long time: Century 21, Sutton Group, HomeLife, Coldwell Banker, Royal LePage, Prudential and Re/Max, just to mention a few. Why they have stayed around so long is because they have a solid business plan and systems that most registrants thrive on.

But as a long-time member of this industry, I, like others, marvel at registrants rushing into lower fees for more money, so that they can spend more on advertising and put more in their own pocket.

It does make sense for those who do less than five to 10 deals a year. I believe that the national average last year was about five transactions per agent. And if one checks the stats on that brokerage, one would see what the average registrant earns.

Just a minute.

Isn’t it a fact that the more business you do, the more proficient you get at honing your skills at negotiating and closing? If you do it right, would they be likely to refer others to you? You take pride that you’ve justified your commissions, whatever they were; based on your skills, number of transactions done annually and the ultimate: the numbers of people in your data bank.

If you work for less, the seller will for sure be happy. He’s saved money. Sure, the registrant will get a referral from the seller, who’ll tell his friend that he made more money as a result of lower commissions. The word will spread. Jack Salesperson will do the deal for x per cent!

So, if a registrant does 30 deals, as an example, at lower fees, compared to a registrant who believes that he’s worth every cent he currently charges who’ll do 25 deals, then who’s ahead of the game and works less, and with quality clientele who will refer other clients based on quality, not on price point?

Let me illustrate this with an excerpt from Malcolm Gladwell’s latest book, Blink.

In Flemington, N.J., there is a Nissan dealership that probably outsells all other Nissan dealerships in that state. One of the reasons is a guy named Bob Golomb. Bob is in his 50s, and is a short guy with thinning hair and glasses. (Almost sounds like a younger brother if I had one!) Since Bob went in business over 10 years ago, he has sold, on average, about 20 cars a month, which is twice what the average salesperson does. In the world of the car business, Bob is the Michael Jordan of the industry. A true virtuoso.

Here’s his secret: He has a careful watchful intelligence and courtly charm. He’s thoughtful and attentive and a wonderful listener.

Here are his three simple rules that guide his every action: Take care of the customer. Take care of the customer. Take care of the customer.

Bob follows up every sale to see how the owner likes the car. He gets repeat business and referral business on an ongoing basis. Is he solely “transaction based”? No, not on your life. He believes in repeat business by treating each customer as a future lead to maintain his business. He’s not in business for the short run.

The Bob Golombs will be around for a long time building their business by not looking at it as a job.

So how does this relate to your value proposition? Is it to do a few deals here and there….pay a few mortgage payments, go on a cruise? Or do you really want to find yourself in a career where you have the comfort of a known brand that the public relies on? Sure you have to pay for that privilege, and if all you yearn for is a cheaper way to make a few more dollars than you would at your previous employment, then go for it by all means.

It always begs the question: can a registrant who is part-time or does little business retain his customers? Can he deliver the service needed in our industry to move us up the ladder of the professions that are most trusted?

History has a way of repeating itself in any industry, in any economy, in any field whatsoever.

New brokerages enter our field constantly, yet few survive because the economy is not always static. Inflation comes and goes and it affects us all.

Brands are self-sustaining because they are constantly striving to provide the services and the synergy for a true professional in this business. And I’m not just talking about franchises.

There are fine independent brokerages across North America that continue to improve the services to their registrants. It cannot be done on a shoe-string budget and not on reduced fee structures for registrants. I just don’t believe it. The service levels would suffer and the profit margins, as low as they are today, would suffer even more.

Brian Buffini’s 100 Days to Greatness amplifies what I’m trying to get across this month. He says this is not a job, this is a business. It is a business where you have an opportunity to establish relationships through lead generation.

Would a registrant who is looking to save money by reducing his fees invest more in his career? Invest more in promoting himself? Invest more in his community? I would love to see that happening. Perhaps down the road I will live long enough to see it happen.

Time will tell which paradigm will succeed on a consistent basis. The public will judge us on that.

And that’s the way I see it from my desk this month.

Quote of the month: “Equal opportunity means everyone will have a fair chance at being incompetent.” – L. J. Peter, The Peter Principal.

Stan Albert is celebrating his 36th year in active real estate. He serves on the Complaints, Compliance and Discipline Committee at RECO, and on two committees at the Toronto Real Estate Board. He is an established trainer and business consultant and can be reached at

The preceding article was posted with the expressed permission by Stan Abert.

Aging Baby Bommers and Real Estate in Canada.

Hey Gang!

I came across a very interesting article today from the Toronto Star which is dated March 31, 2007.

I have always maintained that “larger” home prices would drop in the coming years as aging baby boomers leave their massive monster homes for smaller and more convenient bungalows. However, experts are now saying that this perceived trend may not happen. Read this article and post your comments if you see fit.

NOTE: Continue to visit for up to date information and news on the world of Canadian Real Estate.


Karim Kanji

Buildings go up and prices come down.

What do they say about tall buildings? The bigger they are the harder they fall? And why is it that they seem to be getting taller? Some people say that tall buildings are an eyesore. Others say urban intensification is a good thing. Anyways, here are some stories to get you through the day. Or maybe just lunch…

Canada’s tallest condo.

Competition and Real Estate. Is there really a problem? Or are Realtors just getting nervous and jealous?

Canadian Real Estate Association under investigation.

Hey investors! Wanna know where the next GTA boom is gonna be? Me too! But read this article. It may hold your future fortunes!

MP’s,, and the Environment. Very interesting and timely article. A MUST READ!!!

And finally a story about the U.S. Housing Market. For the first time in 6 years U.S. house prices have declined. Now, here in Canada, who really cares? And should we? So what if prices devline in the States! How does it affect the prices here in Canada. Hey, I’m just asking the questions! YOU provide the answers! Anyways, here’s a Toronto Star article you can read.

Learning Annex’s Real Estate & Wealth Expo in Toronto!

Learning Annex’s Real Estate and Wealth Expo in Toronto.

Hey folks!

Here are some interesting articles regarding last weekend’s Expo……..

Open Letter to Mayor Of Toronto form Toronto Real Estate Board

Open Letter to Mayor David Miller, City of Toronto >> March 21, 2007 His Worship Mayor David Miller City of Toronto Toronto City Hall 100 Queen Street West Toronto, Ontario M5H 2N2 Open letter regarding potential new home buying tax Dear Mayor Miller, The Toronto Real Estate Board’s (TREB) 25,000 REALTOR(R) members are concerned about possible new municipal taxes that homeowners could face in the City of Toronto. Specifically, a potential Toronto land transfer tax, levied on top of the existing provincial land transfer tax, could have serious consequences. Double Whammy It is important to point out that a Toronto land transfer tax would be levied on top of the existing provincial land transfer tax. Put another way, this would be like telling a consumer that they have to pay the GST twice every time they go to the cash register. As the City’s discussion paper notes, there is limited experience with other municipalities that charge a land transfer tax. However, the City’s discussion paper fails to point out that in some of these municipalities there is no provincial/state land transfer tax, meaning that the homebuyer is not faced with a double whammy of land transfer taxes, as is being considered in Toronto. Significant Cost The existing provincial land transfer tax is already a heavy burden for homebuyers and a Toronto land transfer tax would exacerbate this. For example, the average homebuyer in Toronto already has to pay a provincial land transfer tax of approximately $4,200 (on the averaged priced Toronto home in 2006 based on TREB MLS(R) statistics), in full at the time of closing. This means that a Toronto land transfer tax of 0.5%, as noted in the City’s discussion paper, would mean close to an additional $1900 in land transfer taxes for an average Toronto homebuyer, which represents an additional 45% of land transfer taxes. Even a Toronto land transfer tax of 0.1% would represent close to an additional $400 (a 10% increase) for the average Toronto homebuyer – a significant amount of money at a time when most people can least afford it because of the numerous other expenses (appliances, furniture, renovations) that come with home ownership. Land Transfer Tax = Home Buying Tax Make no mistake, a second land transfer tax is nothing short of a home buying tax. Land transfer taxes are payable, in full, by a homebuyer at the closing of a property transaction and can represent one of the biggest closing costs that homebuyers must deal with. Generally, closing costs equal approximately 1.5% of the purchase price of a property. If the City implements a second land transfer tax of 0.5%, as considered by the City’s discussion paper, this represents a 33% increase in closing costs for Toronto homebuyers. Even a 0.1% Toronto land transfer tax would represent almost a 10% increase in land transfer taxes on the average home. At a time when the City’s population growth is being vastly outpaced by surrounding areas, what kind of message does this type of home buying tax send? Benefit for Cost? Taxpayers have the right to know what benefits they receive from taxes. What added services, from the City, can homebuyers expect for paying a second land transfer tax? If this tax is intended simply to generate general revenue, then the City is discriminating against homebuyers and asking them to fund services that existing residents will benefit from. Property taxes, paid by all, are intended to pay for services that everyone benefits from. “What’s in a name?” However, it is no secret that property taxes are overburdened. This is part of the City’s rationale for considering new taxes. Unfortunately, there is little difference between a property tax and a land transfer tax. Both are taxes on home ownership; both are calculated based on a property’s value; and both impact affordability. We support the City in trying to avoid property tax increases, but isn’t a second land transfer tax just another way to raise taxes on property? Don’t Put the Cart Before the Horse TREB has been a vocal supporter of efforts to convince the provincial and federal governments to provide municipalities with adequate, predictable, and sustainable funding from existing tax sources. Furthermore, TREB has joined municipalities in calling for the uploading of social costs, such as disability and drug benefits, that should not be funded by property taxes. We will continue to support these efforts and we strongly believe that these critical issues must be resolved before Toronto taxpayers are expected to pay any new taxes, let alone a duplicate of one that they are already paying at the provincial level. Contradicts Other City Objectives and Goals The City’s Discussion Paper indicates that requiring homebuyers in Toronto to pay a second land transfer tax would have a “neutral policy impact”. Unfortunately, we believe that there is a distinct possibility for substantial impacts on various City policies, objectives, and goals. Environmental Impact: More Traffic, More Smog Under the new City of Toronto Act and the new Municipal Act, Toronto is the only Ontario municipality with the authority to levy a local land transfer tax on top of the existing provincial land transfer tax. This means that, if Toronto levies a second land transfer tax, the City would be creating a financial incentive for homebuyers to choose to buy a property outside of Toronto’s borders. Recent census data already demonstrates that Toronto is growing at a much slower rate than surrounding municipalities; adding additional costs in Toronto will only exacerbate this trend, meaning more urban sprawl, which means more commuting, more traffic and more smog. Affordability and Intensification The average price of a re-sale home in Toronto in 2006 was approximately $378,000. This makes Toronto one of the most expensive cities in the country to live in. As noted above, a second land transfer tax could add considerable costs for homebuyers. Any increase will reduce Toronto’s affordability, making it more difficult to attract new residents and achieve the intensification goals that the City has laid out in its Official Plan. Economic Impact According to a study conducted by Clayton Research for the Canadian Real Estate Association, each re-sale housing transaction in Ontario generates approximately $27,000 in spin-off spending for things like furniture, appliances, renovations, etc. In recent years, this means that re-sale real estate transactions have contributed more than $2 billion per year to Toronto’s economy. Any impact on Toronto’s real estate market, from a second land transfer tax, will impact the overall economy. Moving Forward: Adequate Consultation I hope you find our views on this issue helpful. This is an unprecedented initiative that requires serious and lengthy public consultations, which we look forward to participating in. As such, we would appreciate an opportunity to meet with you to discuss this issue further. Yours truly, Dorothy Mason President <>For further information: Wendy Craven, Director, Public Relations,
Toronto Real Estate Board, Office: (416) 443-8159, 24-Hour Cell: (416)
277-7390, Email:

Information on Rates for Commission Advances

“How Much Does It Cost For A Commission Advance?”

This is the most common question we receive. Guess what our answer is? “80 cents per $1000 per day!”

At that point we’re usually told that Company #2 has quoted them a less expensive rate.

Are they charging less? Or are they charging more?

RealCash charges a flat rate of 80 cents/day/$1000. No Administration Charges, No Hold Back Fees, No Hidden Costs. Why? Because it’s easy and simple!

Here’s an example:

RealCash Bancorp Inc.:
$3000 Purchase Amount – 60+10days
less 80 cents/day/$1000 $168.00
Net Advance $2832.00

Agent repays $3000 after 69 days and receives a $2.40 refund.

Total cost to Agent is $165.60.

Total Advance is $2832.00

Company #2:
$3000 Purchase Amount – 60 days
less 63 cents/day/$1000 $113.40
less admin fee $29.50
less HoldBack (2.5%) $75.00
Net Advance $2782.10

Agent repays $3000 after 69 days and receives a $33.75 refund.

Total cost to Agent is $184.15

Total Advance is $2782.10

HoldBack Fee – Everyone understands that an Agent, let alone a commission advance company, never receives their commission cheque on the day of closing. Obviously Company #2 knows this. Their rate for the days following the closing date jump from 63 cents/day to $1.25/day! That’s a 98% increase. RealCash simply creates a contract that runs 10 days past the closing date with no rate increase. Nothing is hidden.

RealCash’s contracts are straightforward and simple to understand. Our competitors may claim to charge less but as you can see from the above example, it simply is not so.

So, the next time you call Company #2, please don’t just listen to what they are saying because as in most cases, it is what they are not telling you that matters.

Most companies use the line, “Why wait till closing to receive your commission?” Obviously we agree with that philosophy but we add the caveat, “Why wait till closing to find out how much your commission advance really cost you?”

If you have any questions or comments, please feel free to call me at 416.444.7790 and 1.800.265.2694.

Karim Kanji