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C A N A D A ’ S O N LY N A T I O N A L P U B L I C A T I O N F O R A P A R T M E N T O W N E R S A N D M A N A G E R SC A N A D A ’ S O N LY N A T I O N A L P U B L I C A T I O N F O R A P A R T M E N T O W N E R S A N D M A N A G E R S
Mainstreet Equity Corp.Taming the Wild, Wild West
Annual Green Issue
www.canadianapartmentmagazine .ca
VOLUme 9 / nUmBer 2 / march 2012
Whether it’s a seal, shaft or tiny spring, it’s working to keep your residents’ everyday laundry dependably clean.
Daily dependability depends on, well, everything. That’s why every single component of our MHN30 high-effi ciency front-load washer is engineered to deliver the lasting quality that’s made Maytag a household name. Your residents get a machine that stays up and running. And with programmable options to increase revenue, plus signifi cant energy savings built right in, you’ll fi nd plenty in the picture to be happy about, too. Visit mclaundry.com.
® Registered Trademark/ TM Trademark of Maytag Properties, LLC or its related companies. © 2012. All rights reserved.
MG12026_CanadianAptMag0312.indd 1 2/1/12 1:14 PM
What’s in a name?When the name is Stratacon, a lot!
A reputation as a leading sub-metering solutions provider since 1997, with a dedication to technology, innovation and customer service.
Now the Stratacon name has changed – to EnerCare Connections*.
And what’s in that name? A lot more!
EnerCare brings together a variety of “intelligent energy solutions” including:
•Electricity,WaterandBTUSub-metering •WaterConservation •RentalHVAC
Our energy products and services combine the best practices in the industry with comprehensive programs that are flawlessly delivered.
Withourrobustmenu,weworktogetherwithpropertymanagers,multi-residential building owners, developers, condominium boards and residents to save energy, save money and help save the environment.
For more information about EnerCare Connections’ intelligent energy solutions, please visit EnerCare.ca or contact us at 416-649-1900.
*StrataconInc.andEnerCareConnectionsInc.,bothwholly-ownedsubsidiariesofEnerCareInc.,haveamalgamatedandcontinueunderthenameEnerCareConnectionsInc.
EnerCare_Can_Apt_Feb.indd 1 12-01-13 11:23 AM
What’s in a name?When the name is Stratacon, a lot!
A reputation as a leading sub-metering solutions provider since 1997, with a dedication to technology, innovation and customer service.
Now the Stratacon name has changed – to EnerCare Connections*.
And what’s in that name? A lot more!
EnerCare brings together a variety of “intelligent energy solutions” including:
•Electricity,WaterandBTUSub-metering •WaterConservation •RentalHVAC
Our energy products and services combine the best practices in the industry with comprehensive programs that are flawlessly delivered.
Withourrobustmenu,weworktogetherwithpropertymanagers,multi-residential building owners, developers, condominium boards and residents to save energy, save money and help save the environment.
For more information about EnerCare Connections’ intelligent energy solutions, please visit EnerCare.ca or contact us at 416-649-1900.
*StrataconInc.andEnerCareConnectionsInc.,bothwholly-ownedsubsidiariesofEnerCareInc.,haveamalgamatedandcontinueunderthenameEnerCareConnectionsInc.
EnerCare_Can_Apt_Feb.indd 1 12-01-13 11:23 AM
Publisher �Ian�Lederer� [email protected]� (416)�512-8186�ext.�262
ActingEditor Scott�Anderson
SeniorDesigner Annette�Carlucci
Designer Jennifer�Carter
ProductionManager Rachel�Selbie
ContributingWriters� �Peter�Cook,�Derek�Lobo,�Robert�Fleet,�Paula�Gasparro,�Carissa�Drohan-Jennings,�Andy�Schwartze
Circulation Lina�Trunina
Forsalesinformation call(416)512-8186ext.262
Canadian Apartment Magazine is published six times a year by:
5255�Yonge�St.,�Suite�1000,�Toronto,�Ontario�M2N�6P4E-mail:�[email protected]
Tel:�(416)�512-8186�Fax:�(416)�512-8344
PresidentKevin�BrownCopyright�2012
Canada�Post�Canadian�Publications��
Mail�Sales�Product�Agreement�No.�40063056
ISSN�1712-140X
Circulation�ext.�232Subscription�Rates:Canada:�1�year,�$50*�
2�years,�$90*�US�$75�
International�$100�Single�Copy�Sales:�Canada:�$12*
*�Plus�applicable�taxesReprints:
Requests�for�permission�to�reprint�any�portion��of�this�magazine�should�be�sent�to�Ian�Lederer
Authors:Canadian�Apartment�Magazine�accepts�unsolicited��
query�letters�and�article�suggestions.Manufacturers:
Those�wishing�to�have�their�products�reviewed�should�contact�the�publisher�or�send�information�to�the�attention�of�the�editor.
The�opinions�expressed�are�those�of�the�authors�of�articles�and�do�not�necessarily�reflect�the�views�of�Canadian�Apartment�Magazine.�This�
information�is�general�and�is�not�a�substitute�for�legal�advice.Sworn�Statement�of�Circulation:
Available�from�the�publisher�upon�written�request.��Although�Canadian�Apartment�Magazine
makes�every�effort�to�ensure�the�accuracy�of�the�information�published,�we�cannot�be�held�liable�for�any�errors�or�omissions,�however�caused.
Printed�in�Canada
It’s�not�that�easy�being�green�…�or�is�it?
Quoteworthy
– page 16
“We�are�betting�on�commodities,�we�are�betting�on�in-migration,�we� are� betting� on� growth.� You� don’t� have� to� be� the� sharpest�pencil�in�the�box�to�make�money�in�apartments”�
–�Bob�Dhillon,�founder�Mainstreet�Equity
4 www.canadianapartmentmagazine.ca
Editor’s Note
I�never�thought�that�one�day�I�would�be�quoting�a�member�of�the�Muppets�to�get�my�message�across.
But�after�reading�this�issue’s�Marketing�column�by�Carissa�Drohan-Jennings�and�seeing�how�she�playfully�mingled�Kermit�the�Frog’s�famous�“It’s�not�that�easy�being�green”�into�her�column,�I�realized�that�perhaps�Kermit�-�and�Carissa�-�had�a�point.
Indeed,� it� is�not� that�easy�being�green.�Any�company�can�claim�to�be�green�and�many�do�give�sustainability�lip�service�to�appear�that�they�have�the� environment� in� mind,� but� often� it� amounts� to� nothing� more� than�“greenwashing.”
Being�green�takes�time.�It�takes�a�plan.�It�takes�a�commitment�from�the�entire�organization.
This�issue�of�Canadian�Apartment�Magazine�takes�on�the�issue�of�being�green�and�addresses� the�various�ways� in�which�a�company�can�become�more�sustainable.
Finance�columnists�Peter�Cook�and�Robert�Fleet�encourage�the�use�of�an�energy�consultant�and�outline�the�incentive�programs�which�are�offered�by�the�CMHC�and�designed�to�aid�a�building�owner�when�embarking�on�the�green�path.�They�conclude�that� “by�greening�your�building�and�making� it�energy�efficient,�you�will�save�money�in�the�long�term.�In�a�competitive�market,�the�word�‘green’�may�also�be�the�deciding�factor�for�eco�savvy�tenants.”��
Many� multi-residential� firms� have� taken� great� steps� to� make� their� units�more�energy-efficient.�From�retrofitting�their�buildings�with�energy�efficient�windows,� lighting� and� plumbing� to� introducing� green� measures� such� as�recycling�programs,�these�companies�have�embraced�the�environment.
The� feature� article� profiles� Western� Canada’s� Mainstreet� Equity� Corp.�whose�colourful�founder�Bob�Dhillion�claims�was�“green�before�green�was�popular”�and�documents�the�meteoric�rise�of�the�company.���
Meanwhile,�the�aforementioned�Marketing�column�provides�the�dos�and�don’ts�of�a�green�marketing�plan�to�help�landlords�promote�their�eco-friendly�initiatives�to�skeptical� renters.�And�she�offers�up�a�warning�that�should�be�heeded�when�touting�your�program.
“It’s�often�tempting�for�a�company�to�adopt�the�‘green’�label�for�their�units,�but�there�should�be�some�form�of�restraint�taken�prior�to�making�such�a�claim,�for�it�is�important�to�ensure�that�the�claim�adheres�to�the�laws�set�forth�by�the�competition�bureau.”�
With�all�due�respect�to�Kermit,�it�may�not�be�easy�to�be�green,�but�it�is�possible.
Scott Anderson
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Untitled-3 1 11-09-01 11:43 AM
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CovEr Story
14 Taming�the�Wild,�West�WestMainstreet�Equity�Corp.�By:�Scott�Anderson
contentsColumNS
8� Finance�Financing�your�green�initiatives� By�Peter�Cook�and�Robert�Fleet
12� CMHC��Maximize�your�investment�with�CMHC-Multiple�insurance� By�Paula�Gasparro
22� Insurance�Costa�Concordia�–�What�a�mess!� By�Andy�Schwartze
25� �Maintenance�Are�electricity�suite�meters�worth�the�investment?�By�Christopher�Seepe
28� �Portfolio�strategy�Co-brokering�is�about�scaling�your�business�for�the�future
� By�Derek�Lobo
32� �Marketing�Green�marketing�–�It’s�not�that�easy�being�green� By�Carissa�Drohan-Jennings
DEpartmENtS
4� Editor’s�Note
36� �Newsline
37� �New�Products
38� �Smart�Ideas�
columnists
Petercook,RobertFleet,carissaDrohan-Jennings,PaulaGasparro,Dereklobo,Andyschwartze
www.williamshvac.com
Through the wall heating and cooling and solutions!
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11278_GordonWilliams_2012.indd 1 12-01-12 10:57 AM
8 www.canadianapartmentmagazine.ca
Over� the� last�decade,� the� real-estate�market�has�been�adapting�to�a�progressively� “green”�global�attitude.�Some�of�the�biggest�players�in�the�industry�are�opting�for�energy�efficiency,�sustainability,�and�eco-friendly�alternatives.�Unfortunately,�many�apartment�owners�are�still�associating�these�words�with�complexity,�confusion�and�extra�costs.�They’re�not�sure�how�to�get�started,�what�retrofits�would�best�benefit�their�buildings�and�how�quickly�will�they�see�a�return�on�their�investment?�With�assistance�of�a�qualified�energy�consultant�and�the�recent�improvements�to�Canada�Mortgage�and�Housing�Corp.’s�(CMHC)�energy�efficiency�program,�going�“green”�might�actually�be�easier�than�it�seems.�So,�you�ask,�is�it�really�worth�the�effort�and�investment?�Absolutely!�
Program detailsCMHC�has�had�an�energy�efficiency�program�in�place�for�a�number�of�years.�Recently�CMHC�decided�to�expand�the�program�features�further.�The�premise�of�the�program�has�remained�the� same.� Landlords� will� receive� higher� loan� amounts� and� premium� rebates� subject� to�completing�energy�efficient�upgrades� relating�to�hydro,�water,�and�gas�consumption.�The�new�program�has�been� improved� increasing� the�maximum�amount�of�CMHC’s�premium�rebate�from�10�per�cent�to�15�per�cent.�The�new�program�also�allows�for�greater�flexibility�in�the�underwriting�providing�higher�property�valuations�and�loan�amounts.
Table 1 Program features Old program New programPremium�rebate� 10%�(maximum)� 1-15%�Required�reduction�amount� 10%�(minimum)� 1-15%Utilities� Hydro,�Gas� Hydro,�Gas,�WaterMax.�valuation�consideration� 10%�reduction�of� 15%�reduction�of�all�utilities� hydro�and�gasWhen�can�I�make� 12�months�prior�to�advance� 12�months�prior�to�advance�&��improvements?� &�12�months�after�advance� 12�months�after�advance
CMHC insurance premium savingsThe�previous�program�required�a�minimum�energy�savings�of�10�per�cent�to�obtain�a�10�per�cent�reduction�in�the�CMHC�premium.�The�revised�program�will�allow�borrowers�to�obtain�a�
Follow us on Twitter @Robert_Fleet and on LinkedIn. Peter Cook and Robert Fleet are committed to helping borrowers strategize the best loan structure possible. They are available for one-on-one consultation for any CAM reader requiring multi-residential financing. As “Apartment Financing Specialists” with First National Financial LP they have originated over $4 Billion of mortgages. Their combined 35 years experience in the financial industry has lead to frequent speaking engagements across the country. They freely share their knowledge and techniques with audiences, clients and prospective clients. If you have questions, Peter and Robert may be reached by phone or email.Peter Cook — (416) 593-2913 [email protected] Fleet — (905) 301-3449 [email protected]
Financing your greening initiatives
Finance
Finance
premium�rebate�ranging�from�1�per�cent�to�15�per�cent�depending�on�the�energy�savings�projected�for�their�building.�CMHC�will�require�a�report�from�a�qualified�consultant�detailing�the�necessary�energy�efficient� improvements� as� well� as� the� estimated�percentage�of�savings�once�the�retrofits�have�been�implemented.�If�the�improvements�are�completed�12�months�prior�to�the�loan�advance�the�borrower�will�receive�the�premium�reduction�at�the�time�of�funding.�If�the�improvements�are�completed�within�12�months�after�the�funding�date,�the�premium�will�be� rebated�once�CMHC�receives�a� second� report�from�the�consultant�confirming�the�recommended�retrofits�have�been�completed.
Maximize loan amount: Improved underwriting flexibility on CMHC insured loansFurther�incentive�to�go�green�is�CMHC’s�recognition�of�up�to�15�per�cent�in�future�utility�savings�during�the� valuation� process.� CMHC� will� reduce� the�historical� utility� expenses� by� the� percentage� of�overall�savings�confirmed�in�the�energy�consultant’s�report.�With�the�report,�CMHC�will�accept�a�higher�value�and�approve�a�larger�loan�amount�up�to�85�per� cent� of� the� new� lending� value.� If� the� retrofit�work� is� completed� post� funding,� the� additional�loan� amount� recognized� by� the� reduction� in�utility�savings�will�be�held�back�from�the�initial�loan�advance.� The� funds� will� be� released� upon� CMHC�receiving� the� post� report� from� the� consultant�confirming�the�retrofit�items�have�been�completed.��
How does the program work?To� estimate� the� increased� lending� value� and�determine� the� amount� of� the� premium� rebate,�lenders�must�provide�the�consultant’s�energy�report�at� the� time� of� submitting� the� loan� application� to�CMHC.��The�process�involves�a�three-�to�four-hour�site�visit�and�the�consultant’s�review�of�12�months�to� 24� months� of� utility� bills.� With� this� information�the� consultant� can� determine� the� expected�utility� savings� for� the� project.� The� report� takes�approximately�two�weeks�to�complete.
The�cost�of� the�audit� report�will� vary�amongst�consulting� firms.� The� estimated� costs� should� fall�into�the�ranges�identified�in�Table�2�below.
Table 2: Estimated audit report costUnits� Cost�(approx.)0-25�units� $1,100-$1,80025-50�units� $1,500�–�$2,50050-75�units� $2,000�–�$3,000100+�units� $2,500�+
march 2012 9
By�greening�your�building�and�making�it�energy�efficient,�you�will�save�money�in�the�long�term.�In�a�competitive�market,�the�word�green�may�also�be�the�deciding�factor�for�eco-savvy�tenants”�“
Are you contemplating the sale of your apartment property?
Vancouver Calgary Edmonton Winnipeg London Kitchener Toronto Ottawa Montreal Saint John Halifax
Consider the following: • Whowillrepresentyourbestinterests? • Whowillgiveyourpropertymaximumexposure? • Whowilldeliverthehighestvalueforyourproperty?
With over 20 years experience, tens of thousands of units sold, and hundreds of clients represented, we have consistently delivered superior results. Through our local and national coverage, we create maximum exposure, ensuring maximum value for your property.
Pleasevisitourwebsiteatwww.cbre.ca/nag-torontoorcontactusat416.815.2332tolearnmoreabouthowwecanhelpyou.
www.cbre.ca/nag-toronto
CBRELimited-NationalApartmentGroup: : David Montressor*, Executive Vice President
416.815.2332 [email protected]
* Sales Representative CBRE Limited Brokerage
SOLD226Suites-Oakville$182,655 per suite
SOLD849Suites-Toronto$129,564 per suite
SOLD76Suites-Toronto$139,474 per suite
AD Redesign Half Page Island 2011 Jan 012.indd 1 1/6/2012 4:35:37 PM
10 www.canadianapartmentmagazine.ca
According� to� energy� consultant� Steve� Herzog�of� Greener� Solutions� Inc.,� (www.greensolutions.ca)�by� completing� the� recommended� improvements�owners� can� realize� a� decrease� in� utility� costs�anywhere� from� 10� per� cent� to� 30� per� cent.� Some�older� buildings� can� realize� a� savings� as� high� as� 50�per� cent.� Herzog� explains,� “Owners� will� receive� a�detailed�report�providing�an�understanding�of�how�electricity,�natural�gas,�and�water�are�currently�being�used�in�their�buildings.�The�report�may�also�identify�waste�management�savings,�as�well�as�insights�into�future�maintenance�suggestions.�Energy�reports�are�extremely� important� for� running� your� building� at�optimal� efficiency� levels.”� Greener� Solutions� is� also�aware�of�a�variety�of�provincial�and�municipal�rebate�programs�and�will�take�care�of�the�application�process�for�their�clients.�����
Here�is�a�list�of�some�possible�improvements�and�their� estimated� return� on� investment.� See� Table� 3�below.
Table 3Estimated return on investmentWindows� 3-8�yearsVariable�speed�fans� 1-2�yearsToilets/shower�heads� 1-2�yearsReplace�lighting�� 1-2�yearsReplace�boilers�� 3-7�yearsThermostatic�controls� 2�yearsDefective�taps� 1-4�yearsSeal�cracks�in�exterior�walls� 6-10�years
So, is it all worth it?Absolutely!� Greening� your� building� is� truly� a� win-win�investment.�With�the�professional�guidance�of�an�energy�consultant,�owners�not�only�reduce�their�energy�consumption,�they�will�receive�higher�loan�proceeds�and�a�CMHC�premium�rebate�to�offset�a�portion�of�their�implementation�costs.�By�greening�your� building� and� making� it� energy� efficient,� you�will�save�money�in�the�long�term.�In�a�competitive�market,�the�word�green�may�also�be�the�deciding�factor�for�eco-savvy�tenants.��
With�CMHC� interest� rates�at�all-time� lows�more�and�more�clients�are�taking�advantage�of�the�CMHC�energy� audit� program� to� finance� their� greening�initiatives.��
Finance
CARMA_CondoBusiness_01-19-2009_CS2--F.pdf 2/3/09 5:41:35 PM
11002_Carma_2011.indd 1 11-05-02 11:09 AM
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12 www.canadianapartmentmagazine.ca
CMHC Mortgage Loan Insurance for multi-unit properties (five-plus units):If� you’re� looking� to� maximize� your� return� on� an� investment� property,� Canada� Mortgage� and�Housing�Corp.�can�help�you�achieve�that�goal.
CMHC�is�Canada’s�provider�of�mortgage� loan� insurance�for� the�construction,�purchase�and�refinancing�of�multi-unit�residential�properties,� including�rental�buildings,� licensed�care�facilities�and�retirement�homes.�It�provides�borrowers�with�greater�choice�and�financing�options.
Borrowers� can� obtain� mortgage� funding� from� CMHC� at� lower� interest� rates� than� might�otherwise�be�required�for�conventional�mortgage�financing,�and�receive�increased�lending�of�up�to�85�per�cent�of�the�multi-unit�property’s�value.�
CMHC’s� Mortgage� Loan� Insurance� for� multi-unit� buildings� allows� investors� to� purchase� a�property�with�a�lower�down�payment�–�as�little�as�15�per�cent�for�buildings�with�five�or�more�units.
By�offering�the�lower�rate�and�providing�a�lower�down�payment,�a�CMHC-insured�mortgage�loan�allows�borrowers�to�maximize�their�return�on�investment�sooner.
The�CMHC�Mortgage�Loan�Insurance�for�multi-unit�buildings�is�broken�down�into�the�following�areas.�Following�are�a�few�basic�provisions,�guidelines�and�requirements:
Rental, licensed care and retirement facilities:CMHC�mortgage�loan�insurance�is�available�to�approved�lenders�for�loans�to�construct,�purchase�or�refinance,�with�or�without�improvements,�rental,�licensed�care�and�retirement�facilities�in�Canada.�First�and�second�mortgages�are�available.
The�loan�relating�to�residential�property�may�not�exceed�85�per�cent�of�the�lending�value,�as�determined�by�CMHC.�The�loan�relating�to�any�non-residential�components�of�the�building�may�not�exceed�75�per�cent�of� the� lending�value�attributed� to� the�non-residential�component,�as�determined�by�CMHC.
CMHC-insured condominium construction mortgages:First�mortgages�are�available�for�the�construction�of�new�condominium�buildings�in�Canada.�The�maximum�insurable�mortgage�loan�amount�is�the�lesser�of�75�per�cent�of�estimated�market�value�or�85�per�cent�of�the�estimated�total�cost�to�complete.
Requirements�for�any�of�these�loans�are�discretionary�and,�on�a�case-by-case�basis,�CMHC�may�need�additional�documentation�or�may�impose�more�restrictive�underwriting�norms�than�those�listed�in�CMHC�materials�or�the�website.
Flexible�repayment�terms�are�available,�including�extended�amortizations,�and�fixed�or�floating�interest�rates.�There�is�also�an�option�for�rolling�application�fees�and�insurance�premiums�into�the�mortgage�loan.
Paula Gasparro is the Manager, Business Development, Multi-Unit Mortgage Insurance at CMHC. Reach her at 416-250-2731, via e-mail at [email protected] or visit www. cmhc.ca/mult-unit. CMHC provides a wealth of research material and energy-saving tips at www.cmhc.ca > Business /Government Housing Organizations > Building & Design > Highrises and Multiples. You can also call CMHC at 1-800-668-2642.
Maximize your investment with CMHC - Multiple insurance
Go�online�for�more�finance�articles
www.canadianapartmentmagazine.ca
CmHC
The� fees� and� premiums� pay� for� themselves� –�generally� they�are� substantially�offset�by� the� savings�from�lower�interest�rates.
There�are�even�enhanced�underwriting�flexibilities�available�in�support�of�affordable�housing�and�energy-efficiency�initiatives.
Affordable housing: Among� the� general� conditions� are� enhanced�underwriting� flexibilities� for� new� additions� to�affordable� rental� housing� stock,� including� new�construction,� conversion� from� non-residential� to�residential� and� replacement� of� affordable� units� as� a�result�of�demolition.
Also,� units� must� be� modest� in� size,� design� and�amenities�in�relation�to�other�rental�units�in�the�market.�The�project�must�have�a�minimum�of�five�units.
Energy-efficiency:When� energy� efficiency� improvements� are� being�undertaken,� CMHC� multi-unit� insured� financing� for�new�construction,�refinance�or�purchase�is�available.�
To�qualify�for�the�CMHC�energy-efficient�premium�reduction/refund,�borrowers�are�to�submit�the�required�documentation� to� the� approved� lender� within� one�year�after�the�loan�has�been�finalized.
When�retrofit�improvements�have�been�completed�within�a�12-month�period�prior�to�the�current�mortgage�loan�advance,�the�borrower�will�have�the�opportunity�to� demonstrate� a� reduction� in� energy� consumption�and�qualify�for�the�CMHC�energy-efficient�reduction/refund.
Borrowers� are� to� provide� evidence� that� the�improvements� have� been� made� within� the� last�year� through� capital� investment� reports.� CMHC� will�continue�to�include�the�anticipated�lower�energy�costs�when�calculating�net�operating�income�to�determine�property�lending�value.
To� take� advantage� of� CMHC’s� Mortgage� Loan�Insurance,�contact�Paula�Gasparro,�Manager,�Business�Development,�Multi-Unit�Mortgage�Insurance�at�416-250-2731�or�via�e-mail�at�[email protected].�
For more information, log on to www. cmhc.ca/mult-unit.
march 2012 13
CmHC
By�offering�the�lower�rate�and�providing�a�lower�down�payment,�a�CMHC-insured�mortgage�loan�allows�borrowers�to�maximize�their�return�on�investment�sooner”“
Contac t :Tasha Mor ton
Manager, Legal & Col lec t ionsSuite Col lec t ions Canada I nc.
284 R ichmond St . , E , Suite 300Toronto, Ontar io M5A 1P4
t .416.642.0291 x364f.416.340.0855
w w w.suitecol lec t ions.com
Suite Col lec t ions Canada I nc.i s the only Col lec t ions Agenc y in
Ontar io that specia l izes inResident ia l Bad Debt Col lec t ions.
Our pr imar y focus is to recover unpaidrent for landlords, f rom both
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O n e G o a l … . O n e F o c u s … . G r e a t R e s u l t s
Untitled-6 1 12-01-12 1:24 PM
There’s another Dhillon in town and he’s also making a mark on the Wild, Wild West.
Just like Marshall Matt Dillon from the fictional series “Gunsmoke”, Mainstreet EquityCorp.’s founder and largest shareholder Bob Dhillon is also striving to make a name for himself in the West – that being the real estate market of Western Canada.
Taming The Wild, Wild WesT one building aT a Time
Cover Story
march 2012 15
By Scott Anderson
Cover Story
“I�will�go�wherever�the�money�is.�I�will�go�to�Timbuktu�if�I�have�to�to�make�a�buck,�but�commonsense�is�if�you�are�an�amateur�economist�like�me�is�that�the�West�has�a�lot�of�things�to�offer,”�he�said.
What�Calgary-based�Dhillon�saw�in�Western�Canada�–�where�his�family�moved�from�Asia�some�30�years�ago�–�was�a�booming�economy,�in-migration,�burgeoning�job�growth,�a�favourable�landlord�tenancy�act,�and�lowest�unit�count�per�capita�based�on�CMHC�data.
Encouraged�by�the�so-called�“petro�dollars”�and�the�benefits�of�resource-based�jobs�in�Saskatchewan�and�Alberta,�Dhillon�sees�endless�potential�in�Western�Canada�unlike�the�limited�opportunities�of�central�Canada�where�influential�families�and�institutional�money�control�the�market.
“Western�Canada�is�the�Wild�West.�It�is�a�closed�shop.�In�Toronto�there�are�a�lot�of�rich�families;�third�generation�and�fourth�generation.�How�is�a�punk�like�me�going�to�break�into�that�market?�Instead,�I�have�created�my�own�niche�and�my�own�opportunities.”
This�niche�is�mid-market�apartment�buildings�with�less�than�100�units�in�areas�of�Western�Canada�where�the�economy�is�booming,�jobs�are�plentiful�and�90�per�cent�of�the�apartment�universe�is�mid-market.
“We�are�betting�on�commodities,�we�are�betting�on�in-migration,�we�are�betting�on�growth,”�he�said.�“You�don’t�have�to�be�the�sharpest�pencil�in�the�box�to�make�money�in�apartments.”
These�bets�have�helped�Dhillon�and�Mainstreet,�which�he�founded�in�1998�and�took�public�on�the�Toronto�Stock�Exchange�eleven�years�ago,�to�become�the�No.�10�top�gaining�stock�on�the�TSX�in�2011.
This�is�an�impressive�feat�indeed�considering�resource�stocks�were�the�only�game�for�many�years�on�Canada’s�dominant�stock�index.
“The�‘Blue�Sky�stocks’�consisting�of�the�mineral�companies�and�oil�companies�are�shooting�out�of�the�park�and�then�you�have�this�crazy�real�estate�company�in�Western�Canada�that�is�competing�with�these�oil�and�mining�companies�with�Blue�Sky�returns�from�all�over,”�Dhillon�said�of�his�company’s�meteoric�run�up�the�equity�charts.
A�look�at�the�financials�from�2011�tells�the�tale�of�the�incredible�growth�for�Mainstreet.�Funds�from�operations�(FFO)�before�financing�were�up�47�per�cent�from�2010.�FFO�including�financing�costs�was�up�44�per�cent�from�2010.
Westview Terrace - Calgary, Alberta Boutique apartments, Montrose Manor – Saskatoon, Saskatchewan
I�will�go�wherever�the�money�is.�I�will�go�to�Timbuktu�if�I�have�to�to�make�a�buck,�but�commonsense�is�if�you�are�an�amateur�economist�like�me�is�that�the�West�has�a�lot�of�things�to�offer”�
-�Bob�Dhillon,�founder�Mainstreet�Equity“16 www.canadianapartmentmagazine.ca
march 2012 17
Cover Story
Net�operating�income�(NOI)�climbed�23�per�cent�from�2010�to�$41�million,�while�same�asset�NOI�increased�by�11�per�cent.�
Mainstreet’s�assets�also�grew�in�2011�adding�almost�950�residential�apartment�units�–�representing�a�growth�in�portfolio�of�15�per�cent�-�in�its�core�geographic�locations.� Mainstreet’s� total� portfolio� now� includes� almost� 7,800� residential�apartment�units�valued�at�more�than$950�million.�
The�growth�in�2011�–�some�$120�million�of�acquisitions�in�total�–�was�achieved�with�no�equity�dilution.�Instead,�it�funded�this�organic�growth�through�cash�flow,�refinancing�matured�mortgages�and�financing�properties�after�stabilization.
“We�grew�this�company�all�through�internal�cash�flow.�Every�time�we�buy�a�building,�we�don’t�go�back�to�the�market�and�raise�$20�million�or�$50�million�to�buy�real�estate.�We�are�doing�it�all�through�internal�generated�cash�flow,”�Dhillon�said.
“We�built�the�company�from�zero�to�a�billion�dollars�with�limited�equity�dilution.�How�many�guys�have�done�that�ever�in�the�history�of�real�estate?�Zero�to�a�billion�without�going�to�the�market.�That�is�a�testament�to�a�business�model�working.”
“Regardless�of�the�market�conditions�we�keep�going�to�the�market�and�buying�buildings�through�internally�generated�cash�flow.”
Humble beginningsFrom�zero�to�an�almost�billion-dollar�company�is�impressive,�but�even�more�so�when�you�trace�the�path�that�its�founder�who�was�born�in�Japan�with�Sikh�roots�took�to�get�to�where�he�is�today.
“Real�estate�was�part�of�my�DNA�because�I�came�from�a�real�estate�background�although� I’m� an� immigrant� to� Canada.� My� religion� was� capitalism� and� as� an�immigrant�that�was�part�of�my�DNA�to�be�successful�here�at�any�cost,”�he�said.
Real�estate� is� the�only�game�Dhillon�has�known�over� the�years� -�he�started�flipping�houses�when�he�was�about�19�years�old�and�has�never�looked�back.
“I�fixed�up�two�houses,�sold�them�for�a�profit�and�that�was�the�beginning�of�my�career�in�residential�estate,”�he�said�“Right�through�MBA�school�I�paid�by�flipping�real�estate,�adding�value�to�real�estate,�buying�real�estate,�holding�real�estate,�cash�flow�in�real�estate�paid�for�my�schooling�and�right�through�my�MBA.”
During�the�process�when�he�was�flipping�real�estate,�he�accumulated�272�units.�“It�was�like�inventory�for�a�merchant.”
And�with�a�bit�of� swagger� he� jumped�wide-eyed� and� fearless� into� the�deep�end�of�the�real�estate�shark�tank�early�in�the�new�millennium.
“For�all�the�wrong�reasons�I�took�those�272�units�and�went�public�with�it.�
Vintage Squared - Calgary, Alberta (renovation materials direct from manufacturer in China)
Cover Story
The�day�I�got�listed�on�the�Junior�Capital�Pool,�the�day�I�got�listed�is�the�day�the�real�estate�index�crashed.�The�day!�Literally�the�day!”
But�the�hard�and�cruel�lesson�of�the�business�world�did�not�end�there.Fast�forward�a�few�months�and�the�tech�bubble�blew�up�on�Nasdaq�bringing�in�
the� recession.� This� also� ushered� in� a� new� phenomenon,� in� the� form� of� Real� Estate�Investment�Trusts�(REITS),�largely�a�“unique�phenomenon”�in�Canada.
“These� financial� engineers� came� to� the� scene� with� a� different� matrix,� a� different�formula,�endless�capital,�so�they�weren’t�negotiating�as�hard�as�I�would�or�some�of�the�old�time�real�estate�guys�would.�It�was�more�of�a�game�of�consolidation.�It�was�more�of�a�game�accretive�to�their�financial�model�and�not�as�accretive�to�the�market�place.�It�was�more�accretive�to�their�cost�of�capital.�They�were�buyers�from�Mars.�It�was�a�totally,�totally�different�time,�which�we�never�anticipated.”
“I�was�up�against�the�REITS�on�acquiring�assets�who�had�a�lower�cost�of�capital.�So�everything�possible�that�could�have�gone�wrong�went�wrong.�The�real�estate�index�crash.�The�tech�bubble�blew�up�and�the�REITS�came�on�the�scene�that�were�from�a�different�planet.�They�were�gobbling�up�everything�on�a�different�matrix�than�I�was�used�to.”
But�instead�of�folding�up�his�tent�and�going�home,�Dhillon�dug�in�his�heels�and�decided�to�carve�out�a�niche�for�himself�in�an�area�that�would�be�unaffected�by�the�REITs.
“We�rolled�up�our�sleeves.�I�knew�we�couldn’t�raise�any�capital�in�the�marketplace�because�capital�markets�were�tough�and�I�wasn’t�a�REIT�and�I�was�the�only�non-dividend�paying,�non-REIT�on�the�multi-family�real�estate�index.�I�still�am.”
Instead,�he�saw�a�niche�in�Western�Canada�in�mid-market,��add-value�opportunities�and�developed�the�Mainstreet�Value�Chain.
Mainstreet� scours� the� market� for� smaller� buildings� with� less� than� 100� units� that�generally�need�work.�These�units�are� typically�avoided�by�both�the� institutions�and�REITS�who�do�not�have��the�time,�the�patience,�or�systems�in�place�for�the�mid-market.�
It�acquires�the�underperforming�assets,�renovates�them�to�a�higher�standard�and�retrofits�them�with�energy-efficient�features�to�further�lock-in�savings.�It�then�repositions�them�in�the�market�at�a�higher�rent.
Mainstreet’s� platforms� are� British� Columbia’s� lower� mainland,� Edmonton,� Calgary,�and�Saskatoon.�In�these�geographic�areas�some�80�per�cent�of�the�landscape�is�mid-market,�which�kept�the�REITS�away.
“I�created�this�unique�niche�for�myself�that�I�couldn’t�compete�with�the�low-cost�of�capital�of�the�REITs�which�stayed�away�from�the�geographic�platform�of�Western�Canada,�and�generally�they�didn’t�want�to�buy�buildings�that�needed�a�lot�of�work,”�he�said.
Although�each�of�these�areas�have�slightly�different�appeals�for�Dhillon�and�Mainstreet,�he�said�all�boast�common�and�attractive�similarities.�These�include�a�landlord�tenancy�act�that�enables�landlords�to�dictate�the�rental�price�depending�on�the�market,�strong�in-migration�numbers�as�job�seekers�flock�to�the�West�in�search�of�jobs,�and�low�Canada�Mortgage�and�Housing�Corporation�rates.
The�company’s�success�can�be�attributed�to�its�“Six�pillars”�which�it�has�built�over�the�years�and�has�allowed�it�to�fly�under�the�radar�of�the�institutions�and�is�unseen�or�unattainable�by�competing�‘mom�and�pop’�operations.•� Acquire�underperforming�assets�at�attractive�prices•� Limited�to�no�competition�from�REITs�and�pension�funds�in�the�mid-market�sector•� Internalized�construction�capabilities�•� Renovation�supplies�direct�from�manufacturers�in�China•� Internalized�operations�platform�•� Internalized�marketing�and�effective�branding
“We�have�developed�six�pillars�within�Mainstreet�that�are�not�easy�to�replicate�unless�you�have�lots�of�resources,”�he�said.”
The cluster effectKey�to�Mainstreet’s�success� in�each�of�the�geographic�areas�is� its�concentration.�The�company�looks�to�maximize�efficiencies�and�achieve�economies�of�scale�through�the�clustering�of�assets.
The�beautiful�thing�about�social�media�is�it�is�in�its�infancy�for�business.�It�is�a�wide�open�field�and�there�is�no�real�endgame.�You�have�never�arrived…”�-�Michael�Birklein,�Mainstreet’s�director�
of�marketing�and�communications
“
Strategic investing (Cluster: 63 properties / 1,614 units) – Edmonton Central and NAIT
18 www.canadianapartmentmagazine.ca
By� clustering� its� properties� within� a� five-block� radius,� the� company� has� been� able� to�reduce�human�resource�costs�by�retaining�fewer�superintendents,� reduce� property� maintenance�costs,� increase� margins� consistently� and� reduce�advertising�expenses.
And� by� concentrating� on� certain� areas,� the�company� believes� that� the� entire� area� benefits�from�the�attention.
“We�don’t�only�transform�the�building,�we�are�transforming� the� neighbourhood,”� Dhillon� said.�(watch�video�at�www.mainst.biz)
One� needs� to� look� no� further� than�Edmonton�to�see�proof�of� the�success�of� this�“strategic�investing.”
Mindful�that�the�city�was�mulling�development�of� the� inner� core� including� a� new� sports� arena,�significant�expansion�of�Grant�McEwan�University,�a�proposed� light� rail� transit� line,�and�a�new�plan�for� the� city� centre� airport,� the� company� began�gobbling�up�apartment�buildings� in� the�area.� In�the� process� it� accumulated� 63� properties� with�some�1,600�units�in�the�area.�(Please�refer�to�map�on�page�18)
“We�looked�at�all�of�the�plans�and�all�of�the�factors�and�said�if�half�the�things�didn’t�go�ahead,�we�would�be� ahead.� But� you� know� what� all� of� them� went�ahead.�You�can�call�it�luck,�or�you�can�call�it�strategy,”�Dhillon�said.
Cover Story
Key� to� the� company’s� success� is� also� its� effort� to� internalize� many� of� its� services� and� costs.� From�renovations�to�marketing�and�branding,�the�company�has�brought�in�house�the�work�in�a�bid�to�shave�costs.
“We�are�continually�developing�pillars�within�our�organization�that�are�going�to�be�very�hard�for�a�startup�company�to�replicate,”�Dhillon�said.�
“Everything� we� developed� and� internalized.� We� internalized� our� operations.� We�internalized�our�construction,�our�advertising,�our�communications,�nothing�is�outsourced.�We�can�proudly�say�that�we�have�one�of�the�best�margins�in�the�marketplace�because�of�that.”
Dhillon� also� notes� that� mid-market� properties� don’t� have� the�structural� operating� fixed� costs� to� contend� with,� such� as:� building�amenities,�elevators,�and�underground�parking.
A� unique� scheme� sees� the� company� sourcing� a� portion� of� its� building�supplies� direct� from� manufacturers� in� China.� By� purchasing� materials� such�as� cabinets,� wood� laminate� flooring� and� lighting� it� has� cut� its� capital�expenditures�tremendously.�This�has�resulted�in�a�60�per�cent�reduction�in�the�cost�of�cabinets�and�a�200�per�cent�decrease�in�flooring�tiles.
Building the brandClustering�also�allows�the�company�to�develop�its�brand�by�maintaining�a�heightened�presence�in�the�communities.
“We�are�really�pushing�and�we�have�got�a�long�ways�to�go�yet,�but�we�are�trying�to�create�a�brand�for�mid-market�space,�because�this�brand�is�totally�obsolete.�Nobody�has�a�brand�yet�developed�for�the�mid-market�space,”�Dhillon�said.
Social�media�and� the�associated� technologies�will�play�a�huge�part� in�branding� for�Mainstreet.�Through� the� use� of� vehicles� such� as� Twitter,� YouTube� and� various� smartphone� applications,� the�company�is�looking�to�take�advantage�of�society’s�reliance�on�all�things�electronic.
“The�beautiful�thing�about�social�media�is�it�is�in�its�infancy�for�business.�It�is�a�wide�open�field�and�there� is�no�real�endgame.�You�have�never�arrived.�You�can�get� in�there�and�do� interesting�things,�
Phone: 905-693-8666 or 1-866-557-5599
Email: [email protected]
www.phelpslaundry.ca
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PHELPS would like to congratulate Mainstreet Equity Corp. for close to 15 years of outstanding contributions to property management. We are proud to be one of their valued
suppliers and wish them success in all their future endeavours.
Untitled-5 1 12-03-12 2:34 PM
march 2012 19
Cover Story
but� there�are�always�ways� that� it� is�going� to�change� -�how�you�are�using�and�who�you�are�contacting.� It� is�a� really�exciting�area,”�said�Michael�Birklein,� the�company’s�director�of�marketing�and�communications.
A�recent�push�to�move�its�advertising�online�saw�the�company�slash�its�advertising�budget�by�75�percent,�resulting�in�an�increase�in�inquiries�and�coinciding�with�a�drop�in�vacancy�rates.
By�using�the�popular� Internet�site�YouTube�the�company�has�expanded�tremendously�its�advertising�content.�Under�traditional�print�advertising�methods�it�was�limited�to�a�few�words�and�a�picture,�but�now�you�can�go�online�and�post�multiple�digital�assets�and�actually�engage�the�viewer.
“It�is�a�natural�fit�and�people�expect�it,”�said�Birklein.�“If�you�look�at�our�demographic�it�is�the�younger�set�anyway.”
He�notes�that�the�company’s�YouTube�postings�receive�on�average�180�viewings�per�day.�“To�me�that�is�180�showings�that�aren’t�on�the�book.�The�more�video�we�produce,�the�more�it�is�going�to�explode.”
The�company�is�also�eyeing�the�use�of�quick�response�(QR)�codes�on�its�buildings.�These�barcodes�give�potential�tenants�the�ability�to�scan�them�for�an�instant�link�to�video�and�other�information.
“It�is�giving�them�another�access�point,”�said�Birklein.�“They�can�drop�by�anytime�and�not�have�to�wait�for�somebody�to�show�them�a�suite.�They�can�actually�watch�a�video�of�it�right�there.”
The�company�is�also�eyeing�social�media�to�communicate�with�its�existing�tenants�with�the�use�of�tools�such�as�Twitter�and�Facebook�to�communicate.
“Twitter�is�a�really�good�source�of�tenant�retention.�It�is�a�touch�point�for�them.�They�will�use�Facebook�and�Twitter�if�they�have�an�issue,”�he�said.
“You�can�really�turn�a�situation�around.�When�things�are�going�well�people�don’t�generally�talk�to�you,�but�when�they�have�an�issue�they�will�talk�to�you.�If�you�are�responding�to�them�and�dealing�with�them�then�they�are�happy.�You�can�turn�a�situation�around�pretty�quick.”
A perfect stormDhillon�sees�a�perfect�storm�brewing�for�the�company�in�2012�as�the�ongoing�economic�strength�in�its�core�Western�Canadian�markets�and�favourable�macro-economic�conditions�like�low�interest�rates�-�expected�to�remain�at�60-year�lows�-�and�a�new�accounting�standard�benefit�real�estate�companies�like�Mainstreet.
Mainstreet,�like�other�real�estate�companies,�is�preparing�for�the�adoption�of�International�Financial�Reporting�Standards�(IFRS)�for�the�2012�fiscal�year.�For�the�first�time�the�market�value�of�a�company’s�assets�will�be�reported�on�its�balance�sheet�and�will�more�accurately�reflect�the�shareholder�value.�
“We�are�value�creators�in�the�mid-market�apartment�business,�for�the�first�time�the�value�that� we� have� created� will� be� reflected� in� the� new� accounting� standards,� which� in� turn�validates�our�business�model,”�said�Dhillon.
The�best�strategic�move�was�the�share�buyback�as�reported�in�the�2009�annual�report�when�the�company�repurchased�some�4.1�million�shares�representing�28.5�per�cent�of�the�float�at�an�average�share�price�of�$6.35�–�the�stock�at�the�time�of�this�article�is�in�the�$23�range.
Forecasts�suggest� that�Western�Canada,�where�more� than�90�per�cent�of�Mainstreet’s�portfolio�is�situated,�will�also�continue�to�thrive.�Commodity�prices�show�promise�with�oil�prices�projected�to�average�$95.75�per�barrel�in�2013/14�and�billions�of�dollars�in�private�sector�investment�is�seen�flowing�into�Alberta’s�energy�sector.
Demographic� trends� also� tilt� in� Mainstreet’s� favour� with� in-migration� set� to� continue�to� flourish� in�Alberta�on�the�back�of�another�energy�sector�boom.�Migration�to�B.C.�and�Saskatchewan� is� also� not� expected� to� slow.� Landlord-friendly� tenancy� acts� will� allow�Mainstreet�to�raise�rents�as�market�conditions�allow.
All�these�factors�point�to�a�bright�future�for�Dhillon.“I�learned�early�in�the�game�that�you�have�to�continue�to�swing�every�day�and�occasionally�
you�will�hit�a�home�run.�You�are�going�to�hit�a�lot�of�singles�on�the�way�and�occasionally�you�are�going�to�strike�out,”�he�said.
“The�bases�are�loaded�right�now.�I�am�up�to�bat�and�I�think�the�pitcher�is�sending�me�the�perfect�ball�-�where�am�I�going�to�hit�it?.”
Real�estate�was�part�of�my�DNA…My�religion�was�capitalism�and�as�an�immigrant�that�was�part�of�my�DNA�to�be�successful�here�at�any�cost”�
-�Bob�Dhillon
“
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Peoples trust CAM.indd 1 10-09-20 9:29 AM
22 www.canadianapartmentmagazine.ca
Who�could�not�have�witnessed�the�unfolding�of�one�of�the�most�bizarre�marine�accidents�in�recent�memory�in�the�media?�
If�it�were�not�such�a�tragic�occurrence�this�event�would�be�comical�and,�without�a�doubt,�fodder�for�every�sharp�witted�comedian�out�there.�For�the�management�of�one�of�the�largest�cruise�ships,�plying�the�blue�waters�of�planet�Earth,�to�have�even�risked�getting�so�close�to�a�land�form�is�unthinkable.�For�the�management�to�then�get�off�the�ship�and�pretend�to�be�handling�the�evacuation�from�the�comforts�of�a�bobbing�lifeboat�is�even�more�unbelievable.�
This�disaster�brings�to�mind�an�event�that� took�place�on�Nov.�23,�2007�and�which�ended� on� a� much� happier� note.� Doing� its� usual� adventure� cruise� to� the� Antarctic�Peninsula,�apparently�under�the�command�of�a�new�captain,�the�MS�Explorer,�a�small�Canadian� owned� and� Norwegian� flagged� cruise� ship,� hit� some� ice� and� went� down�near�the�South�Shetland�Islands.�The�entire�passenger�group�and�crew�(approximately�150�people)�found�their�way�to�the�lifeboats�and�were�rescued�roughly�five�hours�later.�
This�vessel�too�ultimately�wound�up�on�its�side�prior�to�sinking.�The�unfortunate�event�happened�on�the�same�voyage�that�one�of�my�sons�and�I�had�taken,�on�this�ship,�earlier�that�
Andy Schwartze, BSc., MBA, CIP, is an insurance broker specializing in property management and real estate. He is a former President of the Insurance Institute, has taught in the community college system and provides continuing education to other brokers. He can be reached at [email protected]. For any comments, you can go to www.takecover.ca and post them on their new blog.
Insurance
Costa Concordia – What a mess!
year.�The�manner�in�which�the�ship�was�evacuated�was�lauded�by�experts.�The�Antarctic�waters,�even�in�mid-summer�(being�the�end�of�December)�rarely�rise�above�36�degrees�Fahrenheit.
It�is�very�hard�to�guess�what�will�be�the�final�financial�result�in�the�case�of�the�Costa�Concordia.�This�has�already�put�the�captain�in�danger�of�being�charged�with�a�capital�crime,�one�that�can�result�in�a�stint�as�a�featured�guest�in�one�of�Italy’s�penal�institutions.�That�can�then�trigger�an�avalanche�of�civil�actions�against�the�cruise�line;�clearly�the�estates�of�those�unfortunate�souls�that� died� having� significant� leverage� to� work� with.� Those� who� survived�have�already�been�offered�compensation�and,�as�is�always�to�be�expected,�some�will�take�it�and�others�will�opt�to�go�for�more.
Estimating�the�impact�on�the�insurance�world�is�tricky,�but�insurers�have�to�set�money�aside.�They�are�statutorily�obligated�to�do�so.�Most�of� the�world’s�cruise�ships,�and�their�operations,�are�insured�by�what�are�known�as�“P&I�Clubs”.�These�are�groups�of�pooled�insurers�(no�doubt�with�Lloyd’s�being�a�big�part)�that�have�been�primarily�set�up�in�Belgium�for�this�very�purpose.�Unlike�conventional�insurance�sources,�they�operate�more�as�low�profit�fraternities.�When�they�need�money,�their�“premiums”�are�adjusted;�much�as�the�real�estate�world�deals�with�its�issues�via�the�cash�call.
Early�indications�point�to�settlement�reserves�that�need�to�be�set�aside,�which�range�from�between�$500�million�to�a�not� insignificant�$1�billion.�Interesting�is�the�fact�that�most�cruise�lines�carry�large�deductibles.�Carnival,�the�apparent�owner�of�this�vessel,�allegedly�carries�deductibles�in�the�$25�million� area,� perhaps� as� much� as� $40� million.� At� the� end� of� January,� a�$460-million�class�action�suit�had�already�been�filed�in�a�Florida�court.�The�hit�that�Carnival’s�balance�sheet�will�take�is�far�from�clear;�but�there’s�more�to�the�story.
This�vessel�was�carrying�500,000�tons�of�heavy�fuel�in�its�tanks.�Sitting�on�rocks�that�are�right�by�the�harbour�mouth�of�Giglio�Island,�any�errors�in�retrieving�that�fuel�will�have�an�unimaginable�impact�on�the�local�waters�and�shorelines.�This�fuel�doesn’t�have�to�go�very�far.�Should�foul�weather�shift�the�wreck,�which�as�of�this�writing�could�still�slip�into�deeper�waters,�the�recovery�challenge�would�grow�exponentially.
On�the�financial�side�of�world�insurance�news,�it�looks�like�2011�will�have�turned� out� to� be� the� second� worst� year� on� record� for� economic� losses�resulting�from�natural�catastrophes.�The�year�2005�appears�to�have�been�the� worst.� Of� last� year’s� estimated� $350� billion� in� losses,� most� of� which�stemmed� from� the� Japan� earthquake,� the� insured� portion� amounts� to�
Insurance
march 2012 23
Estimating�the�impact�on�the�insurance�world�is�tricky,�but�insurers�have�to�set�money�aside.�They�are�statutorily�obligated�to�do�so”“
Untitled-1 1 12-01-24 9:59 AM
less�than�one-third.�Earthquake�insurance�is�still�not�universally�offered�and�thus�the�property�loss�portion�was�to�a�large�extent�uninsured.�One�can�only�imagine�the�premium�levels�in�areas�where�the�risk�is�real.�Not�yet�clear,�of�course,� is� the� inevitable� impact� that�will�be� felt�on�North�American� west� coasts� when� the� debris� finally� arrives.� Certainly� the�satellite�images�are�disturbing.�Mother�Nature�never�ceases�to�remind�us�who�is�really�in�charge.�
I�cannot�wrap�this�up�without�a�quick�comment�on�what�insurers�are�thinking�for�the�year�2012.�This�year�is�beginning�to�look�like�it�will�be�a�“swing”�year.�At�such�times,�we�typically�see�a�few�new�insurers�getting�into�unfamiliar�territory.�The�mild�winter�has�certainly�reduced�the�water�and�slip/fall�events�that�apartment�building�owners�are�all�too�familiar�with.�This�will�entice�a�few�novice�underwriters�to�enter�the�rental�realty�insurance�arena.�Experience�shows�us�these�entrants�tend�to�abandon�ship�as�soon�as�their�loss�ratios�go�bad.
After�all,�this�winter�will�be�followed�by�next�and�it�will,�no�doubt,�be�back�to�what�is�normal�for�this�time�of�year.�Insurance�rates�for�revenue�producing�buildings�have�basically�remained�at�stable�levels�for�30�years.�Claims�treatment,�on�the�other�hand,�can�be�all�over� the�map.�So,�be�careful�and�remember�that,�if�it�seems�too�good�to�be�true,�it�probably�is.��
On�the�financial�side�of�world�insurance�news,�it�looks�like�2011�will�have�turned�out�to�be�the�second�worst�year�on�record�for�economic�losses�resulting�from�natural�catastrophes”
“
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Suite�metering,�sometimes�called�sub-metering,�is�where�the�energy�consumption,�rated�in�kilowatt-hours�(KwHr),�of�each�tenant�is�monitored�by�a�separate�meter.�In�most�cases,�a�sub-metered�tenant�is�responsible�for�paying�their�own�utility�costs,�and�is�empowered�with�energy�use�feedback�so�that�they�can�manage�their�energy�consumption.
How�many�property�owners�have�driven�past�their�investment�property�in�the�mind-numbing�cold�days�of�February�and�seen�tenants�with�their�windows�and/or�a�balcony�door�wide�open�and�the�heat�in�their�apartment�cranked�up�to�the�max?
Energy�costs�continue�to�increase,�sometimes�exponentially,�and�especially�electricity.�Time-of-use�pricing�has�added�to�the�energy�consumption�costs�of�the�building.�The�13�per�cent�HST�levied�on�energy�services,�which�cannot�be�passed�on�to�the�tenant,�had�a�huge�impact�on�landlords,�often�causing�landlords�to�compromise�on�the�quality�of�service�that�was�previously�provided�to�the�tenants�as�well�as�to�the�general�maintenance�of�the�property.�The�coup�de�grace�was�delivered�in�2011�with�the�government’s�0.7�per�cent�maximum�rent�increase.�Landlords�have�been�reeling�from�the�devastating�impact�of�these�green�movement�and�economic/social�policies�and�reforms.
Before�the�scares�of�energy�shortages�in�the�early�1980s,�many�apartment�buildings�were�designed�with�a�single�meter,�generally�called�a�bulk�meter.�The�landlord�either�factored�the�utility�costs�into�the�rent,�or�prorated�the�single�bill�among�all�the�tenants.�
In�the�former�case,�landlords�wound�up�absorbing�rising�energy�costs�since�rent�controls�and�the�Residential�Tenancies�Act�(RTA)�in�Ontario�prevented,�and�still�prevents,�landlord/owners� from� passing� on� increased� utility� expenses� to� tenants,� except� in� an� extreme�situation.�In�the�latter�case,�a�single�retiree�could�be�paying�the�same�utility�as�a�five-member�family.�In�all�cases,�there�was�inequity.
However,�the�escalating�costs�of�utilities,�especially�electricity,�combined�with�the�rapid�growth� in� energy� conservation� awareness,� have� fueled� all� kinds� of� incentive� programs�and� cost-cutting� measures.� Unfortunately,� like� many� new� initiatives� from� government�
Christopher Seepe is a commercial realtor at The Behar Group Realty and maintains www.multiresidentialexpert.com, a website dedicated to providing expert advice and sharing his personal investment and ownership experiences to those investing, or looking to invest, in multi-unit residential properties in southern Ontario, Canada. You can contact him at [email protected]
Are electricity suite meters worth the investment?
maintenance
march 2012 25
26 www.canadianapartmentmagazine.ca
maintenance
authorities,� there� are� some� implementation� challenges� and� pains� that�have�arisen�between�government�agencies�like�the�Ontario�Energy�Board�and� conservation� authorities,� who� are� driven� by� certain� mandates� and�ideologies�that�do�not�always�take�into�consideration�the�practical�business�costs� of� implementing� such� programs,� versus� the� utility� companies� that�manage� the� end-user� relationships,� provide� the� actual� service� of� energy�delivering,�and�carry�the�mandate�of�finding�practical�business�approaches�to�implementing�a�government’s�mandates�and�policies.
Consider�an�average�11-plex�that� is�converted�from�one�bulk�meter�to�12�individual�meters�(11�suites�+�1�house�meter).�Instead�of�one�bill�to�the�landlord,�who�is�a�very�low-risk�client�that�always�pays�their�bill,�and�most�likely�on�time.�Individual�metering�now�requires�the�utility�company�to�install�12�new�meters�(but�not�the�infrastructure,�to�be�discussed�further�below),�create�12�separate�business�accounts,�check�credit�references,�sometimes�collect�and�be�accountable�for�deposits,�bill�each�person�separately�every�month�or�two,�collect�and�process�12�separate�payments,�provide�individual�support�and�maintenance� for�each�new�account,�and� take�on�a�notable�relative�increase�in�the�risk�of�payment�delays�and�defaults.
Until� utility� companies� are� legislated� to� take� on� this� extra�administrative� and� operational� burden,� there� is� little� incentive� for�them�to�incur�these�additional�costs�for�virtually�no�directly-correlated�profit.�Nevertheless,�in�Ontario,�these�issues�are�being�worked�out�and�progress�is�being�made.�It�took�me�about�six�months�to�have�the�issues�addressed� with� my� utility� provider,� but� once� the� challenges� were�resolved,�the�utility�company�was�ready�to�do�the�conversion�within�a�couple�of�days’�notice�and�a�small�application�form�that�was�completed�by�the�meter�installer/electrician.�Not�all�utility�companies�and�certainly�not�all�situations�would�have�the�same�types�of�challenges.�You�may�be�pleasantly�surprised�by�the�quick�response�and�painless�process�of�suite�meter�conversion.
Now,�having�provided�caveats�regarding�cooperation�of�the�utility�companies,�there�remains�the�issue�of�“converting”�tenants.�If�a�landlord�installs�a�suite�meter,�a�tenant�does�not�have�to�start�paying�their�own�utility�costs.�An�existing�tenant�must�be�empowered�by�the�landlord�to�make�an�informed�decision�about�how�they�are�charged�for�electricity.�The�process�is�arduous�-�no�surprise�there�-�and,�if�the�tenant�consents,�the�landlord�must�lower�the�rent�according�to�a�prescribed�formula.�
Currently,� my� tenants� do� not� enjoy� the� creature� comfort� of� an� air�conditioner�or�freezer.�I�tried�to�entice�them�to�add�these�amenities.�None�of�my�11�tenants�took�the�offer�and�frankly,�if�I�was�a�tenant,�I�probably�wouldn’t�either.� There’s� little� upside� for� the� tenant.� If� they’re� already� frugal� energy�users,�the�rent�decrease�is�hardly�compelling.
Also,�make�certain�you�notify�tenants�in�writing�of�the�conversion.�Prepare�them�for�a�full�day’s�power�outage.�Keep�refrigerator/freezer�doors�closed�and�don’t�buy�food�on�that�day.�Let�them�know�that�the�landlord�will�not�be�responsible�for�food�spoilage.
After�installation,�likely,�the�best�time�for�you�to�make�the�billing�conversion�is�when�an�existing�tenant�moves�out.�The�Residential�Tenancies�Act�(RTA)�is�structured�such�that�you�can�negotiate�any�new�terms�you�like�in�your�new�rental�agreement,�provided�it�does�not�“contract�out”�existing�legislation,�for�example,�no�pets�allowed.�
This� is�one�of�those�rare�conflict-of-interest�situations�where�you�hope�that� your� tenants� will� move� out� so� that� you� can� start� billing� electricity�separately�and�recover�some�of�the�lost�profit�from�the�financial�hammering�the�government�has�been�doling�out�to�landlords.
While� I� was� waiting� to� sort� out� the� municipal� issues� regarding� the�installation� of� suite� meters,� I� changed� my� monthly� (I� never� do� one-year)�
rental� agreement� to� indicate� that� the� unit� would� eventually� have� a�separate�utility�meter,�and�that�when�the� installation�took�place,� the�tenant�agrees�to�immediately�contact�the�utility�company�to�pay�their�own�utility�bill.�Between�the�time�I�made�that�contract�change�and�the�time� the�meters� first�became�operational,� I�had� three� tenants�move�out,� and� were� replaced� by� three� tenants� who� now� pay� their� own�electricity�bill.
So,� despite� the� potential� long� tenant-turnover� timeframe,� here’s�why�you�should�still�do�it.�From�a�return�on�investment�and�return�of�investment�perspective,�it�could�possibly�be�the�best�investment�you’ll�ever�make�in�your�property.
In�my�case,�when�I�purchased�the�building,�all�11�tenants�had�their�electricity�costs�included�in�their�rent.�
The electricity bill was about $14,000 per year. Once�I�had�the�go�ahead�from�the�utility�company,�I�obtained�six�quotes�for�installation.�Prices�ranged�from�$10,000�to�$28,000.�I�learned�from�several�independent�sources�that�I�should�be�looking�at�about�$1,000�to� $1,100� per� meter� installed.� This� cost� does� not� include� the� actual�meter;�only� the�wiring,�back�plates,�wall�mounts�and�other�assorted�infrastructure�requirements.�
The� utility� company� will� install� the� actual� meters.� Every� utility�company� has� a� different� cost� recovery� policy.� In� my� case,� my� utility�company�provided�all�the�meters�themselves�for�free�(which�it�should)�and� charged� me� a� one-time� $50� fee� for� each� installed� meter� above�the�first�four�(three�apartments�+�the�house�meter).�They�also�charge�a�one-time�fee�of�$30�for�each�tenant�that�is�transferred�from�your�bill�to�the�tenant’s�own�bill.�The�tenant�would�pay�this�service�fee.
The business case (roughly speaking):•� Total� invoice,� including� HST� =� $11,550� to� install� 11� suite� meters� plus� a�
house�meter�(about�$960/meter�installed)•� Average�annual�electricity�bill�=�$14,000•� Cost�reduction�strategic�objective:�convert�eight�of�11�units�(73�per�cent)�
within�three�years�to�having�tenants�pay�their�own�electricity�bills•� Cost�reduction�financial�objective:�=�$14,000�x�73�per�cent�=�$10,220•� Multi-residential�investment�properties�are�currently�selling�at�between�a�
five�per�cent�and�six�per�cent�capitalization�rate�•� $10,220�/�five�per�cent�(cap�rate)�=�$204,400�or�$10,220�/�six�per�cent�(cap�
rate)�=�$170,330
I�didn’t� factor� in/out�the�common�area�costs,� just�to�keep�the�premise�of�the�business�case�simple.�The�financial�result�is�substantial�any�way�you�slice�it.
Business case summaryThere’s�more�to�determining�the�total�return�on�the�value�of�the�investment�but,�in�the�simple�math�above,�adding�between�$170,000�and�$204,000�to�the�value�of�your�property�for�an�investment�of�$14,000�should�be�a�pretty�obvious�inducement�if�you�have�the�upfront�$14,000�to�do�it.
Energy managementI�now�also�have�a�very�useful�record�of�the�energy�consumption�of�every�unit.� I� created� a� meter� record� sheet� to� record� all� the� individual� kilowatt-hours,�and�created�a�spreadsheet�that�not�only�tracks�usage�on�a�per�unit�basis�but�also�automatically�colour-codes�every�unit�to�instantly�identify�the�heavy�users�relative�to�total�consumption�of�the�building.
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Untitled-4 1 12-02-22 5:00 PM
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portfolio Strategy
Derek Lobo is the founder of DALA Group of Companies and Rock Advisors. Derek has been the Canadian rental apartment industry’s leading consultant for almost 30 years and is now one of the industry’s most active brokers. Derek recently brokered the sale of the ESAM portfolio to Minto Management in one of the largest multi-unit residential sales in Canadian history.
Co-brokering is about scaling your business for the future
march 2012 29
A� lot� of� the� green� revolution� that’s� sweeping� our� industry� lately� has� been� about�efficiency.� How� do� we� heat� and� power� our� buildings� using� less� energy?� How� do�we�build�using�more�recycled�materials?�How�do�we�design�to�use�the�most�floor�space�in�the�smallest�footprint?�While�efficient�thinking�takes�a�lot�of�effort,�it�pays�off�directly�on�our�bottom�line.
Realtors�looking�to�grow�their�business�face�similar�concerns�about�growing�efficiently.�They�entered�this�business�because�they�wanted�to�sell�real�estate,�but�it�seems�that�if�they�want�to�sell�more�real�estate,�other�things�get�in�the�way.�There’s�the�paperwork.�There’s�the�need�to�be�up-to-date�on�the�governmental�regulations�and�legislation.�Very�quickly,�realtors�need�to�hire�support�staff�to�help,�but�that�also�is�a�drain�on�their�time,�having�to�market�for,�interview,�hire�and�train�new�people�to�work�for�them.
This� is�a�problem�for�many�brokers�seeking�to�grow.�When�our�companies�are�small,�they�don’t�scale�up�well.�If�only�there�was�a�way�that�one�could�purchase�the�services�and�personnel�one�needed�quickly�to�give�just�the�assistance�that�was�needed,�without�the�cost�and�trouble�of�hiring�one’s�own�support�staff.
Well,�such�an�option�does�exist.�It’s�called�co-brokerage.A�company�offering�co-brokerage�services�has�gone�through�that�growth�period,�has�
hired�support�staff�and�provided�the�training.�It�now�seeks�to�monetize�its�back�rooms�by�offering�its�research�and�analysis�skills�to�other�brokers�willing�to�work�with�them.�
By�partnering�with�a�co-broker,�an�up-and-coming�realtor�benefits�from�the�co-broker’s�experience�in�the�industry,�as�well�as�the�skills�and�infrastructure�in�its�back�room.�The�co-broker�shares�in�the�realtor’s�successes�as�the�realtor�focuses�on�selling�his� or� her� properties.� This� arrangement� allows� mid-market� realtors� to� compete�directly� with� much� larger� companies� for� bigger� deals,� building� their� reputations�within�the�wider�brokerage�community.�
Some�realtors�may�be�wary�of�taking�up�the�services�of�a�co-broker�and�sharing�their�deals�with�such�a�company.�That’s�understandable.�There’s�always�a�certain�amount�of�uncertainty�when�it�comes�to�sharing�such�business�arrangements,�but�the�rewards�are�tremendous.�If�you�have�an�active�co-brokerage�arrangement,�you’re�not�only�paying�for�backroom�services�but�you’re�likely�to�obtain�similar�deals�in�your�area�from�your�partner,�which�would�not�have�come�your�way�and�earned�you�commissions.�
Moreover,�the�realtor�can�limit�his�or�her�risk�in�this�arrangement�by�keeping�a�few�rules�in�mind�when�establishing�a�relationship�with�a�co-broker.�Remember�that�a�co-broker’s�role�is�to�support�the�realtor�in�selling�his�or�her�buildings.�They�are�obliged�to�stay�out�of�the�personal�client/broker�relationships�that�the�realtor�has�established�in�his�or�her�sales�process.�A�co-broker�will�not�contact�your�client�without�first�clearing�the�interaction�with�you.�The�contract�should�state�this�clearly.
portfolio Strategy
30 www.canadianapartmentmagazine.ca
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Specialists in….
Co-brokerage�helps�realtors�enter�into�asset�classes�they�may�not�be�100�per�cent�familiar�with.�By�signing�with�a�co-broker,�a�realtor�takes�advantage�of�the�co-broker’s� skills� and� experience� in� the� industry,� and� this� is� an� excellent� way�to� broaden� one’s� portfolio.� A� good� co-broker� should� also� have� an� advanced�and�robust�database�of�active�buyers,�sellers�and�sales�information,�which�their�back-room�staff�updates�daily.�This� information�is�critical�to�help�realtors�make�informed�decisions�about�potential�deals.�
So,�be�sure�to�ask�what�the�co-broker�logs�in�its�database,�and�don’t�be�afraid�to�ask�for�a�tour�of�the�co-broker’s�facilities�before�you�commit�to�a�deal.�If�you�are�not�going�to�be�spending�the�money�for�an�equipment�room�of�your�own,�you�should�get�the�best�from�your�co-broker.
With� a� co-broker,� a� realtor� will� receive� assistance� with� the� preparation� of�comprehensive�sales�packages,�an�online�marketing�plan,�print�flyers,�and�more.�Direct�target�marketing�services�are�also�available,�getting�the�realtor’s�properties�in�front�of�qualified�buyers�through�e-mail�blasts,�fax-outs�and�telemarketing.
The�key�to�managing�a�successful�real�estate�brokerage�is�effective�delegation.�Without� back� room� support,� realtors� work� too� hard� growing� their� business.� A�co-broker�can�take�that�task�off�a�realtor’s�hands,�allowing�them�to�concentrate�on�the�joy�of�selling.
Co-brokering benefits:
By partnering with a co-broker, an up-and-coming realtor benefits from the co-broker’s experience in the industry
With an active co-brokerage arrangement, you’re not only paying for backroom services but you’re likely to obtain similar deals in your area from your partner
A co-broker’s role is to support the realtor in selling his or her buildings. They are obliged to stay out of the personal client/broker relationships
By signing with a co-broker, a realtor takes advantage of the co-broker’s skills and experience in the industry, and this is an excellent way to broaden one’s portfolio
A good co-broker should also have an advanced and robust database of active buyers, sellers and sales information, which their back-room staff updates daily
portfolio Strategy
TAKE A fresh LOOK AT WHAT’S
POSSIBLE
FlexibilityObtain mortgage � nancing on up to 85% of the multi-unit property’s value when you are buying, building or re� nancing.
Reduced Renewal RiskEnjoy mortgage renewal with no need to re-qualify. CMHC insures the entire amortization period of the loan and coverage is transferable between CMHC-approved lenders.
Lower Interest RatesBene� t from interest rate savings available throughout the entire life of CMHC-insured loans, including construction periods and renewals.
Learn how CMHC mortgage loan insurance gives you more choices for your multi-unit property investment. Call 1-877 Multi GO or visit www.cmhc.ca/multi-unit.
Untitled-1 1 11-09-29 10:55 AM
TAKE A fresh LOOK AT WHAT’S
POSSIBLE
FlexibilityObtain mortgage � nancing on up to 85% of the multi-unit property’s value when you are buying, building or re� nancing.
Reduced Renewal RiskEnjoy mortgage renewal with no need to re-qualify. CMHC insures the entire amortization period of the loan and coverage is transferable between CMHC-approved lenders.
Lower Interest RatesBene� t from interest rate savings available throughout the entire life of CMHC-insured loans, including construction periods and renewals.
Learn how CMHC mortgage loan insurance gives you more choices for your multi-unit property investment. Call 1-877 Multi GO or visit www.cmhc.ca/multi-unit.
Untitled-1 1 11-09-29 10:55 AM
32 www.canadianapartmentmagazine.ca
Carissa Drohan-Jennings is the Director of Marketing and Communications at Landlord Web Solutions (www.landlordwebsolutions.com). If you would like to learn more about any of the topics mentioned above, please email Carissa at [email protected] for more information.
Green marketing - It’s not that easy being green
marketing
march 2012 33
marketing
Kermit� the� Frog� put� it� best� in� his� song�when� he� lamented� “It ’s� not� that� easy�being� green.”� Being� green� in� a� world� of�marketing,� where� advertisers� are� able�to� create� an� image� of� their� brand� and�create� messaging� with� virtual� freedom,�has� led� to� problems� for� anyone� claiming�to� be� green.� Consumers� are� becoming�increasingly� skeptical� of� green� or� eco-friendly� claims� made� by� companies,�and� legislation� has� still� not� caught� up� in�Canada.� One� thing� remains� certain:� it ’s�not�that�easy�being�green.
Landlords�are�faced�with�an�abundance�of� energy� saving� incentives� in� today’s�market.� � Whether� it’s� a� light� bulb� that�saves�electricity�or�a�smart�lighting�system�that� reduces� lighting� usage� during� low�demand,� there� is� no� shortage� of� ways� to�save�on�operational�expenditures.
So� once� these� efficiencies� are�introduced,� it’s� often� tempting� for� a�company� to� adopt� the� “green”� label� for�their�units,�but�there�should�be�some�form�of� restraint� taken� prior� to� making� such� a�claim,�for�it�is�important�to�ensure�that�the�claim�adheres�to�the� laws�set� forth�by�the�competition�bureau.��
“Environmental� claims:� A� guide� for�industry� and� advertisers”� is� produced�by� the� Canadian� Standards� Association�to� provide� advertisers� and� consumers�with� a� best� practice� guide� to� the�application� of� environmental� claims� in�the� Canadian� marketplace.� Landlords� can�find� the� full� document� at:� http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02701.html#pdfreader.��
Within� this� document� landlords� will�find� guidelines� that� govern� the� usage� of�green� labeling� to� ensure� that� all� labels�and� declarations� are� accurate,� verifiable,�relevant,�and�not�misleading.
Once�it�is�determined�that�claiming�eco-friendliness�is�acceptable,�it�is�now�time�to�market� that� status� to� the� public.� Here� are�a�few�strategies�that�will�help�landlords�to�promote� their� eco-friendly� initiatives� to�skeptical�renters.�
Four green marketing strategies to overcome skepticism1. Enlist the support of third parties� Align�with�suppliers�or�third�party�organizations�that�can�lend�credence�to�the�claims.��
Perhaps�they�perform�independent�life-cycle�inventories,�certify�claims�or�award�eco-seals.�Any�way�that�the�product�can�be�certified�will�lend�credibility�to�the�environmental�messages.�When�choosing�eco-labels,�choose�wisely�based�on�how�relevant�the�label�is�to�the�brand’s�image.�
Mind, body and soul.
You’ve been thinking about leaving it all behind, for some time now. You worked hard to get to this stage in your life, yet the challenge of keeping pace with the demands of today’s business is getting to the point of overwhelming. There’s nothing wrong withleaving while you’re on top of your game. In reality, it may be thevery thing to bring your life back into focus. Whether a new business challenge, a more balanced lifestyle, or simply a leisurely ride along a sunny beach—you decide.
At MetCap Living, we’re always looking to add to our capital assets; so, if you feel you’re ready to exercise some options on your current property portfolio, give us a call—we’d like to talk to you. After all, change is good... but, change with a solid return on your investment is even better.
Enjoy it. You’ve earned it.
For more information, please contact Stacey Kurck, Director of Business Development, MetCap Living 416.894.2377 or [email protected]
Untitled-1 1 11-05-02 10:50 AM
34 www.canadianapartmentmagazine.ca
2. Avoid the logical approach� Purchasing� is� an� emotional� decision,� rarely� a� logical� one.�
Consumer�decisions�are�made�because�a�product�is�perceived�to�have�a�higher�value�to�them.�Consider�the�question,�“What’s�in�it�for�me?”
� It’s� better� to� sell� deep� emotional� benefits.� Just� think� about�marketing�for�beer;�they�promote�improving�sex�appeal�rather�than�how�great�the�beer�tastes.�When�selling�a�unit�try�to�focus�the�image�around�status�or�improving�family�life.
3. Promote responsible consumption� The� first� step� is� to� make� the� product� greener,� but� the� next�
is� to�continue� to�promote�eco-friendly�practices� throughout�the� product’s� life� cycle.� If� you� are� replacing� incandescent�bulbs� for� energy� efficient� ones� for� example,� make� sure�that� residents� can� dispose� of� them� in� an� efficient� manner.�Supporting� responsible� consumption� is� a� sure-fire� way� to�build�credibility�and�reduce�risk.�
4. Be transparent� A� skeptic� is� always� looking� for� any� hint� of� deviation� from� the�
claim.�Be�transparent�and�offer� links�to�the�supplier’s�website,�or�additional�information�about�the�eco-friendly�practices�that�have� been� implemented.� Educate� them� on� environmental�issues� and� the� specifics� of� their� company’s� processes� so� they�can� fuel� authentic� communications� about� your� company’s�green�initiatives.
A�recent�episode�of�the�popular�show�Marketplace�took�a�look�at�a�product� that�claimed� to�be�eco-friendly.�A�particular�brand�of� toilet� paper� had� a� label� claiming� it� came� from� sustainable�logging.�Once�Marketplace�dived�into�the�details�of�that�label,� it�was�quickly�discovered�that�the� logging�practices�were�far� from�sustainable.
These�types�of�shows�only�help�to�fuel�consumer’s�skepticism�when� it� comes� to� green� marketing,� but� one� way� marketers�can� circumvent� this� skepticism� and� arrive� ahead� is� to� provide�information.
In�short,�there�are�many�motivations�for�purchasing�eco-friendly�products,� and� not� all� of� them� involve� saving� the� planet.� Some�people� buy� energy� efficient� appliances� to� save� money,� while�others� may� pay� a� premium� for� natural� cosmetics� because� they�are�perceived�as�safer�than�conventional�products.�Although�only�some�seven�per�cent�of�consumers�are�motivated�by�altruism,�the�majority�are�motivated�because�they�see�the�product�as�better�in�some� way� for� themselves� (such� as� health,� lower� energy� cost,� or�safety).�In�many�cases,�the�green�product�is�the�tiebreaker�or�the�cherry�on�top,�thus�green�consumers�must�see�the�product�as�the�same,�or�better,�than�the�competition.
Being�green�may�simply�provide�an�advantage�when�deciding�between� similar� apartments;� however,� promoting� the� green�angle�is�still�worth�the�effort.
marketing
ambient.indd 1 12-03-07 11:01 AM
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Contact us today to learn more about how MCAP can be your Expert Partner.
Untitled-8 1 12-03-16 3:05 PM
36 www.canadianapartmentmagazine.ca
Newsline
CREA sees flat 2012 home sales across countryThe� Canadian� Real� Estate� Association� (CREA)� has� updated� its�quarterly� forecast� for� home� sales� activity� via� the� Multiple� Listing�Service� (MLS)� Systems� of� Canadian� real� estate� Boards� and�Associations�in�2012,�and�extended�it�to�2013.
National�home�sales�activity� for�2012�and�2013� is�projected�to�remain�roughly�on�par�with�the�10-year�average�for�annual�activity,�as�interest�rates�remain�low�and�further�economic�and�job�growth�continue�to�support�Canada’s�housing�market.
National�resale�housing�activity�is�forecast�to�reach�458,800�units�in�2012,�representing�an�annual�increase�of�0.3�per�cent�compared�with�457,305�sales�in�2011.�Rising�demand�in�Alberta,�Saskatchewan,�and� Nova� Scotia,� is� expected� to� offset� softer� activity� in� British�Columbia,�Ontario,�and�New�Brunswick.
“The�continuation�of�low�interest�rates�is�good�news�for�housing�and� for� the� economy,”� said� Gary� Morse,� CREA’s� president.� “Local�housing� market� outlooks� differ� according� to� their� respective�economic�prospects,�so�buyers�and�sellers�should�talk�to�their�local�realtor�to�better�understand�housing�market�prospects�in�their�area.”
In� 2013,� national� sales� are� forecast� to� ebb� by� 0.3� per� cent�to� 457,200� units,� with� modest� gains� in� all� provinces� except�Ontario�as�economic�and� job�growth�picks�up� later� this�year�and�builds�into�2013.
Multimillion-dollar�sales�activity�in�Vancouver�caused�the�national�average�price�to�temporarily�spike�in�early�2011.�This�phenomenon�is� not� expected� to� recur� in� 2012.� As� a� result,� while� prices� are�projected�to�hold�steady�near�current�levels,�the�national�average�price� is� forecast� to�dip�by�1.1�per�cent� in�2012�to�$359,100.�Prices�are�expected�to�rise�modestly� in�2013,�with�the�national�average�inching�upward�0.9�per�cent�to�$362,300�at�the�national�level.
“CREA’s� updated� housing� market� forecast� reflects� recent� and�prospective�trends�for�provincial�home�sales�activity�coupled�with�prevailing� provincial� economic� outlooks,”� said� Gregory� Klump,�CREA’s�chief�economist.�
“Risks�to�the�Canadian�economic�outlook�remain�elevated�owing�to�the�European�sovereign�debt�quagmire,�but�the�continuation�of�low�interest�rates�is�the�silver�lining.�As�long�as�the�European�debt�crisis� is�contained�and�a�global�economic�recession�avoided,� low�interest�rates�will�support�Canadian�home�sales�and�prices.�Recent�trends�are�reassuring,�but�interest�rates�remaining�low�for�longer�will�no� doubt� keep� the� Canadian� housing� market� under� scrutiny� for�signs�of�overheating.”
Please send your company’s news tips, acquisitions and new products to [email protected]. As well, check out our website, www.canadianapartmentmagazine.ca for timely news, features and V-Reports.
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Untitled-5 1 12-01-16 11:37 AM
march 2012 37
New products
Homazooma helps users take charge of real estate decisionsCreated�to�give�consumers�unprecedented�privacy�and�control�over�their�real�estate�
needs,�financial�planning�and�mortgage�decisions,�Homazooma.com�empowers�Canadians�to�make�the�most�of�their�biggest�and�proudest�investment:�their�home.�A�free�public�resource�with�no�industry�biases�or�affiliations,�Homazooma.com�provides�its�members�with�all�the�calculation�tools�and�professional�expertise�required�to�make�confident,�informed�choices�–�anonymously�and�hassle-free.
In�addition�to�browsing�(or�posting)�real�estate�on�Homazooma’s�search�engine�or�crunching�numbers�with�superior�mortgage�calculation�and�credit�management�tools,�members�can�solicit�the�advice�and�opinions�of�as�many�real�estate�and�financial�professionals�as�they�wish�without�having�to�reveal�their�own�identity.�
For�licensed�real�estate�agents,�financial�planners�and�mortgage�professionals,�Homazooma�represents�the�opportunity�to�connect�with�–�and�impress�-�potential�clients�in�a�neutral,�permission-based�context.
“The�whole�idea�behind�Homazooma�is�that�you�can�go�about�your�business�and�get�the�information�you�need,�when�you�need�it,�anonymously�and�with�no�strings�attached.�Your�identity�remains�confidential�until�you�decide�to�reveal�it�to�the�professionals�of�your�choice,”�said�co-founder�Tracy�Thomas.
Donat�Plenter,�also�co-founder,�adds�that�Homazooma’s�level�of�privacy�has�advantages�most�consumers�don’t�even�realize.�For�example:�every�time�homeowners�shop�a�mortgage�in�the�hopes�of�finding�a�better�rate,�they�lose�points�on�their�credit�rating�and�must�spend�time�completing�forms�and�dealing�with�multiple�agents�or�lenders.�At�Homazooma,�applicants�are�provided�the�opportunity�to�pull�their�own�credit�without�penalty�and�encouraged�to�submit�their�score,�anonymously.
Following�almost�two�years�of�research�and�development�by�parent�company,�DataAbacus�Inc,�Homazooma�offers�tools�and�features�not�available�anywhere�else�including:�•�The�most�advanced�mortgage�calculation�tools�on�the�internet�today�•�A�robust�and�detailed�alternative�to�MLS�•�Anonymous�home�market�evaluation�•�Home�match�system•�Anonymous�applications�•�Client�reviews�•�
Anonymous�24/7�live�chat.“The�real�estate�and�mortgage�industry�
has�lagged�behind�how�consumers�get�their�information.�Homazooma�was�created�to�help�Canadians�get�their�business�done,�on�their�own�terms,�and�in�the�medium�they�are�accustomed�to�using,”�Thomas�said.
Real Estate Investment: Here’s an app for thatIf�you�have�an�iPad�or�an�IPhone,�you�know�that�there�is�an�ever�increasing�number�of�fun,�interesting,�entertaining�and�inexpensive�apps�you�can�download.
The�Real�Estate�Investor�Formulator�app�created�by�veteran�Apple�developer�Marc�Schulman�at�Multieducator,�Inc.�New�Rochelle,�N.Y.�allows�you�to�make�an�incredible�number�of�important�real�estate,�financial,�and�property�management�calculations.�It’s�a�powerhouse�in�your�pocket.�
This�handy�little�program�can�calculate�the�market�value�property,�vacancy�loss,�rent�multiple,�total�net�operating�income�and�much�more.�Real�Estate�Investor�includes�45�important�formulas.�Sections�include�capitalization,�debt�ratios,�depreciation,�interest,�investment�returns,�mortgages,�rent�multipliers,�valuation�and�a�variety�of�formulas�for�calculating�rental�income�on�various�types�of�properties.�
You�just�finger�touch�an�item�on�a�menu�screen,�enter�the�data�required�to�do�the�calculation,�and�click�to�calculate�the�results.�All�the�formulas�are�programmed�and�each�key�formula�element�is�defined.�
All�formulas�can�be�saved�and�printed.�You�can�also�quickly�access�recent�formulas�and�tag�formulas�as�favorites.�Results�can�also�be�e-mailed.
j
j
Congratulations! Berkley Property Management on all of your success. We feel fortunate and privileged to be working and associated with
the professionals of the Berkley Property Management team. All the staff of C.H.A.M.P. Engineering Limited wish Berkley
Property Management many years of continued success.
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12018_CHAMP_Engineering_2012.indd 1 12-03-07 1:36 PM
38 www.canadianapartmentmagazine.ca
Smart Ideas
What’s green on the inside?Eco-savvy building owners are realizing the benefits of a living wall in their buildings. Here are five benefits of choosing one for your building:
Property value Energy savings
Cou
rtesy
of G
reen
ove
r Gre
y - L
ivin
g W
alls
and
Des
ign
Living walls are also great marketing tools that can be used to promote a company’s green image. A living wall can increase property values of homes and businesses. By simply having plants in and around a building or home can increase real estate values by up to 20 per cent. A living wall is a unique way to add more greenery to the interiorscape design or exterior landscaping plan and attract more people interested in purchasing your property. A green wall is a great way to provide the greenery that people want. If they feel less stress, become more relaxed, they will end up staying longer.
Studies have shown that the surface of an exterior green wall is up to 10°C cooler than an exposed wall, therefore, considerably less heat is radiated inward. Not only do green walls reduce cooling requirements but they also help to mitigate the urban heat island effect. Interior green walls also help to save energy during the summer. During the winter a living wall system acts as extra insulation.
Indoor air quality LEED creditsA green wall can contain more than 1,000 plants, all of which filter air and create energy-rich oxygen. Research undertaken by the National Aeronautics and Space Administration (NASA) proves that plants are capable of cleaning indoor air of the toxic chemical soup that is common in modern buildings.
Installing a living wall can be used to earn LEED credits. A living wall qualifies directly for two LEED credits and helps gain an additional 30 points. The categories include sustainability, energy savings, indoor air quality, health and wellness, and acoustics.
Quick closings with competitive LTV.That’s our commitment to you.First National is committed to working together to provide the ideal customized mortgage solution to meet your needs. We offer a wide variety of mortgage products, competitive loan to value, and one of the quickest closings in the industry. You can often receive your commitment documents in as little as seven days. Trust us to fi nd the best fi nancing solution for your property.
First National is licensed under the Mortgage Brokers, Lenders and Administrators Act 2006 (Ontario) Licence No. 10514
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Make First National your fi rst call. Contact us today.
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604.681.5300 800.567.8711
CALGARY
403.509.0900 888.923.9194
TORONTO
416.593.1100 800.465.0039
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514.499.8900 888.499.1733
HALIFAX 902.452.0776
Untitled-1 1 12-01-05 5:30 PM
Living walls protect buildings by reducing temperature fluctuations of the envelope. A constant flux in temperature leads to the expansion and contraction of building materials resulting in cracks, fractures and general deterioration. Covering an exposed vertical surface with a green wall shields it from precipitation and wind as well as from harmful UV radiation and corrosive acid rain. This in turn increases the integrity and longevity of a building’s exterior.
Building protection
Quick closings with competitive LTV.That’s our commitment to you.First National is committed to working together to provide the ideal customized mortgage solution to meet your needs. We offer a wide variety of mortgage products, competitive loan to value, and one of the quickest closings in the industry. You can often receive your commitment documents in as little as seven days. Trust us to fi nd the best fi nancing solution for your property.
First National is licensed under the Mortgage Brokers, Lenders and Administrators Act 2006 (Ontario) Licence No. 10514
www.fi rstnational.ca
Make First National your fi rst call. Contact us today.
VANCOUVER
604.681.5300 800.567.8711
CALGARY
403.509.0900 888.923.9194
TORONTO
416.593.1100 800.465.0039
MONTREAL
514.499.8900 888.499.1733
HALIFAX 902.452.0776
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Financial Sustainability. Customer Sustainability. Environmental Sustainability.
Providing sustainable solutions for multi-dwelling and commercial properties
Receive a FREE survey of your laundry services,
call: 1.877.755.5302 email: [email protected] visit www.coinamatic.com
■ Reduce utility costs and maximize revenues with our robust leading edge equipment
■ Enhance resident loyalty and experience with our guaranteed nation-wide service – priority response
■ Enjoy a hassle-free experience with our multilingual Customer Care Centre for management and resident support 24/7
■ Improve the value of your building with well designed laundry rooms that residents want to use
Coinamatic continues to evolve the laundry business with earth friendly products and services that both our Clients and their residents value.
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