investment, leasing & development ... - real estate forums€¦ · source: global capital...
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Investment, Leasing & Development Trends in the U.S., Asia and Western Europe:
How do they compare with Calgary and the Canadian Market?
Session C1
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Moderator:
Patrick McFetridge, Executive Vice PresidentCB Richard Ellis
Panel:
Paul Boneham, Senior Vice President, AcquisitionsKennedy Associates Real Estate Counsel LLC
Chris Broccolo, Principal, Marketing & LeasingVerus Partners LP
Yves-Andre Godon, Managing DirectorSITQ
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Source: CBRE Torto Wheaton Research 2008
Question: Paul Boneham
A wide Bid/Ask gap has emerged between Buyers and Sellers.
Will this Spread widen or narrow in 2009?
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Session C1Question: Paul Boneham
Will the US Troubled Asset Relief Program (TARP) include offerings in direct commercial real estate assets?
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Forced and Distressed SellersIndustrial Closings
Source: Global Capital Trends, Real Capital Analytics, Inc.
Question: Chris Broccolo
Merchants Developers are typically highly levered; do you think industrial developers will be a major source of distressed sales in 2009?
a) What does a current financing package to develop industrial project in the US look like versus the financing package to develop a similar project Calgary?
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Question: Chris Broccolo
We were starting to see Green Design incorporated in industrial developments throughout North America.
Is Green Design and its higher upfront costs taking a back seat to other financial considerations?
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Source: CBRE
Sources of Acquisition Financing
Question: Paul Boneham
Who will fill the debt void in 2009?
a) What does US debt pricing currently look like?
Net Borrowing as % of GDP
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Cap Rates
Question: Yves-Andre Godon
Global Commercial Real Estate markets have performed in a highly correlated manner. Yields in both Europe and N. America have backed up 75 bp to 100 bp.
Is SITQ concerned that diversification of risk is not being met by investing through different geographic regions?
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Source: Global Capital Trends, Real Capital Analytics, Inc.
Page 9
Question: Yves-Andre Godon
If you can buy good quality Canadian REITs at yields between 9 - 11% why would you buy direct investments yielding 7%?
Name PriceDistr.
($/Unit)Yield
Artis $10.00 1.0800 10.8%
CREIT $22.00 1.3600 6.2%
Dundee $19.97 2.2000 11.0%
H&R $9.89 1.4400 14.6%
Morguard $9.00 0.9000 11.7%
Whiterock $7.36 1.1220 15.2%
Primaris $12.08 1.2240 10.1%
RioCan $16.59 1.3800 8.1%
Calloway $14.70 1.5500 10.5%
Crombie $8.59 0.8900 10.4%
AVERAGE 10.86%
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Industrial Construction Completions
Source: CBRE United States National Office Vacancy Index
Question: Chris Broccolo
How does the risk/reward ratio of developing industrial product in Calgary compare to developing industrial product in US markets?
United StatesCalgary
Source: CBRE
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a) Are construction costs in US declining? Do you see Calgary construction cost declining in 2009?
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Question: Chris Broccolo
If serviced industrial land in Calgary is trading at between $600,000 and $750,000 per acre, how does this pricing compare to industrial land prices in Us markets?
How liquid is industrial land in the markets that you operate?
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Page 12Source: Global Capital Trends, Real Capital Analytics, Inc.
Volume
Question: Paul Boneham
There is lots of equity on the sidelines, and commercial real estate values have not dramatically declined (-10%). Will equity shift to other asset classes that have been more beat up and may therefore offer more upside?
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Source: Global Capital Trends, Real Capital Analytics, Inc.
* 90-day rolling average
Question: Yves-Andre Godon
Asian Markets have maintained there value significantly better than EMU and the American markets.
Are you inclined to invest in the Asian markets because they have shown resilience or go to the European and US markets where prices have already decreased 8-10%?
Acquisition Yields*
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Source: Capital Trends Monthly, Real Capital Analytics, Inc.
Mega Deals and Portfolios*
* 3 month rolling average
Question: Paul Boneham
Large property deals (+$100M) have fallen by 50% this year.
Do your funds see this space as an opportunity to buy at better pricing?
a) What will take to get them to back into the market?
b) Will they go for core or opportunistic acquisitions?
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Cap Rate Grade A
Question: Yves-Andre Godon
If Canadian Class A Office Cap Rates are currently in the low 6’s and emerging market Class A Office Cap Rates are only 100-150 b.p. higher, is this yield premium high enough to justify the associated lack of transparency and political risk?
Source: CBRE
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