RealtyBizNews: Real Estate News & More » Canada market

Partners Real Estate Investment Trust

Phil Butler — Thu, 10 Jan 2013 14:31:49 +0000

With hurdles to credit and lack of consumer confidence still low in the US, is Canada the investment Mecca for Baby Boomers and the monied middle class? This question has to, or at least should be, in the minds of all those looking for a stable property investment. If you Google “Canadian Real Estate Trusts”, the trail of money being put into commercial there may just astound you.

Canada REITs, the new wave of moneymaking? – Courtesy © Anna – Fotolia.com

News about US real estate and the markets has been a mixed bag for some months now. The elections, the recent Fed news, many variables have played their role in tempering what should be a boom for buying property. At least this is one view of a property sector made of price constraints so minimal demand should be blossoming. We spoke this week with the President and CEO of a key Canadian firm, Adam Gant Partners Real Estate Investment Trust, about just these issue and more. But first, let’s just run down a few headlines on Canada investing:

The Huffington Post - Canadian Real Estate Above $1-Million Still Finding Buyers: Sotheby’s Canada Report (Luxury)
CBC News - Record year for St. John’s real estate market (Commercial – condos)
TD Tower stake swap sets new high mark for commercial property market (Commercial shift)
CBC News - Canada Pension Plan’s investments see ‘explosive’ growth
Financial Post - Portion of condo apartments in rental market on the rise across Canada (vertical demand – see below)
Bloomberg - Canada Consumer Confidence Rises on Real Estate: Nanos

And on, and on, and there are the occasional mentions of an “overheated market”, the sluggish residential side, and so forth, but in general Canada’s real estate market overall is a relative boom compared with some areas of the US. A herd of investment trusts are approaching “opportunities” there from every angle, Adam Gant’s Partners REIT is tightly focused on the commercial end of things, shopping centers and commercial space, with a look into what Gant suggested could be a Canada gone vertical and low maintenance (meaning managed condos etc.). I asked Gant about things interested investors would want to know.

On the stability of commercial in Canada, Gant was straightforward, the Partners REIT noted:

“Canada is very stable and seeing positive inward migration and population growth from other countries as our borders are very open right now to skilled workers of all levels. Unemployment is low historically but we are growing at a moderate pace.”

With this, key variables such as unemployment, reduced barriers to credit in many cases, a lot less red tape in the Canadian system of things, and greater investor confidence, all these and more play a role in propping up a Canada real estate market seemingly capable of a “balance” for positive growth. What I mean here is, consumer and investor confidence in the US kills a commercial market just as it does the residential one. Meanwhile, relatively uninhibited investors in Canada make possible a commercial market that can and does counterbalance a sagging traditional residential market. Gant and I spoke on “new options” emerging for Canada investors:

“We have seen a significant turn around over the last 3 years in the credit markets in Canada to the point now where there are more new options for financing than there were even back in 2007. There has not been a re-emergence of the conduit lending activities and the securitization that we experienced back in 2006-2007 so the loan to value levels are still conservative and more reasonable than they grew to at the height of the peak in 2007.”

With this, you have to be asking; “So why is the Canada market really so attractive?” The answer is pretty simple really, the confidence to invest money is there. I asked Adam why he thinks the US market is still so jammed up, even with prices so low? Even people who do have money to invest are scared to death because of the ineffectiveness of government to solve problems. This is what Gant iterated to me, and it makes so much sense. And he should know, if success is any baromter, since Gant took over at Partners, the firm has been catapulted into the limelight and the profit beam. As of October Gant moving the fund to the TSX board has resulted in a 6X market cap.

After doing their research, it seems pretty clear too, any diligent investor will have weighted Partners REIT as at best a “sure thing” return getter, and at worst a low risk break even proposition. Wanting to know, as some readers may, the complexion of the investor in this sector, I asked Gant about “who” has put their money in so far:

“Partners REIT, as I mentioned, is great for both a Canadian resident and a US Resident because 100% of the distribution is deferred and considered return of capital for tax purposes which also means that there is no withholding tax for a US investor on the income paid out. We are at a 86% payout ratio and are currently trading above an 8% yield.”

Gant has answered the next set of logical questions too. Namely, whether or not US investors should take advantage of Canada commercial, but what said investors might expect to return on their money. Deferred and other tax incentives, plus the aforementioned stability factors, could spell a sort of Northward migration of American dollars.

The video below from Partners REIT shows Gant talking about the firm’s early moves in 2o12 such as the market cap then having been doubled. As we stated, that same market cap has now more than tripled from then. What’s even more significant here is that Gant’s firm is not the only one showing such powerful ROI cards. In fact, the demand for REITs was termed “insatiable” by The Financial Post early last year, and things have not changed much.

Take Away

It remains to be seen whether or not the “stable” factors Gant discusses will hold true. This is the first and last question most investors will want to ask. Looking at the video from him, and speaking with him about where all those “Baby Boomers” are putting their savings, the term “essentials based” properties comes to mind from our conversation. These kinds of commercial centers will always be a sort of “last bastion” for negative economic situations. People will almost always go to McDonald’s, its true, but the bread store and drug store are even more concrete entities.

Will any Canada investment boom hurt US entities? Of course. Much needed investment for growth in the US, this is another topic Gant and I discussed. In fact, investment is the only way in which the US and other economies can emerge from the ongoing economic situation. People need jobs, jobs come from investing.

Let us hear your views on this. Meanwhile, we’ll keep you updated on all investing news.

Average Canadian Home Prices 2% More Than a Year Ago

Allison Halliday — Fri, 16 Mar 2012 07:27:44 +0000

CREA

According to figures just released by the Canadian Real Estate Association (CREA), the average selling price of Canadian real estate increased slightly in February compared to a year earlier. The average price of a home sold in Canada last month was $372,763, which is 2% more than February 2011.

The number of real estate sales increased by 1.4% on January, and sales activity rose in more than half of all local markets. The top performing markets were Calgary, Toronto, Barrie, Montréal, Québec City and St John. All in all, 61,772 homes have been sold through the first two months of this year, which is 6.7% more than during the first two months of 2011.

According to the president of the CREA the increase in sales activity and the number of homes for sale shows Canadians still have confidence in the housing market. In spite of the fact that house prices are still increasing, the market has definitely softened over the last few months, as for much of last year annual house price rises were in double digits. However a lot of this was due to the real estate market being skewed by activity in Vancouver, but this hasn’t had so much of an effect recently. The CREA now thinks other factors are keeping national house prices up, in particular the market in Toronto which is being driven by the balance between supply and demand. Toronto is now seeing some of the largest price gains in the country, and single, detached family homes are proving to be particularly popular.

In spite of continued mutterings about a housing bubble forming in the country, it looks more likely that the real estate market will have a soft landing. During the next couple of years new home construction is predicted to slow down slightly, especially as there is still an oversupply of condominiums in some markets, most notably Vancouver and Toronto. The CREA is already anticipating that housing prices and sales will be flat over the next couple of years.

Canadian Buyers of US Real Estate Snowball

Mike Wheatley — Wed, 16 Mar 2011 05:46:48 +0000

With the unprecedented opportunities arising in the US markets this year, we are seeing an avalanche of Canadian buyers rushing to take advantage snap up their dream winter home in order to secure their getaway from the dreary winter months north of the border.

Image courtesy Vancouver Sun

Available for $288,900 in January 2006, this same house is now on the market for just $109,900.

According to one well known Realtor at the Phoenix-based Russ Lyon’s Sotheby’s International Realty, the housing market in the city is at its lowest for 25 years, and Canadians in particular are rushing to make the most of the situation – while there’s still time. In a sign that things are set to pick up soon, last week’s report from Moody’s Analytics in West Chester, Pa., showed that home mortgage applications had hit their highest level for 3 months, thanks to an improvement in the job market and growing consumer confidence.

For now though, the market remains bottomed-out, and many Canadian bargain hunters are seeking to exploit the opportunity before it disappears. According to Russ Lyon’s Sotheby’s International Realty, with more than 70% of mortgages in Phoenix underwater and around 40,000 properties listed in the area, competition to sell is fierce, with the majority of units being sold at list price, paid for in cash.

Canada real estate leaving US in shadow

However, we’re not just seeing a rush of sun-seekers in Phoenix. Florida too, is proving to be a big hit right now. One particular Ontario retiree, Diana Carter, toured dozens of properties for more than four months in the Sunshine State, before eventually settling on a $43,555 single family home. With prices this low, Carter admits that it’s “crazy not to buy right now”, and indeed she may be right.

And who can not take note of Canadian all star investor W. Brett Wilson, who gave a name and a face to ultra successful Canadian money makers.

A Miami Beach condo in 2007 that sold for $214,300 was available for just $81,900 last year, while single family homes have dropped from an average of $371,200 to a low of $200,900 in 2010. While figures for 2011 are currently unavailable, things have not improved much.

Meanwhile, back in the West, prices are even lower – a condo in the Phoenix-Mesa-Scottsdale area used to fetch around $201,500 just four years ago, yet now the same condo can be snapped up for as little as $68,900, while family homes have fallen from $234,900 to a staggering $139,200.

The biggest appeal for Canadian buyers is not just the rock-bottom prices though – with the Canadian dollar hitting a three year high against the US dollar this week, rising 3 cents above the dollar, the premium that they used to pay in the US housing market has been completely wiped out. Expect to see more Canucks in your neighborhood sometime soon.

Canadian Real Estate Investment Way Up

Ryan Cox — Wed, 16 Feb 2011 10:24:49 +0000

In news from Canada, the real estate market there saw a 48 percent increase in commercial investment volume in 2010, to the tune of $18.9 billion. The increase was sparked by a stronger economy and “surging investor confidence,” according to CB Richard Ellis. Toronto ended 2010 with $7.4 billion in trades, up almost 4 billion, from $3.8 billion in 2009, according to the 2010 National Investment Report released yesterday by the CBRE.

As a whole, Canadian commercial Real Estate transaction volumes in 2010 increased from $12.7 billion in 2009, to $18.9 billion in 2010. This is anything but if not an indicator that Real Estate is trending upward, approaching the pre-recession 2005 levels when the commercial transaction volume traded in Canada peaked at $19.8 billion. Further proof, by year-end, the number of commercial transactions reached 4,589, compared to 3,872 completed in 2009.

Canada's commercial investment market thriving

Looking deeper into the commercial Real Estate numbers in Canada, we see that in Calgary during 2010, 332 Real Estate transactions took place, totaling approximately $1.6 billion in transaction volume. About a $200 million increase from 2009. Edmonton’s commercial Real Estate market recorded 339 transactions for the calendar year 2009, totaling $2 billion.

“We were all amazed at the rapid return to optimism in 2010,” said Greg Kwong, Executive vice-president and regional managing director for Alberta for CBRE, in Calgary. “That optimism showed itself in renewed investor confidence, the higher amount of capital put into play, and rising prices. We are not back to the lofty heights of 2007, but it is encouraging to see liquidity return to the market. We expect 2011 will maintain the momentum that we saw in 2010.”

The Canadian commercial Real Estate market has already shown in the start of 2011 that its primed to continue trending upward. A general trend is emerging that companies and investors notice there is good inventory on the market, along with low interest rates, and they are locking in long-term deals that some analyst predict could be extremely fruitful.

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