Vancouver Real Estate Forum

Transcription

1 Vancouver Real Estate Forum MODERATOR John O Bryan Chairman CBRE Limited PANELIST Chris Dobrzanski, CEO, Citizens Bank David Franklin, President, CMLS Financial Ltd. Morley Greene, President, Trez Capital Murray J. Williamson, Senior Vice President, Bank of America Merrill Lynch, British Columbia Region, Global Commercial Banking

2 $100 $80 $60 $40 $20 Billions Commercial Mortgage Market Continued Growth Signals Confidence Size of Canadian Instiutional Mortgage Market (exluding CMBS and Pension Funds) $ Source: Bank of Canada CBRE Page 2

3 Few Delinquencies 2.0% Insurance Cos 1.6% 1.2% 0.8% 0.4% 0.0% 3/1/99 9/1/99 3/1/00 9/1/00 3/1/01 9/1/01 3/1/02 9/1/02 3/1/03 9/1/03 3/1/04 9/1/04 3/1/05 9/1/05 3/1/06 9/1/06 3/1/07 9/1/07 3/1/08 9/1/08 3/1/09 9/1/09 3/1/10 9/1/10 Commercial Mortgage Delinquency Rates (90 Days +) Source: CLHIA CBRE Page 3

4 Canadian VS. U.S. Job Creation 6,000 4,000 Dec U.S. Job Gains/Losses (000s) 2, ,000-4,000-6,000 Dec. 10 Dec Canada Job Gains/Losses (000s) -8, , Number of Months Following Peak Employment Month US ( L ) Canada ( R ) -1,000 Source: Statistics Canada and Bureau of Labor Statistics CBRE Page 4

5 Large Projects Will Drive Economic Growth BC $5 Billion Kitimat Export Terminal BC $8 Billion Shipbuilding Contract AB $200 Billion Oilsands Investment ON $43 Billion Smelting + $80 Billion Hibernia Plan Nord Hydro & Mining Projects $3.3 Billion Ring of Fire QC NL NS $25 Billion Shipbuilding Contract CBRE Page 5

6 Balanced Debate Of Residential Markets Source: Maclean s Magazine CBRE Page 6

7 Home Value Boosts Spending 20.0% 15.0% 10.0% Y/Y Change 5.0% 0.0% -5.0% -10.0% Average MLS Home Price Retail Sales Mid-2012 Source: Statistics Canada, CMHC CBRE Page 7

8 Residential Market Surprisingly Stable 1.0 Sales to New Listings Ratio Balanced Market Sellers Market Buyers Market Source: CREA, TD Economics CBRE Page 8

9 Canada An Oasis of Stability Office 8.1% Industrial 5.2% CANADA Office 8.6% Industrial 6.5% Office 16.5% Industrial 10.1% Office 19.4% Industrial 10.5% Office 13.2% Industrial 12.9% USA Office 18.2% Industrial 14.0% Canada Q U.S. Q CBRE Page 9 Source: CBRE Limited

10 U.S. Heading in Right Direction Q Vacancy / Availability Rate Natural Rate Year Back to "Natural Rate" Office 12.4% 10.0% % 2013 Industrial 13.1% 9.0% % 2015 Retail 13.2%* 9.0% % 2016 Multi-Family 5.3%* 5.0% - 6.0% 2010 Source: CBRE-EA * Mid-Year CBRE Page 10

11 Canadian Cross-Border Capital in the US Market Total Props Total Volume Manhattan 17 $5,127.2 Country Total Props Total Volume Canada 1,242 $28,480.5 *Volume in Millions $ Houston 48 $1,784.7 Boston 42 $1,600.4 Phoenix 106 $1,323.4 Los Angeles 18 $1,023.9 Atlanta 60 $956.9 Dallas 63 $950.0 No NJ 13 $897.5 San Diego 15 $843.3 Other 860 $13,973.2 Total 1,242 $28,480.5 *Volume in millions $ Source: Real Capital Analytics; properties and portfolios over $2.5 million tracked since Updated CBRE Page 11

12 Historical Conduit Issuance Canada and US Annual CMBS Issuance as % of Peak Volume % 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% The beginning of the recovery US Issuance CA Issuance Source: Bloomberg Vancouver Real Estate Forum April 2013 / 12

13 Canadian CMBS Market Pre- and Post-Recession Issuers ($24Bn) 2012/2013 Deal Comparison 5% 4% 2% 1% 12% 15% 20% 42% Merrill Lynch TD RBC Caisse de Depot Credit Suisse/Column CIBC Cut-Off Date IMSCI July 1, 2012 CCMOT Oct 1, 2012 IMSCI Feb 1, 2013 Scotia Capmark Deal Size $240 million $249 million $250 million Issuers ($1Bn) # of Loans IMC 74% CMLS 26% Cut-off Date LTV 63.5% 60.79% 63.5% Cut-off NCF DSCR 1.44x 1.66x 1.46x 5 year AAA pricing 136 bps 130 bps 110 bps Vancouver Real Estate Forum April 2013 / 13

14 Current Market Conditions Factors contributing to the return of Canadian CMBS BORROWER DEMAND: Strong borrower demand for 7-10 year mortgages As much as you can for as long as you can Investor demand has resulted in a lower cost of funds and more competitive loan level pricing Conduits now in direct competition with Banks on new origination INVESTOR DEMAND: The Canadian experience a positive one Losses on pre-recession Cdn CMBS total less than 0.01% on an annualized basis Attractive yield relative to similarly rated structured products Vancouver Real Estate Forum April 2013 / 14

15 Cap Rates At Record Lows Again 11% Cap Rate 10% 9% 8% 7% 6% 5% Q 2012 Office - CBD A Industrial - A & B Retail - Neighbourhood Multi-Res - High Rise B Source: CBRE Limited CBRE Page 15

16 National Cap Rate vs. 10-yr Bond Yield bps 426 bps (%) bps bps Q12 2Q12 3Q12 10-yr GoC Bond Yield All-Properties National Average Cap Rate Source: CBRE Limited, Bank of Canada CBRE Page 16

17 Canadian Investment Volume ($B) Property Type * Office $4.1 $5.4 $4.4 $10.3 $6.0 $2.5 $3.7 $6.1 $9.1 Industrial $3.4 $4.1 $7.2 $5.8 $4.4 $2.7 $5.7 $4.3 $4.5 Retail $4.0 $4.1 $4.0 $4.4 $3.2 $2.4 $3.7 $5.7 $4.5 Multi-Res $2.9 $3.0 $3.5 $4.4 $3.2 $2.4 $2.9 $3.6 $5.3 Land $2.5 $2.4 $3.9 $4.6 $4.0 $2.6 $2.7 $3.1 $4.2 Hotel $0.3 $0.8 $1.3 $2.6 $0.9 $0.4 $0.7 $0.9 $0.9 Total $17.3 $19.8 $24.2 $32.2 $21.7 $13.0 $19.5 $23.6 $28.6 Source: CBRE Market Outlook 2013, Canada/RealTrack Inc. * Projected 2012 Investment Volume CBRE Page 17

18 US Transaction Volumes Peak Transaction Volume 2007 $540 B Trough Transaction Volume 2009 $63.5 B Transaction Volume 2012 $248 B -54% CBRE Page 18

19 4 th Year of Record Low Interest Rates 15% % 9.1 5% % 1/1/83 1/1/85 1/1/87 1/1/89 1/1/91 1/1/93 1/1/95 1/1/97 1/1/99 1/1/01 1/1/03 1/1/05 1/1/07 1/1/09 1/1/11 1/1/13 10-Yr Bond Source: Bank of Canada CBRE Page 19