Domenic mandato apartments_an_investors_dream_20110618

Real Buildings, Real Investments, Real Returns TM

Apartment Buildings…An Investor’s Dream

Domenic Mandato, President




Forward-Looking Statement• This Presentation contains forward-looking statements. These statements relate to future events or the

Partnerships future performance. All statements other than statements of historical fact are forward looking statements. Forward looking statements are often, but not always, identified by the use of words such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "targeting", "intend", "could", "might", "continue", or the negative of these terms or other comparable terminology. These statements are only predictions. In addition, this Presentation may contain forward-looking statements attributed to third party industry sources. Undue reliance should not be placed on these forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By its nature, forward-looking information involves numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward looking statements will not occur and may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The forward-looking statements contained in this Presentation are expressly qualified by this cautionary statement. The Partnership is not under any duty to update any of the forward-looking statements after the date of this Presentation to conform such statements to actual results or to changes in the Partnerships expectations except as otherwise required by applicable legislation.


AGENDA• Who is InvestPlus Properties• Global Real Estate• Apartment Building Landscape• Key Trend Affecting Apartment Buildings –

Supply vs Demand?• Apartments – One of the Most Profitable

Business for the Next 10 years?


Who is InvestPlus Properties• Buy, Renovate, Convert, Hold Apartment Bldgs

• In business since 1999

• Limited Partnership/JV Investment Opportunities

• Invested across Canada

• Transacted over 240 doors worth almost $23M

• Focused in Western Canada and bullish in Alberta


Canadian Real Estate Prices1980 – 2010 YTD


Global Real Estate Status

Courtesy: Scotia Bank Housing Report 2010 Q1


Why Real Estate is So Powerful And Why Apartment Buildings

Can be Lucrative!


Leverage!


20% down - 80% mortgage No Growth – No Cash Flow

5 10 250%

50%

100%

150%

200%

250%

300%

350%

400%

450%

40%88%

400%

Number of Years of Investing


20% down - 80% mortgage 3% Growth – No Cash Flow

5 10 250%

200%

400%

600%

800%

1000%

1200%

1400%

1600%

150%

400%

1500%

Number of Years of Investing


The Multiplier Effect!


Multiplier Effect

• As an Asset the more income the building produced the higher it’s value

• Based on 7% Cap rate, $1 rental increase = $170 increase in building value

Or• $25 increase on a 50-suiter=$214,000

increase in value


How Risky is the Apartment Building Business


Lender & Banks Financial RiskThe order of risk for Lenders and Bankstoward real estate investment is:

1. Land2. Land Development3. Industrial & Commercial Development4. Industrial & Commercial5. Residential Apartment Buildings6. Residential Homes

RISK

Why? Tenants. Tenants pay the bills, pay down our debt and pay our investors.


Canadian Apartment Landscape

Canadian Apartment LandscapeNo. Of Structures (by Building Size)

Metropolitan Area Under 6 6 to 19 20 to 49 50 to 199 200+ TotalHalifax 741 684 289 198 8 1,920London 839 378 246 271 14 1,748Calgary 867 944 389 120 20 2,340Hamilton 499 564 194 222 30 1,509Winnipeg 326 746 504 213 29 1,818Ottawa 1,027 1,153 169 229 69 2,647Edmonton 77 1,347 920 224 21 2,589Quebec City 3,371 3,285 567 144 11 7,378Vancouver 532 1,540 1,307 532 14 3,925Toronto (CMA) 3,053 2,274 1,082 1,306 363 8,078Montreal (CMA) 30,008 22,892 2,622 794 96 56,412Total 41,340 35,807 8,289 4,253 675 90,364Source : CMHC 2008

No. Of Dwelling Units (by Building Size)Metropolitan Area Under 6 6 to 19 20 to 49 50 to 199 200+ TotalHalifax 2,789 6,931 9,040 16,548 1,994 37,302London 3,109 3,655 7,077 22,283 3,188 39,312Calgary 3,440 10,056 11,570 11,070 5,280 41,416Hamilton 1,906 5,511 6,183 22,107 7,031 42,738Winnipeg 1,269 8,761 15,081 20,031 7,904 53,046Ottawa 3,707 9,809 5,205 24,217 17,581 60,519Edmonton 315 15,975 25,395 19,193 5,179 66,057Quebec City 13,180 30,629 17,214 12,856 3,031 76,910Vancouver 1,923 17,521 41,549 42,373 3,299 106,665Toronto (CMA) 11,073 21,555 35,585 131,246 103,532 302,991Montreal (CMA) 109,512 193,221 77,966 71,584 26,532 478,815Total 152,223 323,624 251,865 393,508 184,551 1,305,771

Canadian Apartment Landscape

Source : CMHC 2008

Suites Owned & Managed Share of Market

Boardwalk (50-200+ suites) 35,277 4.40%Realstar Realty (est) 27,000 3.25%Transgloble 26,500 3.19%Capreit 27,614 3.33%Timbercreek 9,500 1.14%Morguard 7,401 0.89%Skyline 5,000 0.60%Mainstreet (20-150 +suites) 5,500 0.66%Harpar (est) (20 -100 suites) 3,500 0.42%

Total Estimated market share owned bybig players 149,715 18.04%

Market Share (20-200+Suites or 830,000 suites)


Canadian Apartment Landscape Split

1,305M suites in Canada

BC AB ON QC0

10

20

30

40

50

60

70

4% 5%

18%

60%


Canadian Apartment Suites/1Million People

BC AB ON QC -

20,000

40,000

60,000

80,000

100,000

120,000

140,000

17,700 22,140 21,500

124,000

No Rent Control in

Alberta


The Cost of Buying vs Building Apartments


Buying Below Replacement Cost

InvestPlusPurchase Price Market Value Cost to build a

comparable building today


Construction Cost Feb 2011

Land Cost Not Included in Price

Cost to BuildSoft Costs(Permits,

common area, etc.)

Total Estimated Cost to build

Cost per SuiteAverage 2bdrm

900 sq-ft

Wood Frame Walk-up

Low rise (2.5 storey)

$160/sq-ft$30 - $35/

sq-ft$190 to $195/

sq-ft$171,000/

Suite

High Rise $185/sq-ft$ 35 - $45/

sq-ft$220 - $230/

sq-ft$198,000/

Suite

Current Rents Don’t Justify New Rental

Construction

http://www.clker.com/clipart-house-silhouette.html


Condo Completions - GTA


Purpose-Built Apartment Completions - GTA


Edmonton CMA – Multi-Family Starts

Source: CMHC – Multi Family market trends Jan 2011

Almost 4000 Multi-Family Units in

2010


Edmonton CMA –Rental Housing Starts


Only 300 Rental Housing

Units in 2010


What About Existing Rental Product?


Edmonton CMA – Condo Conversions2007 the peak year



Calgary Condo Conversions

Since 1994 a loss of almost 17,000 rental units

to condo conversions. Source: Calgary Inc. Dec. 2008


Another Key Trend Calgary Happening Right Now!

• In 2010 there were 13 sales

• Average price per suite: $142,000

• 6/13 were purchased for affordable housing initiatives – Homeless Foundation


Population Increase


Canada’s Population (Millions)

1981 1986 1991 1996 2001 2003 2005 2007 2008 200920.0

22.0

24.0

26.0

28.0

30.0

32.0

34.0

36.0

Population Growth Last 28 years (36% Increase)

Courtesy: Stats Canada Main Demographic Indicators… 1981 to 2009


Population Growth in Canada

Canada’s Population grew faster in 2008 & 2009 (1.2% Annually)

than any time since 1991-Canadian Housing Oberserver 2010


Historical & Projected ImmigrationCanada, 1972-2036

Projected 40 Million People

in Canada by 2036


70% of All Immigrants to Canada move to GTA


NEW TREND IN IMMIGRATION IN ALBERTA


39


Home Ownership Vs Renting


$1,154

Sources: REBGV, Bank of Canada, Statistics Canada, CMHC

Cost of Home Ownership Vs RentingGreater Vancouver


Buying & Renting Gap In U.S.

$256


National Average Vacancy 2.6% in 2010

Courtesy: CMHC –Fall 2010 Rental Market Survey

National Average Vacancy 6.2% in Q4 2010

Courtesy: preliminary figures from real estate research firm Reis Inc April 2011

http://www.vermontcanada.org/img/CanadianFlag.jpeg


Average Apartment Vacancy

Courtesy: CMHC –Canadian Housing Observer 2010 & Rental Market Survey


Factors Why Owner-Occupied Multi-Unit

Dwelling is on the Rise


Shares of Owner-Occupied Dwellings by Dwelling Type 1986-2006

Courtesy: CMHC –Canadian Housing Observer 2009 and adapted from Stats Canada

Canadians Are Choosing a

Condo-Living Life Style


From 1981 to 2006, the number of owner-occupied condominiums increased more than

five-fold—from 171,000 to 916,000

Courtesy: CMHC –Canadian Housing Observer 2010 and adapted from Stats Canada


Changing Composition of Household

• Strong Income & Employment Growth

• Improved Lending ConditionsLow interest rates

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Changing Composition of Household

• Growing number of non-traditional Family Households

Young adults moving out Divorces Single Parent-Family


Decline in Average Household size


APARTMENTS – ONE OF THE MOST PROFITABLE BUSINESS FOR THE NEXT 10

YEARS?


1. Buying building below replacement cost

2. Strong immigration & Population Growth

3. Widening Home Ownership vs Rent Gap

4. Changing Composition of Household

Four Reasons


Decrease Supply of Rental Product


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