Q3 2018 Canadian Cap Rates & Investment Insights · 2018-12-04 · Q3 2018 Canadian Cap Rates & Investment Insights CBRE Research | PAGE 3 AAA EE E-2% 0% 2% 4% 6% 8% 10% 12% 1990

CBRE RESEARCH

Q3 2018 Canadian Cap Rates & Investment Insights

A quarterly snapshot of Canadian commercial real estate cap rates and investment trends.

Q3 2018 Canadian Cap Rates & Investment Insights

CAP RATE SUMMARY SHEET 23-24

GLOSSARY OF TERMS 25

CITY-BY-CITY ANALYSIS

Victoria 10Vancouver 11Calgary 12Edmonton 13Saskatoon 14Winnipeg 15London 16Kitchener-Waterloo 17Toronto 18Ottawa 19Montreal 20QuebecCity 21Halifax 22

CANADIAN INVESTMENT TRENDS

Investment 3DebtMarket 4Office 5Industrial 6Retail 7Multifamily 8Hotel 9

Q3 2018 Canadian Cap Rates & Investment Insights CBRE Research | PAGE 3


-2%

0%

2%

4%

6%

8%

10%

12%

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

Q3 20

18

211 bps

426 bps

231 bps465 bps

321 bps

Source: CBRE Research, Q3 2018

National Average Cap Rate

All-Properties National Average Cap Rate10-Yr GoC Bond Yield

Investment SummaryDOWNTOWN OFFICE rQ/Q

AA 4.81% tu

A 5.63% tu

B 6.50% p

SUBURBAN OFFICE

A 6.31% tu

B 7.16% q

INDUSTRIAL

A 5.22% q

B 6.20% q

RETAIL

Regional 5.23% tu

Power 6.09% p

Neighbourhood 6.16% tu

Strip 5.86% tu

Strip (non-anchored) 6.73% tu

Urban Streetfront 5.34% q

High Street 3.81% p

MULTIFAMILY

High Rise A 3.89% q

High Rise B 4.48% q

Low Rise A 4.45% q

Low Rise B 4.97% q

HOTEL

Downtown Full Service 7.14% tu

Suburban Limited Service 8.27% tu

Focused Service 7.98% tu

Paul MorassuttiVice Chairman, Valuation & Advisory Serviceswww.cbre.ca/paul.morassutti

Q3 2018 CAP RATES

• WhilethebackgroundnoiseoftheNAFTAmelodramaandlong-termbondyieldincreaseshasbeenhardtotuneout,investorsarefocusedonsectorfundamentalsthatforthemostpartremainrocksolid.

• Canadahasseenanincreaseininternationalfirmsexpandingtheiroperationsoverrecentquarters.Whileentrantshavecomefromavarietyofsectors,themajorityhavebeentechfirms.

• Buyersremaindisciplinedbutcapratestightenedslightlyforanyassetorsectordisplayingstrongrentalrategrowthsuchasindustrialandmultifamilyproperties.

• TheagreementinprinciplefortheUSMCAalleviatesmuchoftheuncertaintysurroundingCanada’seconomicoutlook,openingthewayfordeferredinvestmentstoproceed.



Mortgage Rates to Government of Canada Bonds

Debt Market Summary

5-Yr Commercial Mortgage Rate 10-Yr Commercial Mortgage Rate

5-Yr GoC Bond Yield10-Yr GoC Bond Yield

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

Sep-16

Nov-16

Jan-17

Mar-17

May-17

Jul-17

Sep-17

Nov-17

Jan-18

Mar-18

May-18

Jul-18

Sep-18

CAD/USD

Q2 2018 Q3 2018Change QoQ (%)

$0.76 $0.77 p 1.75%

CANADA PRIME RATE

Q2 2018 Q3 2018Change QoQ (%)

3.45% 3.70% p 7.25%

30-DAY CDOR

Q2 2018 Q3 2018Change QoQ (%)

1.67% 1.83% p 9.98%

WEST TEXAS INTERMEDIATE (USD)

Q2 2018 Q3 2018Change QoQ (%)

$74.15 $73.25 q -1.21%

5-YEAR MORTGAGE SPREAD RANGE

Q2 2018 Q3 2018Change QoQ (%)

1.40% - 1.90% 1.40% - 1.90% tu 0.00%

10-YEAR MORTGAGE SPREAD RANGE

Q2 2018 Q3 2018Change QoQ (%)

1.50% - 2.00% 1.50% - 2.00% tu 0.00%

Source: CBRE Limited, Thomson Reuters Eikon, Q3 2018

Source: CBRE Research, Thomson Reuters, Q3 2018

Carmin Di FioreExecutive Vice President, Debt & Structured Financewww.cbre.ca/carmin.difiore

MARKET MOVERS

• CreditspreadswereunchangedinQ32018ascompetitiveliquiditycontinuestodrivemarkets.Whilespreadsseemtohavehitaresistancetofurtherdeclines,lendersarewillingtocompeteondealstructureissuesinvolvingLTV’s,amortizationandrecourse.

• BondyieldsrespondedmoretoBOCguidancethantheprotracteduncertaintyofNAFTAnegotiationswithCanadian5and10-yearbondyieldsincreasingalmost30basispointsduringthequarter.An11thhouragreementinprincipleretainedtheessenceofNAFTA’skeyvirtueswithsomediminutionintradecostefficiencies.

• GlobalattentionwillnowfocusontheU.S.midtermelectionsandthehopefuladoptionofNAFTA2.0in2019.However,steelandaluminumtariffsstillremainalongwiththeimplicationsofaU.S.-Chinatradewarontheglobaleconomy.

CANADIAN INVESTMENT TRENDS REGIONAL RANKINGS


Downtown AA & ASuburban ADowntown BSuburban B

DOWNTOWN AA & A

SUBURBAN A

DOWNTOWN B

SUBURBAN B

National Office Summary

Historical Office Cap Rates

Vanc

ouve

r

Toro

nto

Mon

treal

Vict

oria

Otta

wa

Win

nipe

g

Cal

gary

Que

bec

City

Edm

onto

n

Kitc

hene

r-W

ater

loo

Hal

ifax

Sask

atoo

n

Lond

on-W

inds

or

0%

2%

4%

6%

8%

Vanc

ouve

r

Toro

nto

Vict

oria

Mon

treal

Otta

wa

Win

nipe

g

Kitc

hene

r-W

ater

loo

Que

bec

City

Hal

ifax

Sask

atoo

n

Cal

gary

Lond

on-W

inds

or

Edm

onto

n

0%

2%

4%

6%

8%

10%

Vanc

ouve

r

Vict

oria

Toro

nto

Mon

treal

Otta

wa

Cal

gary

Kitc

hene

r-W

ater

loo

Que

bec

City

Win

nipe

g

Sask

atoo

n

Hal

ifax

Edm

onto

n

Lond

on-W

inds

or

0%

2%

4%

6%

8%

10%

Vict

oria

Vanc

ouve

r

Toro

nto

Que

bec

City

Otta

wa

Mon

treal

Win

nipe

g

Kitc

hene

r-W

ater

loo

Sask

atoo

n

Edm

onto

n

Hal

ifax

Cal

gary

Lond

on-W

inds

or

0%

2%

4%

6%

8%

10%

-25 bps

+25 bps

Cap Rate rQ/Q National Average

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

Q2-15

Q3-15

Q4-15

Q1-16

Q2-16

Q3-16

Q4-16

Q1-17

Q2-17

Q3-17

Q4-17

Q1-18

Q2-18

Q3-18

• Aftertwoconsecutivequartersofnoreportedchangesinofficesectorcaprates,ClassBpropertieshavebeguntoshowminormovementsinQ32018.AggressivevaluationsinTorontodowntownClassBproducteasedslightlywhilesuburbanofficepricinginMontrealtightenedfurther.

• Investorinterestisrisingforunderperformingofficepropertiesthathavepotentialforrepositioning.

• Improvingmacroeconomicconditionsandatightlabourmarketsupportapositiveoutlookfortheofficesectorwithfundamentalstoremainhealthyacrossthecountry.



INDUSTRIAL A

INDUSTRIAL B

National Industrial Summary

Historical Industrial Cap Rates

Vanc

ouve

r

Toro

nto

Otta

wa

Victo

ria

Cal

gary

Mon

treal

Edm

onto

n

Kitch

ener

-Wat

erlo

o

Win

nipe

g

Hal

ifax

Sask

atoo

n

Que

bec

City

Lond

on-W

inds

or

0%

2%

4%

6%

8%

Vanc

ouve

r

Vict

oria

Toro

nto

Cal

gary

Otta

wa

Mon

treal

Kitc

hene

r-W

ater

loo

Edm

onto

n

Win

nipe

g

Sask

atoo

n

Hal

ifax

Lond

on-W

inds

or

Que

bec

City

0%

2%

4%

6%

8%

10%


-25 bps

-25 bps

-25 bps

-13 bps

-63 bps

-25 bps -25 bps

• TheaveragenationalindustrialcaprateforClassAandBpropertiesdroppedby5bpsinQ32018,markingthetenthconsecutivequarterofcompressionsinceearly2016.

• InvestorscontinuetotargetpropertiesinVancouverandQuebecCitywhichhascausedcapratestofallacrossallclassesofindustrialproductinbothcities.

• Demandforindustrialassetsremainshighandlimitedavailablesupplyissustainingrobustmarketprices.StrongfundamentalsandastabilizingAlbertaneconomyaredrivinginvestmentactivityforindustrialpropertiesfromcoasttocoast.

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

Q3-15

Q4-15

Q1-16

Q2-16

Q3-16

Q4-16

Q1-17

Q2-17

Q3-17

Q4-17

Q1-18

Q2-18

Q3-18

Industrial AIndustrial B



REGIONAL

POWER

STRIP

NEIGHBOURHOOD

STRIP (NON-ANCHORED)

National Retail Summary

Historical Retail Cap Rates

Vanc

ouve

r

Toro

nto

Vict

oria

Cal

gary

Edm

onto

n

Sask

atoo

n

Otta

wa

Mon

treal

Win

nipe

g

Kitc

hene

r-W

ater

loo

Lond

on-W

inds

or

Hal

ifax

Que

bec

City

0%

2%

4%

6%

8%

Vanc

ouve

r

Vict

oria

Sask

atoo

n

Cal

gary

Kitc

hene

r-W

ater

loo

Otta

wa

Edm

onto

n

Win

nipe

g

Toro

nto

Mon

treal

Lond

on-W

inds

or

Hal

ifax

Que

bec

City

0%

2%

4%

6%

8%

Vict

oria

Vanc

ouve

r

Cal

gary

Toro

nto

Edm

onto

n

Kitc

hene

r-W

ater

loo

Sask

atoo

n

Otta

wa

Win

nipe

g

Lond

on-W

inds

or

Mon

treal

Hal

ifax

Que

bec

City

0%

2%

4%

6%

8%

Vanc

ouve

r

Vict

oria

Toro

nto

Cal

gary

Mon

treal

Kitc

hene

r-W

ater

loo

Otta

wa

Edm

onto

n

Sask

atoo

n

Lond

on-W

inds

or

Win

nipe

g

Que

bec

City

Hal

ifax

0%

2%

4%

6%

8%

Vanc

ouve

r

Vict

oria

Kitc

hene

r-W

ater

loo

Cal

gary

Toro

nto

Edm

onto

n

Lond

on-W

inds

or

Sask

atoo

n

Otta

wa

Win

nipe

g

Que

bec

City

Mon

trea

l

Hal

ifax

0%

2%

4%

6%

8%

10%


RegionalStripPowerStrip (non-anchored)Neighbourhod

-37 bps

-25 bps+38 bps

+30 bps

• TheretailsectorcontinuestoevolvewithvaluationsdivergingacrossretailformatsinQ32018.Whilemostremainedstableduringthequarter,thenationalaveragecapratedeclinedforurbanstreetfrontretailandroseforpowercentresaswellashighstreetretailproperties.

• Retailinvestmentswereactiveduringthequarterasdemandforfood-anchoredpropertiesremainedstableandsiteswithresidentialdevelopmentopportunitiesraisedinvestorinterest.

• RetailproductinVancouver,TorontoandVictoriacontinuetoleadvaluationsacrossCanada.

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

Q3-15

Q4-15

Q1-16

Q2-16

Q3-16

Q4-16

Q1-17

Q2-17

Q3-17

Q4-17

Q1-18

Q2-18

Q3-18



High Rise ALow Rise A

High Rise BLow Rise B

HIGH RISE A

LOW RISE A

HIGH RISE B

LOW RISE B

National Multifamily Summary

Historical Mulifamily Cap Rates

Vanc

ouve

r

Toro

nto

Otta

wa

Mon

treal

Cal

gary

Edm

onto

n

Kitc

hene

r-W

ater

loo

Hal

ifax

Lond

on-W

inds

or

Que

bec

City

0%

2%

4%

6%

8%

Vanc

ouve

r

Vict

oria

Toro

nto

Otta

wa

Cal

gary

Kitc

hene

r-W

ater

loo

Edm

onto

n

Mon

trea

l

Sask

atoo

n

Hal

ifax

Win

nipe

g

Lond

on-W

inds

or

Que

bec

City

0%

2%

4%

6%

8%

Van

couv

er

Toro

nto

Vic

tori

a

Otta

wa

Cal

gar

y

Mon

trea

l

Kitc

hene

r-W

ater

loo

Hal

ifax

Que

bec

City

Edm

onto

n

Sask

atoo

n

Win

nipeg

Lond

on-W

indso

r

0%

2%

4%

6%

8%

Vanc

ouve

r

Toro

nto

Vict

oria

Otta

wa

Cal

gary

Kitc

hene

r-W

ater

loo

Mon

trea

l

Hal

ifax

Edm

onto

n

Que

bec

City

Win

nipe

g

Sask

atoo

n

Lond

on-W

inds

or

0%

2%

4%

6%

8%


David MontressorExecutive Vice President, National Apartment Groupwww.cbre.ca/david.montressor

-13 bps-25 bps-25 bps

-25 bps

-25 bps -38 bps

-25 bps -62 bps -38 bps

• Extremelystrongfundamentalsandlimitedsupplyofmultifamilyassetsareliftingpropertyvaluations.ThenationalaveragecapratefellacrossallcategoriesofmultifamilypropertiesinQ32018,particularlyforlowriseClassBproductwhichexperiencedthelargestcapratemovementinthequarter.

• MultifamilypricingremainedstableinVancouverandTorontowhichcontinuetograpplewithhousingaffordabilityissues.

• Meanwhile,demandhasintensifiedinCalgary,Edmonton,MontrealandLondonwithallreportingtighteryieldsinQ32018.

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

Q3-15

Q4-15

Q1-16

Q2-16

Q3-16

Q4-16

Q1-17

Q2-17

Q3-17

Q4-17

Q1-18

Q2-18

Q3-18



Downtown Full Service Focused Service

Suburban Limited Service

DOWNTOWN FULL SERVICE

FOCUSED SERVICE

SUBURBAN LIMITED SERVICE

National Hotel Summary

Historical Hotel Cap Rates

Vanc

ouve

r

Toro

nto

Otta

wa

Mon

treal

Win

nipe

g

Cal

gary

Que

bec

City

Edm

onto

n

Hal

ifax

Kitc

hene

r-W

ater

loo

Lond

on-W

inds

or

0%

2%

4%

6%

8%

10%

Vanc

ouve

r

Toro

nto

Otta

wa

Mon

trea

l

Lond

on-W

inds

or

Kitc

hene

r-W

ater

loo

Que

bec

City

Hal

ifax

Cal

gary

Win

nipe

g

Edm

onto

n

0%

2%

4%

6%

8%

10%

Vanc

ouve

r

Toro

nto

Kitc

hene

r-W

ater

loo

Otta

wa

Win

nipe

g

Mon

trea

l

Que

bec

City

Hal

ifax

Cal

gary

Lond

on-W

inds

or

Edm

onto

n

0%

2%

4%

6%

8%

10%


Bill StoneExecutive Vice President, CBRE Hotels

www.cbre.ca/bill.stone

• Capratesheldsteadythisquarterasthesectorcontinuestoperformatrecordlevelsonanationallevelfrombothatopandbottomlineperspective.

• SignificantappetiteforqualityassetsinTorontoandVancouverremains,whichisnotbeingmetbythescarcityofproductcomingtomarket.

• HotelsinAlbertasawa6%improvementinRevPARasofYTDJuly2018,signalingtheworstmaybeover.However,tradesarelimitedastherecontinuestobeaspreadbetweenbuyerandsellerexpectations.

• AlackofsupplyinTorontoisdrivinginvestorstoseeknewbuildopportunitieswhichcouldhaveshorttermimpactsonperformanceinselectsuburbanmarkets.

6.5%

7.0%

7.5%

8.0%

8.5%

9.0%

9.5%

Q3-15

Q4-15

Q1-16

Q2-16

Q3-16

Q4-16

Q1-17

Q2-17

Q3-17

Q4-17

Q1-18

Q2-18

Q3-18

INVESTMENT TRENDS


Q3 2018 CAP RATES

• Buyersandlendersareslightlymorecautiousduetothepotentialforhigherinterestratesaswellasheightenedprovincialandmunicipalpoliticaluncertainty.

• Demandremainsstrongacrossallpropertytypesduetoalackofavailableproductandscarcityofland.

• HealthycompetitionamonginstitutionalandprivatebuyersdemonstratecontinuedconfidenceinVictoria’smarketfundamentals.

Victoria DOWNTOWN OFFICE rQ/Q

AA N/A

A 4.75% - 5.25% tu

B 5.25% - 5.75% tu

SUBURBAN OFFICE

A 5.00% - 5.50% tu

B 5.25% - 5.75% tu

INDUSTRIAL

A 5.00% - 5.50% tu

B 5.25% - 5.75% tu

RETAIL

Regional 4.75% - 5.25% tu

Power 5.00% - 5.50% tu

Neighbourhood 5.00% - 5.50% tu

Strip 5.00% - 5.50% tu

Strip (non-anchored) 5.25% - 5.75% tu

Urban Streetfront 4.75% - 5.25% tu

High Street 4.50% - 5.00% tu

MULTIFAMILY

High Rise A N/A

High Rise B 3.25% - 3.75% tu

Low Rise A 3.50% - 4.00% tu

Low Rise B 4.00% - 4.50% tu

HOTEL

Downtown Full Service N/A

Suburban Limited Service N/A

Focused Service N/A

Ross MarshallVice President

www.cbre.ca/ross.marshall

INVESTMENT TRENDS


Q3 2018 CAP RATES

• Demandforindustrialpropertiesincreaseddramaticallyoverthelastquarter.Investorsarelookingtocapitalizeonthegrowingopportunitieswithinthisfundamentallystrongsector.

• Retaildemandinsecondarymarketscontinuetosufferdespitesolidtenantsalesinmanycases.Pressuredvaluationsalongsideownersdeterminedtodivestofthisassetclassareexpectedtobringsolidbuyingopportunitiesinthenearterm.

• Downtownandsuburbanofficeyieldsareexpectedtoremainaggressiveasfundamentalslooktofurtherimproveovertheneartomid-term.

• Multifamilyassetsremaininstrongdemandwithrecordlowcapratesbeingdrivenbynearzerovacancyrates.

Vancouver

Historical Vancouver Cap Rates

Office Downtown AA & AIndustrial A & B

Retail NeighbourhoodMultifamily High Rise B

DOWNTOWN OFFICE rQ/Q

AA 3.75% - 4.00% tu

A 3.75% - 4.25% tu

B 4.00% - 4.50% tu

SUBURBAN OFFICE

A 4.75% - 5.50% tu

B 5.25% - 6.00% tu

INDUSTRIAL

A 3.50%-4.00% q

B 4.25%-4.75% q

RETAIL


Power 5.00% - 5.00% tu


Strip 4.00% - 5.00% tu



High Street 3.50% - 4.00% tu

MULTIFAMILY

High Rise A 2.50% - 3.00% tu

High Rise B 3.00% - 3.50% tu

Low Rise A 2.75% - 3.25% tu

Low Rise B 3.25% - 4.25% tu

HOTEL

Downtown Full Service 4.50% - 6.00% tu

Suburban Limited Service 6.50% - 7.50% tu

Focused Service 6.00% - 7.50% tu

Jim SzaboVice Chairman, National Investment Team

www.cbre.ca/jim.szabo

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Q3

2018

INVESTMENT TRENDS


Q3 2018 CAP RATES

• AggressivevaluationsinothermajorCanadiancitieshaveincreasedtheamountofcapitalseekingopportunitiesinCalgary.

• CapratesremainstableasCalgaryisinthemidstofeconomicrecoveryandleasingfundamentalscontinuetostabilize.

• Limitedacquisitionopportunitiesaresustaininghistoricallylowcapratesforcoreindustrialandmultifamilyassets.

• Privateinvestorswithvalue-addstrategiesareactivelyacquiringunderperformingofficeassetstoreposition.

Calgary

Historical Calgary Cap Rates


AA 5.25% - 5.75% tu

A 6.25% - 7.00% tu

B 7.75% - 8.50% tu

SUBURBAN OFFICE

A 6.25% - 6.75% tu

B 7.50% - 8.25% tu

INDUSTRIAL

A 5.00% - 5.50% tu

B 5.75% - 6.25% tu

RETAIL


Power 5.50% - 6.00% tu


Strip 5.25% - 5.75% tu



High Street N/A

MULTIFAMILY

High Rise A 4.00%-4.50% q

High Rise B 4.25%-4.75% q

Low Rise A 4.50%-5.00% q

Low Rise B 4.75%-5.25% q

HOTEL






Duncan McLeanSenior Vice President, National Investment Team

www.cbre.ca/duncan.mclean

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Q3

2018

INVESTMENT TRENDS


Q3 2018 CAP RATES

• Coreindustrialandmultifamilyproductremaininhighdemandwithlimitedsupplyavailable.

• Foodanddruganchoredpropertiesareattractingsignificantdemandrelativetounanchoredcentres.Meanwhile,privateinvestorsareshowingstrongappetiteforsmallerretailofferings.

• InvestorandtenantdemandforCBDofficecontinuestofocusontheICEDistrictandtheneighbouringtowers.

• Astheenergysectorcontinuestostabilize,pocketsofstrengtharerisinginthesoutheastandNisku/Leducindustrialsubmarkets.

Edmonton

Historical Edmonton Cap Rates


AA 5.50% - 6.00% tu

A 6.75% - 7.50% tu

B 8.00% - 10.00% tu

SUBURBAN OFFICE

A 6.75% - 7.50% tu

B 7.50% - 8.00% tu

INDUSTRIAL

A 5.25% - 5.75% tu

B 6.50%-7.25% q

RETAIL


Power 6.00% - 6.50% tu


Strip 5.75% - 6.25% tu



High Street N/A

MULTIFAMILY

High Rise A 4.00% - 4.50% tu

High Rise B 4.50% - 5.00% tu

Low Rise A 5.00% - 5.50% tu

Low Rise B 5.50%-6.00% q

HOTEL






Dave YoungExecutive Vice President, National Investment Team

www.cbre.ca/dave.young

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Q3

2018

INVESTMENT TRENDS


Q3 2018 CAP RATES

• Capratesremainstableacrossallassettypes,withslightdownwardpressureonindustrialproductaseconomicconditionscontinuetoimprove.

• ThelimitedinvestmentactivityinSaskatoonhasbeendrivenbyuserandowner-occupiergroups,primarilyintheretailsector.

• StrongleasingmomentumintoqualitynewofficeproductatRiverLandingcontinuestocreateuncertaintyforinvestmentinagingdowntownofficeassets.

Saskatoon

Historical Saskatoon Cap Rates


AA N/A

A 6.50% - 7.25% tu

B 7.25% - 8.25% tu

SUBURBAN OFFICE

A 6.50% - 7.25% tu

B 7.25% - 8.00% tu

INDUSTRIAL

A 6.25% - 7.00% tu

B 6.75%-7.25% q

RETAIL


Power 5.00% - 5.75% tu


Strip 6.00% - 6.75% tu



High Street N/A

MULTIFAMILY

High Rise A N/A

High Rise B 5.00% - 5.50% tu

Low Rise A 5.25% - 5.75% tu

Low Rise B 6.00% - 6.50% tu

HOTEL

Downtown Full Service N/A

Suburban Limited Service N/A

Focused Service N/A



Michael BratvoldVice President, Managing Director

www.cbre.ca/michael.bratvold

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018

INVESTMENT TRENDS


Q3 2018 CAP RATES

• ThecompletionoftheofficetowerlocatedatTrueNorthSquaremarkedadoublinginthedowntownClassAofficevacancyrate,despitethe365,000sq.ft.towerbeing60%preleased.

• Increasingleasingvelocityiscreatingopportunitiesforinvestorstocapitalizeandisraisinginterestinofficerepositioningprojects.

• Thepaceofindustriallandsalescontinuestoriseasdevelopershavebegunbridgingthegapbetweenmarketratesandconstructioncosts.Inparticular,theCentreportregionishighlyactiveandprovingsuccessfulinconnectingmarketdemandfornewsupplywithinvestorcapital.

Winnipeg

Historical Winnipeg Cap Rates


AA N/A

A 5.50% - 6.00% tu

B 6.50% - 7.00% tu

SUBURBAN OFFICE

A 6.50% - 7.00% tu

B 7.00% - 7.50% tu

INDUSTRIAL

A 6.00% - 6.50% tu

B 6.50% - 7.25% tu

RETAIL


Power 6.00% - 6.50% tu


Strip 6.50% - 7.00% tu



High Street N/A

MULTIFAMILY

High Rise A N/A

High Rise B 5.00% - 5.75% tu

Low Rise A 5.50% - 6.00% tu

Low Rise B 5.75% - 6.00% tu

HOTEL






Ryan BehieVice President, Managing Director

www.cbre.ca/ryan.behie

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

2010

2011

2012

2013

2014

2015

2016

2017

Q3

2018

INVESTMENT TRENDS


Q3 2018 CAP RATES

• RetailtransactionvolumehasbeenrobustwithFirstCapitalRealtyselling50%interestsintheirretailpropertiesandRioCanREITsellingsomeoftheirplazas.

• Strengtheningindustrialfundamentalsareattractingincreasedinvestorinterestforthispropertytype.

London

Historical London Cap Rates


AA N/A

A 6.50% - 8.50% tu

B 8.00% - 9.00% tu

SUBURBAN OFFICE

A 7.50% - 8.00% tu

B 8.00% - 8.50% tu

INDUSTRIAL

A 6.30% - 7.50% tu

B 7.50% - 8.50% tu

RETAIL


Power 6.25% - 7.00% tu


Strip 6.00% - 7.00% tu



High Street N/A

MULTIFAMILY

High Rise A 4.75%- 5.50% q

High Rise B 5.25% - 6.50% tu

Low Rise A 5.00%- 6.75% q

Low Rise B 6.00% - 7.25% tu

HOTEL




Peter WhatmoreSenior Vice President, National Investment Team

www.cbre.ca/peter.whatmoreOffice Downtown AA & AIndustrial A & B


3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

2013

2014

2015

2016

2017

Q3

2018

INVESTMENT TRENDS


Q3 2018 CAP RATES

• LandisinhighdemandwithcoreandLRT-orientedinfillprojectsdrivingrecordvaluations.

• Industrialpropertiescontinuetobehighlysought-afterwithstrongfundamentalsleadingtospecconstructioninKitchenerandCambridge.YieldsonClassAproductstillrepresentapremiumoverothermajormarkets.

• Brick&breamofficeinventoryisvirtuallyfullyoccupiedandthetechsectorcontinuestodrivedemand.

• Thereisstronginvestorinterestinretailpropertiesasbuyersseekopportunitiesforaddingresidentialdensitytotransit-orientedsites.

• Scarcityofmultifamilyproductismaintaininghighmarketvaluesascapratesstabilizeamidrisinginterestrates.

Kitchener-Waterloo

Historical Kitchener-Waterloo Cap Rates


AA N/A

A 6.00% - 7.00% tu

B 6.50% - 7.25% tu

SUBURBAN OFFICE

A 6.00% - 7.00% tu

B 6.75% - 7.75% tu

INDUSTRIAL

A 5.50% - 6.10% tu

B 6.00% - 7.25% tu

RETAIL


Power 5.75% - 6.50% tu


Strip 5.00% - 6.50% tu



High Street N/A

MULTIFAMILY

High Rise A 4.25% - 4.75% tu

High Rise B 4.25% - 5.00% tu

Low Rise A 4.50% - 5.25% tu

Low Rise B 4.75% - 5.50% tu

HOTEL






Peter WhatmoreSenior Vice President, National Investment Team

www.cbre.ca/peter.whatmore

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

2013

2014

2015

2016

2017

Q3

2018

INVESTMENT TRENDS


Q3 2018 CAP RATES

• Afterfourback-to-backquartersofrecordtradingvolumeduringQ32017toQ22018,investorsaretakingintoconsiderationtheglobalgeopoliticalissuesaswellasinterestratesrisingtolevelsnotseensince2008.

• Whileinvestorinterestremainshigh,liquidityabundantandfundamentalsverystrong,themarketseemstobeinaholdingpatternasmanyhavetakenawait-and-seeapproachtoinvestmentdecisions.

• Theadjustmentsinthebondmarketsuggestinflationmayberealwhichisgoodforrealestateinvestorsinthelongrun.

Toronto

Historical Toronto Cap Rates


AA 4.00% - 4.50% tu

A 4.25% - 4.75% tu

B 4.75%-5.25% p

SUBURBAN OFFICE

A 5.50% - 6.25% tu

B 6.50% - 7.25% tu

INDUSTRIAL

A 4.00% - 4.75% tu

B 5.00% - 6.00% tu

RETAIL


Power 5.75%-7.00% p


Strip 4.75% - 6.00% tu



High Street 3.50%-4.25% p

MULTIFAMILY

High Rise A 3.00% - 3.75% tu

High Rise B 3.50% - 4.25% tu

Low Rise A 3.00% - 3.75% tu

Low Rise B 3.50% - 4.50% tu

HOTEL






Peter SenstPresident, Canadian Capital Markets National Investment Teamwww.cbre.ca/peter.senst

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Q3

2018

INVESTMENT TRENDS


Q3 2018 CAP RATES

• TheinvestmentmarketinOttawahasbeenstrongandbolsteredbytherecordlevelofinvestmentactivityseenacrossCanadafromthefirsthalfof2018.

• Industrialandofficepropertiescontinuetobeinhighdemandandareconsideredthemosttradableassetsatthemoment.

• AnadditionalsurgeofinvestmentactivityisexpectedinQ42018tocapoffanothersolidyearoftradingvolume.

Ottawa

Historical Ottawa Cap Rates


AA 4.75% - 5.25% tu

A 5.00% - 5.50% tu

B 5.75% - 6.25% tu

SUBURBAN OFFICE

A 6.00% - 6.50% tu

B 6.75% - 7.25% tu

INDUSTRIAL

A 4.50% - 5.00% tu

B 5.50% - 6.50% tu

RETAIL


Power 5.75% - 6.50% tu


Strip 5.50% - 6.25% tu



High Street N/A

MULTIFAMILY

High Rise A 3.25% - 3.75% tu

High Rise B 4.00% - 4.25% tu

Low Rise A 3.50% - 4.00% tu

Low Rise B 4.25% - 4.75% tu

HOTEL






Nico ZentilSenior Vice President, National Investment Team

www.cbre.ca/nico.zentil

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Q3

2018

INVESTMENT TRENDS


Q3 2018 CAP RATES

• TheinvestmentmarketinMontrealremainsactiveacrossallpropertytypes,withparticularstrengthingroceryanchoredretailassets.However,theavailablesupplyofnewervintagehigh-qualitytrophyassetsislimited.

• Landvaluesarerisingasanincreasingnumberofinvestorsareseekingpurpose-builtmultifamilydevelopmentopportunities.

• Abundantcapitalissupportinganactiverealestatedebtmarket,notablyalsoinMontreal’shotelsector.

Montreal

Historical Montreal Cap Rates


AA 4.25% - 4.75% tu

A 5.00% - 5.50% tu

B 5.25% - 6.00% tu

SUBURBAN OFFICE

A 5.25% - 6.50% tu

B 6.75%-7.50% q

INDUSTRIAL

A 5.00%-5.75% q

B 6.00% - 6.75% tu

RETAIL


Power 6.00% - 6.75% tu


Strip 5.25% - 6.00% tu


Urban Streetfront 3.75% 4.50% q

High Street N/A

MULTIFAMILY

High Rise A 3.75%-4.50% q

High Rise B 4.50% - 5.00% tu

Low Rise A 4.50% - 5.00% tu

Low Rise B 5.00%-5.75% q

HOTEL






Nektar DiamantopoulosExecutive Vice President, National Investment Teamwww.cbre.ca/nektar. diamantopoulos

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Q3

2018

INVESTMENT TRENDS


Q3 2018 CAP RATES

• TheeconomyinQuebecCityishealthywithGDPgrowingatitsfastestpacesince2011andarecordlowunemploymentrateof4.2%.

• Investmentactivityisrobustwithover$900millioninnon-residentialrealestateinvestmentvolumeslastyearandover10,000residentialunitscurrentlyunderdevelopment.

• Majordevelopmentprojectssettobegininthenexttwoquartersincludethe500,000sq.ft.IlotMendelretailproject,the1.5millionsq.ft.mixed-usedevelopmentcalledLePhareandthe800,000sq.ft.industrialprojectbyGroupeDallaire.

Quebec City

Historical Quebec City Cap Rates


AA N/A

A 6.00% - 6.75% tu

B 6.25% - 7.50% tu

SUBURBAN OFFICE

A 6.25% - 7.00% tu

B 6.50% - 7.25% tu

INDUSTRIAL

A 6.25%-7.00% q

B 7.50%-8.50% q

RETAIL

Regional 6.75%-7.75% q

Power 6.50% - 7.50% tu

Neighbourhood 7.00%-8.60% p

Strip 6.25% - 7.50% tu


Urban Streetfront N/A

High Street N/A

MULTIFAMILY

High Rise A 4.75% - 5.75% tu

High Rise B 5.50% - 6.50% tu

Low Rise A 4.75% - 5.50% tu

Low Rise B 5.25% - 6.25% tu

HOTEL






Stéphane HudonVice President

www.cbre.ca/stephane.hudon 3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018

INVESTMENT TRENDS


Q3 2018 CAP RATES

• InvestmentvolumesinHalifaxandtheAtlanticRegionareonpacetosurpasslastyear’stotalof$875million.

• TheAtlanticRegionisexperiencingthehighestlevelofindustrialinvestmentactivitysince2012withanumberofportfoliotradescompletedin2018.

• TheNationalShipbuildingStrategycontinuestogrowandbenefittheHalifaxeconomywiththefirstArcticPatrolVessellaunchedinSeptemberandtwomoreunderconstruction.

Halifax

Bob MussettSenior Vice President, National Investment Team

www.cbre.ca/bob.mussett

Historical Halifax Cap Rates


AA N/A

A 6.25% - 6.75% tu

B 7.00% - 7.50% tu

SUBURBAN OFFICE

A 6.50% - 7.50% tu

B 7.50% - 8.00% tu

INDUSTRIAL

A 6.00% - 7.00% tu

B 7.25% - 7.75% tu

RETAIL


Power 6.25%-7.00% q


Strip 6.75% - 7.75% tu



High Street N/A

MULTIFAMILY

High Rise A 4.75% - 5.25% tu

High Rise B 5.00% - 5.50% tu

Low Rise A 4.75% - 5.25% tu

Low Rise B 5.25% - 5.75% tu

HOTEL






3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Q3

2018

Q3 2018 Canadian Cap Rates rQ/Q


DOWNTOWN OFFICE VICTORIA VANCOUVER CALGARY EDMONTON SASKATOON WINNIPEG LONDON-WINDSOR

AA N/A 3.75% - 4.00% tu 5.25% - 5.75% tu 5.50% - 6.00% tu N/A N/A N/A

A 4.75% - 5.25% tu 3.75% - 4.25% tu 6.25% - 7.00% tu 6.75% - 7.50% tu 6.50% - 7.25% tu 5.50% - 6.00% tu 6.50% - 8.50% tu

B 5.25% - 5.75% tu 4.00% - 4.50% tu 7.75% - 8.50% tu 8.00% - 10.00% tu 7.25% - 8.25% tu 6.50% - 7.00% tu 8.00% - 9.00% tu

SUBURBAN OFFICE

A 5.00% - 5.50% tu 4.75% - 5.50% tu 6.25% - 6.75% tu 6.75% - 7.50% tu 6.50% - 7.25% tu 6.50% - 7.00% tu 7.50% - 8.00% tu

B 5.25% - 5.75% tu 5.25% - 6.00% tu 7.50% - 8.25% tu 7.50% - 8.00% tu 7.25% - 8.00% tu 7.00% - 7.50% tu 8.00% - 8.50% tu

INDUSTRIAL

A 5.00% - 5.50% tu 3.50% - 4.00% q 5.00% - 5.50% tu 5.25% - 5.75% tu 6.25% - 7.00% tu 6.00% - 6.50% tu 6.30% - 7.50% tu

B 5.25% - 5.75% tu 4.25% - 4.75% q 5.75% - 6.25% tu 6.50% - 7.25% q 6.75% - 7.25% q 6.50% - 7.25% tu 7.50% - 8.50% tu

RETAIL

Regional 4.75% - 5.25% tu 4.00% - 4.50% tu 4.75% - 5.25% tu 5.00% - 5.50% tu 5.00% - 5.75% tu 5.50% - 6.00% tu 5.50% - 6.50% tu

Sector/Power 5.00% - 5.50% tu 5.00% - 5.00% tu 5.50% - 6.00% tu 6.00% - 6.50% tu 5.00% - 5.75% tu 6.00% - 6.50% tu 6.25% - 7.00% tu

Neighborhood 5.00% - 5.50% tu 5.00% - 5.50% tu 5.25% - 5.75% tu 5.50% - 6.00% tu 5.75% - 6.50% tu 6.50% - 7.00% tu 6.00% - 7.50% tu

Strip 5.00% - 5.50% tu 4.00% - 5.00% tu 5.25% - 5.75% tu 5.75% - 6.25% tu 6.00% - 6.75% tu 6.50% - 7.00% tu 6.00% - 7.00% tu

Non-anchored Strip Mall 5.25% - 5.75% tu 5.00% - 5.50% tu 5.75% - 6.25% tu 6.25% - 7.00% tu 6.75% - 7.25% tu 6.75% - 7.50% tu 6.00% - 7.50% tu

Urban Streetfront 4.75% - 5.25% tu 3.75% - 4.25% tu 5.50% - 6.00% tu 6.00% - 6.50% tu 6.50% - 7.00% tu 6.00% - 6.75% tu 7.00% - 8.50% tu

High Street 4.50% - 5.00% tu 3.50% - 4.00% tu N/A N/A N/A N/A N/A

MULTIFAMILY

High Rise A N/A 2.50% - 3.00% tu 4.00% - 4.50% q 4.00% - 4.50% tu N/A - N/A 4.75% - 5.50% q

High Rise B 3.25% - 3.75% tu 3.00% - 3.50% tu 4.25% - 4.75% q 4.50% - 5.00% tu 5.00% - 5.50% tu 5.00% - 5.75% tu 5.25% - 6.50% tu

Low Rise A 3.50% - 4.00% tu 2.75% - 3.25% tu 4.50% - 5.00% q 5.00% - 5.50% tu 5.25% - 5.75% tu 5.50% - 6.00% tu 5.00% - 6.75% q

Low Rise B 4.00% - 4.50% tu 3.25% - 4.25% tu 4.75% - 5.25% q 5.50% - 6.00% q 6.00% - 6.50% tu 5.75% - 6.00% tu 6.00% - 7.25% tu

HOTEL

Downtown Full Service N/A 4.50% - 6.00% tu 7.00% - 8.75% tu 7.25% - 8.75% tu N/A 7.00% - 8.50% tu 7.50% - 8.75% tu

Suburban Limited Service N/A 6.50% - 7.50% tu 8.00% - 9.25% tu 8.50% - 9.50% tu N/A 8.00% - 9.50% tu 8.00% - 9.00% tu

Focused Service N/A 6.00% - 7.50% tu 7.50% - 9.25% tu 8.00% - 9.50% tu N/A 7.50% - 8.75% tu 7.75% - 9.00% tu

Q3 2018 Canadian Cap Rates rQ/Q

DOWNTOWN OFFICE KITCHENER-WATERLOO TORONTO OTTAWA MONTREAL QUEBEC CITY HALIFAX

AA N/A 4.00% - 4.50% tu 4.75% - 5.25% tu 4.25% - 4.75% tu N/A N/A

A 6.00% - 7.00% tu 4.25% - 4.75% tu 5.00% - 5.50% tu 5.00% - 5.50% tu 6.00% - 6.75% tu 6.25% - 6.75% tu

B 6.50% - 7.25% tu 4.75% - 5.25% p 5.75% - 6.25% tu 5.25% - 6.00% tu 6.25% - 7.50% tu 7.00% - 7.50% tu

SUBURBAN OFFICE

A 6.00% - 7.00% tu 5.50% - 6.25% tu 6.00% - 6.50% tu 5.25% - 6.50% tu 6.25% - 7.00% tu 6.50% - 7.50% tu

B 6.75% - 7.75% tu 6.50% - 7.25% tu 6.75% - 7.25% tu 6.75% - 7.50% q 6.50% - 7.25% tu 7.50% - 8.00% tu

INDUSTRIAL

A 5.50% - 6.10% tu 4.00% - 4.75% tu 4.50% - 5.00% tu 5.00% - 5.75% q 6.25% - 7.00% q 6.00% - 7.00% tu

B 6.00% - 7.25% tu 5.00% - 6.00% tu 5.50% - 6.50% tu 6.00% - 6.75% tu 7.50% - 8.50% q 7.25% - 7.75% tu

RETAIL

Regional 5.50% - 6.00% tu 4.25% - 5.50% tu 5.00% - 5.75% tu 5.00% - 5.75% tu 6.75% - 7.75% q 5.75% - 6.25% tu

Sector/Power 5.75% - 6.50% tu 5.75% - 7.00% p 5.75% - 6.50% tu 6.00% - 6.75% tu 6.50% - 7.50% tu 6.25% - 7.00% q

Neighborhood 5.50% - 6.50% tu 5.00% - 6.25% tu 5.75% - 6.50% tu 6.50% - 7.00% tu 7.00% - 8.60% p 7.00% - 8.00% tu

Strip 5.00% - 6.50% tu 4.75% - 6.00% tu 5.50% - 6.25% tu 5.25% - 6.00% tu 6.25% - 7.50% tu 6.75% - 7.75% tu

Non-anchored Strip Mall 5.00% - 6.75% tu 6.00% - 7.00% tu 6.50% - 7.50% tu 7.00% - 7.75% tu 6.75% - 7.75% tu 7.50% - 8.50% tu

Urban Streetfront 6.00% - 7.50% tu 3.75% - 4.50% tu 4.75% - 5.50% tu 3.75% - 4.50% q N/A 6.50% - 7.50% tu

High Street N/A 3.50% - 4.25% p N/A N/A N/A N/A

MULTIFAMILY

High Rise A 4.25% - 4.75% tu 3.00% - 3.75% tu 3.25% - 3.75% tu 3.75% - 4.50% q 4.75% - 5.75% tu 4.75% - 5.25% tu

High Rise B 4.25% - 5.00% tu 3.50% - 4.25% tu 4.00% - 4.25% tu 4.50% - 5.00% tu 5.50% - 6.50% tu 5.00% - 5.50% tu

Low Rise A 4.50% - 5.25% tu 3.00% - 3.75% tu 3.50% - 4.00% tu 4.50% - 5.00% tu 4.75% - 5.50% tu 4.75% - 5.25% tu

Low Rise B 4.75% - 5.50% tu 3.50% - 4.50% tu 4.25% - 4.75% tu 5.00% - 5.75% q 5.25% - 6.25% tu 5.25% - 5.75% tu

HOTEL

Downtown Full Service 7.50% - 8.50% tu 4.50% - 6.00% tu 7.00% - 8.00% tu 7.00% - 8.00% tu 7.25% - 8.50% tu 7.25% - 8.75% tu

Suburban Limited Service 8.00% - 9.00% tu 7.00% - 8.50% tu 7.75% - 8.75% tu 7.75% - 8.75% tu 8.00% - 9.00% tu 8.00% - 9.00% tu

Focused Service 7.50% - 8.50% tu 7.00% - 8.00% tu 7.50% - 8.50% tu 7.50% - 8.75% tu 7.50% - 9.00% tu 7.50% - 9.00% tu


CAP RATE: Estimates are provided by NIT members in respective markets based on market transactions and/or feedback from investors on their current yield expectations.

Office/IndustrialDOWNTOWN: The neighborhoods in a metropolitan area which are the most densely populated, contain the highest concentration of businesses, offer access to a variety of urban amenities, and are typically well serviced by public transit.

SUBURBAN: The portion of a metropolitan area that is outside the city centre with a less concentrated population and typically lower density land use than is typically found in the metro’s urban areas.

CLASS AA (OFFICE ONLY): The best quality office assets in a metropolitan area’s downtown submarket. Typically, these properties are newer, larger than 800,000 sq. ft. with large floor plates, fully or near fully leased at or above markets rents to top quality tenants.

CLASS A: Properties competing for higher-quality tenants with above average rental rates for the area. Buildings are in good physical shape, are well situated and contain high-quality finishes, top class building systems and exceptional accessibility features.

CLASS B: Properties competing for a wide range of tenants with average or below average rents for the area. Buildings are in good to fair shape and suitable for tenants seeking functional space at discounted rates.

RetailREGIONAL: Enclosed malls which have strong anchors with a high percentage of National tenants in CRU space. Occupiers focus on general merchandise or fashion-oriented offerings. Properties are typically anchored by at least two large format tenants, including most often a department store.

POWER CENTRES: Unenclosed retail centres comprised of freestanding and mostly unconnected single storey properties or “big boxes”, often including at least one large format brand name anchor tenant. Typically situated in a larger retail node but contain limited CRU space.

COMMUNITY/NEIGHBORHOOD: Enclosed or unenclosed shopping centres that serve a community and are generally anchored by some combination of a junior department store, supermarket, drug or sport store. Typically supply a wide range of apparel and soft goods.

STRIP (ANCHORED): Open-air centres anchored by either a grocery or major drugstore tenant. Designed to provide convenience shopping for the daily needs of consumers in the surrounding neighbourhood. Off-street parking typically offered on site.

STRIP (NON-ANCHORED): Open-air centre typically not anchored by either a grocery or drugstore tenant. Centres offer a narrow mix of goods and personal services to a limited trade area. Off-street parking typically offered on site.

HIGH STREET RETAIL: Self-contained streetfront properties centrally located along high-profile retail corridors. Properties are occupied by well-known brands at well above average rental rates. Parking is typically available on street or within a public parking structure.

URBAN STREETFRONT: Streetfront properties located side by side along major urban thoroughfares in close proximity to public transit. Properties may be occupied by a wide range of tenants at above average rental rates. Parking is typically available on street or within a public parking structure.

MultifamilyHIGH RISE: Multi-unit high density properties typically 5 storeys and above in height.

LOW RISE: Multi-unit properties typically 4 storeys and below in height.

CLASS A: Newer properties which are situated in desirable neighbourhoods, well-serviced by public transit, demand above average rents, and are furbished with top of the line finishes and amenities.

CLASS B: Older properties which offer functional space with rental rates near to or below the market average.

HotelCAP RATES (HOTEL SPECIFIC): Rates indicated are based on adjusted results after deduction of management fees and reserves for replacement

FULL SERVICE: Hotel properties offering an abundant provision of food and beverage services (meeting rooms and dining venues). Full service hotels also typically offer additional amenities such as room service, valet parking and concierge service. Examples of core brands would be Marriott, Hilton, Four Seasons.

LIMITED SERVICE: Hotel properties that are rooms focused and don’t offer a wide variety of additional amenities or services. This category would include “budget” limited service assets that offer no-frills rooms at modest prices, as well as more robust limited service properties that might offer a fitness room, a guest laundry facility, a market pantry, an indoor and/or outdoor pool, and/or a small meeting room. Examples would include Comfort Inn, Days Inn, Super 8.

FOCUSED SERVICE: Focused service hotels (also referred to as select service hotels) offer the fundamentals of limited-service properties together with a selection of the services and amenities characteristic of full-service properties. They may offer food and beverage facilities but on a less elaborate scale than one would find at full-service hotels. Extended Stay/All-Suite hotels are included in this sample. Examples would include Hampton Inn, Holiday Inn Express, Residence Inn.

GLOSSARY OF TERMS:

This disclaimer shall apply to CBRE Limited, Real Estate Brokerage, and to all other divi-sions of the Corporation; to include all employees and independent contractors (“CBRE”). The information set out herein, including, without limitation, any projections, images, opin-ions, assumptions and estimates obtained from third parties (the “Information”) has not been verified by CBRE, and CBRE does not represent, warrant or guarantee the accura-cy, correctness and completeness of the Information. CBRE does not accept or assume any responsibility or liability, direct or consequential, for the Information or the recipient’s reliance upon the Information. The recipient of the Information should take such steps as the recipient may deem necessary to verify the Information prior to placing any reliance upon the Information. The Information may change and any property described in the In-formation may be withdrawn from the market at any time without notice or obligation to the recipient from CBRE. CBRE and the CBRE logo are the service marks of CBRE Limited and/or its affiliated or related companies in other countries. All other marks displayed on this document are the property of their respective owners. All Rights Reserved.

Documents

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