Transaction Real Estate - EY€™s Transaction Real Estate practice, in conjunction with affiliated EY entities, combines professionals with broad real estate industry experience

Transaction Real Estate Increasing ValueAccelerating Growth

EY has one of the largest

integrated real estate

practices providing advisory

services to real estate owners,

developers, investors, lenders

and users. Our experienced

professionals can help

you address complex and

demanding challenges

and provide connected

service around the globe.

Working with you, we draw

on our industry knowledge,

experience and insight to help

you develop and implement

your real estate strategy.

1Ernst & Young Real Estate Services Inc./Services Immobiliers Ernst & Young Inc.

Many businesses are focused primarily on real estate, while many more are not in the real estate business yet have a substantial amount of capital invested in it. In today’s complex and fast-moving economic environment, the strategies developed and steps taken to effectively manage real estate assets must be re-evaluated continuously.

With a global network of real estate professionals and hospitality and health care practices, among others that link closely with real estate, we bring in specific subject matter capabilities where required and collaborate with your legal and other advisors to help you achieve your goals.

It’s how EY makes a difference.

We can help.EY’s Transaction Real Estate practice, in conjunction with affiliated EY entities, combines professionals with broad real estate industry experience. Our team provides integrated, objective advice and a wide range of services to help evaluate opportunities and challenges and identify and implement strategies. We have experience in all sectors and have clients engaged in every aspect of real estate.

Services:

Strategic analysis

Financing services

Acquisitions, divestitures and partnerships

Valuation

Due diligence

Dispute resolution

Public sector advisory

Operations enhancement

Sectors:

Retail/Commercial

Hospitality and hotel/resort

Industrial

Office

Institutional

Residential/Multi-family

Mixed-use projects

Retirement and seniors’ housing

Land for future development

Our services

Ernst & Young Real Estate Services Inc./Services Immobiliers Ernst & Young Inc. 3

What are the issues?• The outlook for real estate

assets is changing

• Extract value from existing asset/portfolio

• Repositioning or monetizing assets is required

• Succession planning is required or underway

• Significant capital is tied up and/or a large additional commitment of funds to real estate is pending

• Overall asset or portfolio performance is below expectations

Strategic analysis

How we can helpWe can help you fully understand the attributes of your real estate, manage risks, assess opportunities to enhance and unlock value and outline the critical steps to help you get there. Our services include:

• Asset or portfolio assessment, options analysis and cash flow modelling

• Market analysis

• Strategy development, including assessment of opportunities to realize value and achieve targets

• Benchmarking

• Lease vs. own analysis, including sale-leaseback analysis

• Tax analysis and tax-effective disposition or separation strategies

• Financial statement implications for financial reporting purposes

The potential benefits• Better knowledge and understanding of your real estate assets,

the market and the competitive landscape

• Improved basis for decision-making, including understanding the financial statement implications

• Value optimization

Ernst & Young Real Estate Services Inc./Services Immobiliers Ernst & Young Inc.4

What are the issues?• Existing financing is maturing

• Increasing leverage may enhance returns

• Repatriating capital may allow for redeployment

• New projects require financing

Financing services

How we can helpOur thorough understanding of real estate, financing structures and funding sources allows us to properly position the assets in the market and present the opportunity to those investors and/or lenders (both debt and equity) most likely to participate. Our services include:

• Asset and portfolio valuations

• Cash flow modelling

• Analysis of available debt and equity financing options

• Debt and equity sourcing and arranging

• Permanent, recapitalization and construction/project financing

• Access to funding sources in Canada, the United States and around the world through the EY global real estate network

• Finding appropriate joint venture partners

The potential benefits• Enhanced returns

• Ability to grow the business

• Facilitate desired investment or recapitalization with appropriate sources of funds

• Improve cost of capital and/or financial flexibility


How we can helpOur experience in assessing real estate assets and market trends allows us to thoroughly evaluate each situation in the context of your business objectives and, in the case of dispositions, position the asset in the market to enhance proceeds. Our services include:

• Market analysis and assessment

• Property evaluations

• Assessing complex assets and portfolios, including in-depth buy-side due diligence

• Developing “go-to market” strategy and investment memorandums

• Designing and administering the RFP process, including evaluating submissions

• Preparating data rooms and managing potential buyer’s due diligence requests

• Deal structuring and tax planning

• Licensed real estate broker services

• Transaction closing oversight

The potential benefitsIntegrated services from asset assessment and marketing strategy development to tax structuring and transaction completion for both asset purchases and sales

Acquisitions, divestitures and partnerships

What are the issues?• A revised asset or

business strategy is under consideration

• A market opportunity has presented itself

• Non-core assets have been identified and are to be sold

• Real estate as a component of a larger corporate transaction

• Due diligence is required in support of the asset or portfolio purchase

• Succession planning and/or disputes requiring a sale of real estate


How we can helpOur team values and reviews appraisals for billions of dollars of properties each year, giving us a thorough understanding of each asset class and geography. Our services include:

• Appraisals and appraisal review

• Lease valuation

• Cash flow modelling

• Fairness opinions

• Purchase price allocations

• IFRS advisory

• Impairment testing and other issues related to financial reporting requirements

• Litigation support

The potential benefitsCurrent independent and objective valuations supported by up-to-date market data

Valuation

What are the issues?There is a requirement for an independent valuation of real property for:

• Transaction readiness

• Capital raising

• Shareholder buyouts

• Financial reporting


How we can helpOur due diligence services are focused on reviewing and understanding historical and projected operating metrics for assets and portfolios. Our services include:

• Property and portfolio revenue analysis

• Operating expense analysis

• Review or development of financial projections

• Lease analysis and review

• Lease audits

• Tenant and property profile analysis

• Review of projected capital expenditures for maintenance and development

• Review of closing statements and adjustments

• Oversight of sub-consultants (environmental and structural engineers)

The potential benefits• Ability to act quickly when internal resources are limited

• Independent confirmation to ensure reasonability of underwriting and completeness of all due diligence procedures

• Objective and independent assessments

Due diligence

What are the issues?• An asset or portfolio is

under contract for potential acquisition or divestiture

• Independent review of in-place or future Net Operating Income is required

• Lease analysis is required to ensure consistency with cash flows


How we can helpWe have experience dealing with disputes between stakeholders and have acted in both informal and formal capacities to assist one or multiple parties as they work to resolve differences. Our services include:

• Asset or portfolio valuation

• Development of tax-effective strategies for the separation of interests

• Development of budgets and oversight of disbursements in accordance with agreed-upon budgets

• Development of cash flow models

• Acting as an informal mediator

• Litigation support mandates

• Forensic accounting services

• Acting as a court-appointed administrator or construction lien trustee

The potential benefitsDevelopment and implementation of strategies to reduce cost and time

Dispute resolution

What are the issues?Disagreements between stakeholders have arisen and are threatening to impair or erode the value of the property or portfolio. Commonly disputed issues include:

• Project cost and/or funding allocations between stakeholders

• Valuation disputes

• Buy/sell transactions

• Separation of assets


How we can helpOur professionals have many years of experience working closely with all levels of government in a wide range of engagements. Our services include:

• Strategic and financial options analysis

• Portfolio planning

• Market assessments

• Assessing assets including development opportunities

• Designing and administering RFQ/RFP processes

• Developing evaluation criteria and evaluating the submissions

• Preparing projections and related business cases

• Advising on appropriate financing structure and sources

• Establishing parameters for financial models to be submitted by bidders

• Securing financing

• Preparing comprehensive reports in support of all reporting requirements

• Advising on alternative service delivery models

• Evaluating public-private partnership (PPP) scenarios

The potential benefitsA relationship with an advisor who understands the requirements of the sponsor, is sensitive to issues affecting other stakeholders, and who is able to objectively meet the needs of the sponsor


What are the issues?• Long-term capital and

operating expense planning for government-owned assets

• Opportunities to unlock value through densification, sever-and-sell and/or lease out to third parties

• Infrastructure project assessments

• Alternative funding options when funding is not available


How we can helpOur experience allows us to quickly understand the existing cost structure and/or property management terms as a basis for identifying opportunities to improve. Our services include:

• Operating cost benchmarking

• Assessing existing processes and outlining potential opportunities for improvement

• Assessing capital improvement and return of capital plans

• Developing and implementing asset and portfolio management plans

• Reviewing leases and property management contracts for financial and non-financial terms

The potential benefits• Efficient improvement strategies and operating cost structures

• Ability to balance cash flow and measure return on investment

• Position company to grow without disrupting existing processes


What are the issues?• Current processes are not

sufficiently flexible to support future growth

• High operating costs

• Changing industry practices with new technologies and standards

• Significant new regulations

• Pressure from analysts or stakeholders to achieve certain ratings


About EY’s Global Real Estate Center

Today’s real estate industry must adopt new approaches to address regulatory requirements and financial risks — while meeting the challenges of expanding globally and achieving sustainable growth. The EY Global Real Estate Center brings together a worldwide team of professionals to help you achieve your potential — a team with deep technical experience in providing assurance, tax, transaction and advisory services. The Center works to anticipate market trends, identify the implications and develop points of view on relevant industry issues. Ultimately, it enables us to help you meet your goals and compete more effectively.


Ray Drost +1 416 943 4455 | [email protected] Vice President and Canadian Practice Leader

Ray has practised corporate finance and restructuring for over 30 years and currently leads EY’s Canadian Transaction Real Estate practice. He has worked on numerous real estate assignments, ranging from restructuring of large real estate entities to valuations of over $15 billion in real estate assets. Ray also provides strategic consulting advice on various real estate matters, including portfolio reviews and shareholder disputes. Additionally, he has worked on numerous assignments involving financing, acquisitions and divestitures, valuations and restructuring in various other industries, including manufacturing, retail, forestry and public-private partnerships. He is a broker of record with Ernst & Young Real Estate Services Inc., and holds his CPA, CA designations as well as a Bachelor of Commerce from the University of Toronto. Ray is a licensed trustee in bankruptcy and a licensed real estate broker in Ontario and British Columbia.

Stuart Clinton +1 416 943 3042 | [email protected] Vice President

Stuart has over 24 years of experience dealing with real estate businesses and assets. He has advised company management and key stakeholders in situations involving the assessment and repositioning of assets, the repair and/or completion of projects in progress, the sale of assets and portfolios and other related issues. He has worked with municipal officials, engineers, builders and funders on various engagements, as well as on numerous successful engagements involving financings, valuations and restructurings in industries including technology, telecommunications, entertainment, manufacturing and automotive. Stuart is a licensed trustee in bankruptcy, a chartered insolvency and restructuring professional and a CPA, CA.

Wissam Francis +1 416 943 4432 | [email protected] President

Wissam has extensive experience in transaction services, corporate finance and strategy formulation through acquisitions/dispositions of real estate (deal development, due diligence, assessment and structuring), debt and equity origination, commercial and financial evaluations, constructing and developing evaluations and strategic assessment. Wissam has over 15 years of experience and has actively been involved in various projects and sectors, including retail, commercial, industrial, office, residential, mixed-use and development projects. Prior to joining EY, Wissam was the Director of Finance and Acquisitions for a major Canadian real estate organization. Wissam has been involved in over 50 real estate projects, raising over $3 billion in debt and equity financing, $5 billion of direct acquisitions, dispositions and due diligence services, and oversight over 16 development projects with a combined value in excess of $1 billion. Wissam is a licensed real estate sales agent in Ontario and holds a CMA designation as well as a Master of Business Administration from Wilfrid Laurier University and a Master of Arts in Economics and Finance from the University of Waterloo. He also holds a Bachelor of Arts in Finance and Economics and an Honours Degree in Economics and Mathematics from the University of Western Ontario.

The right teamThe senior members of our Transaction Real Estate practice are:


Jeffrey Wood +1 416 943 3962 | [email protected] President

Jeffrey is a member of our Real Estate Advisory group and provides advisory services to all levels of government across the country and to large national real estate companies. With a focus on operating model definition, management processes, portfolio planning and supply and demand management, Jeffrey has worked with clients to develop successful long-term strategies supported by practical implementation plans. He has completed operating model reviews for real estate portfolios collectively valued at over $14 billion and portfolio strategies for portfolios in excess of $2 billion. Jeffrey’s experience covers a broad spectrum of real estate projects, ranging from traditional office space to social housing. He is an accredited Professional Land Economist and holds a Bachelor’s Degree from the University of Ottawa.

William Jegher +1 514 879 8143 | [email protected] President

William leads our Transaction Real Estate Advisory Services practice in Montreal. Before joining EY, he ran his own consulting company for six years, providing corporate real estate strategic consulting services to major corporate real estate groups across North America. William was also engaged by a number of companies to perform strategic consulting mandates in the real estate and facility management industries. These mandates included benchmarking real estate metrics for occupancy cost reductions, building financial models for potential acquisitions, dispositions and consolidations of real estate assets, site selection, building real estate tenant satisfaction surveys and several other projects for the corporate real estate industry. He has written extensively for several publications and spoken frequently at conferences. William is a fluent speaker of French and Hebrew, and holds a Bachelor of Commerce from McGill University.

Zachary Pendley +1 416 943 5465 | [email protected] President

Zach is a dedicated strategy and valuation advisor in the real estate industry. He brings experience serving international banks, private equity firms and commercial real estate owners and operators. Specifically, Zach assists companies in the financial services industry with their real estate acquisition, disposition and capital requirements. Zach has extensive experience working on distressed debt, managing the restructuring and disposition of several large portfolios of CRE non-performing loans. Since joining EY in 2004, Zach has worked in our offices in Phoenix, Arizona, and New York. He holds an Executive Master’s in Business Administration from Columbia University and a Bachelor of Business Administration (Honours) from the Eller School of Management at the University of Arizona.


Selected engagements


Major Canadian real estate company

Strategic advisory

EY advised the company on options available to grow its asset base to $1.0 billion. Options included monetizing existing assets, outlining various growth scenarios and assessment of all existing processes to set the company up for growth.

$450,000,000 in asset value

Strategic analysis

Confidential - regulated industry

Strategic advisory

EY advised our client in its development of a long-term real estate strategy for its headquarters.

Development options

Confidential - energy sector

Strategic advisory

EY conducted a study for a major energy company to asses the implications of a proposed workplace relocation/consolidation strategy.

Premises consolidation strategy

Canadian insurance company

Strategic advisory

EY advised the insurance company on the options available for re-development and future use of the asset including financial analysis of the options.

Commercial building

Federal Crown corporation

Strategic advisory

EY advised our client on development options for the land and joint venture options to support the development including preparing the financial model and drafting the RFP seeking developer participation.

Prominent land on the South Shore, Montreal

Provincial Crown corporation

Strategic advisory and sale

EY conducted a market sounding with prospective developers to understand the potential and discuss the risk and benefits of a sale with our client. We structured the RFP seeking a broker, assisted in selecting the broker and undertaking the sale.

Former public transportation hub

Federal Crown corporation

Strategic advisory

EY was engaged to participate on the committee responsible for developing options for the re-development of the property, recommending the most appropriate option, crafting the RFP and related evaluation matrix, assessing submissions and recommending the most appropriate developer.

Waterfront site, Atlantic Canada

Canadian University

Strategic advisory

EY benchmarked various costs and other operating metrics, including outsourcing agreements, then developed a recommended organizational structure and steps to undertake the transformation.

Organizational structure of real estate function

Federal government department

Strategic advisory

EY advised the federal government on the alternative services delivery options for a Canada-wide portfolio of government-owned and -operated residential properties.

Residential housing


Financing services/acquisitions, divestitures and partnerships

Canadian university

Strategy and financing

EY developed a comprehensive financing strategy to support the capital budget (virtually all real estate related) and negotiated and arranged the financing in keeping with the university's objectives and risk tolerance.

$135-million bank financing

Canadian university

Strategy and financing

EY developed a financing strategy to support the expansion of the campus, including a real estate joint venture with a private sector developer, and negotiated and arranged the financing in keeping with the university’s objectives and risk tolerance.

$129-million bank financing

Residential condominium developer

Construction financing

EY sourced, arranged and closed the financing required to launch the marketing and construction of a mid-town Toronto condominium project then arranged second-round financing as the development progressed.

$60 million

Private mortgage investment corporation

Strategic advisory and arranging a revolving credit facility

EY was retained by a mortgage investment corporation to secure a revolving credit facility to finance the Company's growth.

$20-million facility

Private company

Advisory and asset acquisition

EY advised the buyer on the initial purchase and subsequent strategic divestiture of approximately 1,740 apartment units.

Apartment units

Private property owner

Strategic advice and asset disposition

EY advised the owner on options available for the development and/or disposition of the property including financial analysis of the options.

Site in major Canadian city

Canadian REIT

Strategic advisory

EY advised the REIT on the options available for the re-development, repositioning and future use of a large commercial property including financial analysis of the options.

Redevelopment of assets

Warehousing and logistics company

Strategic advice and asset sales

EY provided strategic advice to the owner then acted in the sale of certain properties.

$25-million industrial portfolio

Private developer

Strategic advisory and $50M equity origination

EY advised a Quebec developer focused on residential condominium development on strategic options to grow the company including seeking potential equity partners.

Residential developer


Valuation

Confidential - adjudication

Independent valuation

EY adjudicated a multimillion-dollar difference in value between vendor and purchaser for a portfolio of 18 retirement home assets and provided a binding portfolio value for the transaction.

$500-million real estate transaction

Municipal government agency

Valuation advisory

EY advised our client on the value of its partial interest in the development and underlying real estate.

Toronto Port Lands

Confidential - Canadian retailer

Purchase price allocation

EY was retained by the purchaser to prepare the purchase price allocation for its purchase of another major retailer.

Multibillion-dollar acquisition

Confidential - Canadian retailer


EY was retained by the purchaser to assess the initial purchase price allocation prepared by another valuator.

Multimillion-dollar transaction

Confidential - retail acquisition


EY was retained by the purchaser to prepare the purchase price allocation for its purchase of a portfolio of retail locations across Canada.

Multimillion-dollar transaction

Major Canadian retailer

Purchase price allocationMultimillion-dollar acquisition

EY was retained by the purchaser to conduct due diligence in support of its purchase price of another major retailer in Canada.

Major Canadian Real Estate Company

EY was retained by the company to complete a comprehensive valuation of all the company's income-producing and development properties.

Independent Valuation

$2.3-billion portfolio

Various clients

Property valuations

Annually review real estate valuations and appraisals for properties cumulatively valued in excess of $8 billion as part of ongoing engagements.

All property categories

Aquattro Estates LP

Valuation and sale

EY acted as Receiver to assess the assets, obtain zoning variances and market and sell the assets.

13.8 acres and 37 condominium units


Due dilligence and dispute resolution

Pension fund

Due diligence

EY advised a pension fund on its acquisition of a portfolio of 20+ industrial manufacturing facilities.

Multimillion-dollar industrial portfolio

Public real estate company

Due diligence

EY was retained by the purchaser to conduct due diligence in support of its purchase of eight office properties in the US.

$2.3-billion office portfolio


Due diligence

EY was retained by the purchaser to conduct due diligence in support of its purchase of five office properties in the US.

$1.1-billion office portfolio


Due diligence

EY was retained by the purchaser to conduct due diligence on a mixed-use property comprising commercial and two residential towers in downtown Toronto.

$120-million mixed-use property


Due diligence and valuation

EY was retained by the purchaser to conduct due diligence and a valuation review of a large lease portfolio in support of its purchase of another major retailer in Canada.

Multibillion-dollar acquisition

Penex Metropolis (Toronto) Vancouver Olympic Village

Interim management and disposition

EY acted as receiver in both cases overseeing daily operations while managing the process to market and sell the assets located in Yonge-Dundas Square, Toronto and in Vancouver.

Mixed-use buildings valued at over $300 million

One Bloor - Toronto

Proposed receiver

EY advised the secured lender and was proposed court-appointed receiver for this premium undeveloped land assembly.

Mortgage debt of $50 million

Nortel Networks

Sale of corporate campus

EY acted as Monitor, managed the process to market the corporate campus and negotiated the terms of sale.

$208-million sale price

Major Canadian law firm

Arbitration supportToronto residential assets

EY advised a party to an arbitration on the validity of the approach and relevance of the underlying data used by the opposing party to value the disputed real estate.




Strategic advisory

EY advised the federal government on the alternative services delivery options for a Canada-wide portfolio of government-owned and -operated residential properties.

Residential housing


Strategic advisory

EY advised the federal department on a portfolio plan for the National Capital Area.

Portfolio planning

Territorial government

Strategic advisory

EY advised a territorial government on a large telecommunications Public-Private Partnership project.

P3 advisory

Territorial government

Strategic advisory

EY advised a territorial government on a new hospital project to be provided through Public-Private Partnership.

P3 advisory

Municipal government

Strategic advisor

EY executed a market sounding for a large residential social housing portfolio looking at innovative financial and transaction options.

Market sounding

Federal government agency

Strategic advisory

EY advised on strategic options analysis and prepared a comprehensive financial model assessing redevelopment options for existing properties.

Redevelopment options

Federal government agencies

Strategic advisory

EY advised two government agencies regarding a portfolio rationalization and consolidation plan.

Office and laboratory assets

Provincial government

Strategic advisoryprocess management

EY was retained by a provincial government to document various processes for the real estate operation and implement a strategy to streamline various process based predetermined criteria.

Municipal government

Strategic advisoryprocess management

EY provided advisory services to a municipal government on leading practices in the real estate operations processes.



Major Canadian diversified REIT

Strategic review and performance improvement

EY provided advisory services including an operating model review, process improvement benchmarking, and conducted a corporate-wide business transformation exercise.

Private Canadian real estate company

Strategic review and performance improvement

EY provided advisory services including an operating model review, process improvement benchmarking, and conducted a corporate-wide business transformation exercise.

Confidential – Canadian real estate company

Finance transformation and process improvement

EY was retained by the company to undertake a finance transformation initiative to implement a future state finance organization based on predetermined criteria.

Major Canadian REIT

Process redesign

EY was retained by the company to complete a back office assessment and redesign of various business processes.

Global construction firm

Finance transformation and process design

EY was retained by the company to complete a financial process design of specific back office processes.

Canadian real estate services firm

IT strategy and roadmap

EY was retained by the company to assess existing systems and to develop an IT strategy and operating model.

Real estate services firm

Systems requirements determination

EY was retained by the company to develop a solution architecture, vendor evaluation and product selection.


Efficiency study and process redesign

EY was retained to complete an efficiency study and recommend approaches on various processes including logistics, distribution and site optimization for a major Canadian retailer.

Canadian real estate services firm

System selection

EY was retained by the company to analyze, assess and recommend appropriate systems given existing process and people.

About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization and may refer to one or more of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

For more information about our organization, please visit ey.com.

About EY’s Transaction Real Estate ServicesOur global network of transaction real estate professionals can help you make strategic real estate decisions with objective and responsive advice. We understand the biggest challenges you face — the need for capital, the long-term investment horizon, the immobility of assets and the complexity of construction. We take a multi-disciplinary approach, bringing together experienced teams to help you achieve the potential of your real estate assets, portfolios or companies. Our clients see us as a vital part of the team and we will work closely with you to develop capital market strategies for acquiring and disposing of real estate assets, including fund concepts or sale and leaseback structures. Our global reach means that, wherever you are in the world, we can help you raise or structure necessary capital and buy or sell individual properties, property portfolios or equity investments. It’s how EY makes a difference.

© 2013 Ernst & Young LLP. All Rights Reserved. A member firm of Ernst & Young Global Limited.

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This publication contains information in summary form, current as of the date of publication, and is intended for general guidance only. It should not be regarded as comprehensive or a substitute for professional advice. Before taking any particular course of action, contact Ernst & Young or another professional advisor to discuss these matters in the context of your particular circumstances. We accept no responsibility for any loss or damage occasioned by your reliance on information contained in this publication.

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Transaction Real Estate - EY€™s Transaction Real Estate practice, in conjunction with affiliated EY entities, combines professionals with broad real estate industry experience