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Regs likely to have minor impact on purchases

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The province of Ontario is planning to license and regulate home inspectors, who would need to be properly qualified and meet minimum standards for home inspection reports, among other things. The proposed changes would also establish an independent authority which would be responsible for administering and enforcing the forthcoming legislation and its associated regulations.

“These changes would ensure consumers benefit from quality advice, are protected from surprise costs and aware of safety issues before buying a home,” says the province.

But what, if anything, would this mean for condominium purchases? In this lawyer’s view, the licensing of home inspectors will have only some impact on condominium purchases. Here’s why.

Experience suggests that a home inspection is now a typical step most real estate purchasers take. It’s an excellent way for a purchaser to gain valuable (often critical) information about the condition of the property, normally before the purchase agreement becomes unconditional. In other words, a home inspection is commonly arranged by the purchaser during a conditional period. The purchaser normally depends on, among other things, receiving a home inspection that he or she deems satisfactory to waive conditions (resulting in a binding purchase agreement).

In the case of a condominium purchase, the purchaser sometimes (though not always) arranges for a home inspection of the unit — again, during a conditional period, as described above. So, the province’s forthcoming regulations for home inspectors will certainly have an impact upon those “unit home inspections” arranged by condominium purchasers. As noted above, the idea is that those home inspections will become even more reliable and helpful to the consumer.

But condominium purchasers typically do not arrange for inspections of the common elements for the following reasons.

The common elements can of course be quite extensive. The common elements can also be difficult to access. Take, for example, roof areas, windows, balconies, mechanical and electrical components, elevator machine rooms and mechanical penthouses. Therefore, the cost for a common element inspection can be prohibitive for most purchasers. Inspections of the common elements are of course arranged by condominium corporations as part of performance audits and reserve fund studies; and those costs are typically thousands or even tens of thousands of dollars.

Purchasers also don’t have the legal right to access the common elements (unless and until they are residents of the condominium). Now, the purchaser (and/or his or her chosen inspector) can be invited to inspect the common elements as a guest of the owner/vendor.

But even the rights of residents (and their invitees) to inspect the common elements are limited. In most cases, the condominium’s declaration or bylaws state that certain parts of the common elements (generally areas set aside for maintenance and for mechanical services) are off limits to residents.

Also, residents have no right to access units or exclusive-use common elements (which might be necessary to inspect certain parts of the common elements — take attics as an example). In addition, the inspection process itself might in some respects exceed the rights of a resident to make “reasonable use” of the common elements, as stated in section 116 of the current Condominium Act (1998).

So, even if a purchaser were willing to spend the money for an inspection of the common elements, the inspector likely wouldn’t have the right to conduct a completely thorough inspection (at least without the consent and cooperation of the condominium corporation).

Condominium purchasers typically can’t, in practical terms, arrange for a thorough inspection of the common elements. They normally only arrange for inspection of the unit and those few common elements which are visible during an inspection of the unit.

In that respect, “condominium buyers can’t beware” — at least when it comes to the common elements. This is precisely one of the key reasons for status certificates. So, in order to allow condominium units to sell, the Condominium Act allows purchasers to obtain status certificates, which include the following statement:

“The corporation has no knowledge of any circumstances that my result in an increase in the common expenses for the unit, except…” (And then any such circumstances known to the corporation must be listed.)

Condominium corporations are also obligated to arrange reserve fund studies, which include an inspection of the common elements at least every six years. With the benefit of the reserve fund study, the condominium corporation then determines the necessary annual contribution to the reserve fund. And the corporation is obligated to say, in the status certificate, if the corporation is aware of circumstances revealing that the annual contribution may need to increase (beyond inflation), or if a special assessment may be required, at some time in future.

Therefore, if paragraph 12 of the status certificate is “clear,” this tells the purchaser that — as far as the condominium corporation is aware — the condominium fee is the “whole story” and is expected to stay constant (increasing only by inflation). And the purchaser knows that the condominium corporation has reached this conclusion, at least in part, with the benefit of a reserve fund study. That’s also why condominium purchases are typically conditional upon the purchaser obtaining a status certificate that is satisfactory to the purchaser.

In summary, the idea is that mandatory reserve fund studies combined with the ability to obtain a status certificate gives purchasers the necessary information about the common elements to go ahead with the purchase — even though it’s not practically possible for the purchaser to arrange for a home inspection of the common elements.

James Davidson is a partner at Nelligan O’Brien Payne LLP, and has been a member of the firm’s Condominium Law Practice Group for more than 30 years. He represents condominium corporations, their directors, owners and insurers throughout eastern Ontario.

New Quebec regulation on ladder, stepladder use

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The Commission des normes, de l’équité, de la santé et de la sécurité du travail (CNESST), on September 28, 2016, published a notice of a draft regulation in the Gazette officielle concerning the use of ladders and stepladders on worksites. That may seem quite mundane. Nevertheless, according to a regulatory impact assessment by CNESST, dated August 12, 2016:

[TRANSLATION]

Industrial accidents attributable to inappropriate use of ladders or stepladders are leading to serious consequences, and even to deaths, every year. Over the last five years, 35 per cent of work accidents have occurred as a result of falls from ladders and stepladders. It is recognized that these accidents are often attributable to an unstable surface, inappropriate use, poor installation, an inadequate choice or the defective condition of the equipment. […] Hence, although their use is simple, preventive measures must be applied in order to avoid what may often turn out to be a tragic accident.

CNESST is therefore dusting off the regulation respecting occupational health and safety with respect to these tools. In some respects, that is just a matter of common sense, but we would remind you that a non-conforming use may entail penal complaints, resulting in fines between $1,613 and $3,255, and up to $12,899 for repeat offences.

The draft regulation clarifies the conditions governing the use, installation and manufacture of these tools and promotes the adoption of best practices. If the draft as published is adopted, it will be prohibited:

  • to use a portable ladder or a stepladder near an exposed electrical circuit, if it is made of metal or is metal-reinforced;
  • to use a portable ladder or a stepladder as a horizontal support;
  • to stand up on
  • the last two rungs of a portable ladder;
  • the top rung, on the pail shelf, on the rear section or on the top of a stepladder, except if it was so designed by the manufacturer;
  • to use the intermediate or upper section of a multiple-section ladder or of an extension ladder as the lower section, unless such use is authorized by the manufacturer.

The safety precautions applicable to the use of these tools are also clarified. The worker shall:

  • be facing the portable ladder or stepladder at all times;
  • remain in the centre of the steps or rungs of the portable ladder or stepladder and comply at all times with the maximum height indicated by the manufacturer;
  • maintain three points of contact while climbing or descending the portable ladder or stepladder, unless a means of protection against falls is used.

That latter standard, the three-points-of-contact rule, clearly illustrates how such a regulation can subtly complicate the performance of certain tasks. Imagine climbing up a stepladder to reach three boxes of a product stored high up (shoe boxes, for example), and you will quickly conclude that it will be practically impossible to climb back down the stepladder with your hands full while still complying with the three-points-of-contact rule. It may perhaps be necessary to make three trips or to develop another tool to gain access to the stock.

At the very least, a revision and updating of the training program on the use of portable ladders and stepladders would be indicated.

CNESST foresees implementing a public relations plan to inform employers of the new provisions governing the manufacture, verification, selection and use of ladders and stepladders when the final version of the regulation is published, and it also plans to publish an informational guideline on the safe use of portable ladders and stepladders in 2017, in order to facilitate gaining further knowledge, as well as the adoption and observance of best practices.

François Longpré is a partner with the Labour & Employment Practice Group of Borden Ladner Gervais at its Montreal office. He represents management in labour relations, employment and workers compensation matters, appearing before tribunals and the courts and providing pragmatic advice and litigation risk assessments.

This article was originally published on November 1, 2016, on the Borden Ladner Gervais website.

REALpac survey reveals disproportionate tax rates

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Canadian cities have extended the ongoing trend of decreasing commercial tax rates in an effort to promote business growth, according to a new report released by REALpac (Real Property Association of Canada).

Conducted by Altus Group, the REALpac Canadian Property Tax Rate Analysis is a Canada-wide survey of property tax rates of ten major urban centres. Vancouver, Toronto and Montreal continue to post the highest commercial-to-residential ratios of the cities analyzed. Vancouver is the only city to post a commercial-to-residential tax ratio in excess of 4:1, of the municipalities surveyed in 2016.

The 2016 survey reveals higher property tax rates for major cities in the Prairie Provinces, with the exception of Winnipeg, which saw commercial and residential rates decline due to the increased reassessment base. Rates have also come down in Vancouver, Toronto, Ottawa and Montreal. However, due to steadily rising assessment values in these cities, taxpayers may not see an improvement on their property tax bill.

“We continue to focus on the disproportionately high commercial tax rates in three major Canadian cities: Vancouver, Montreal and Toronto,” says REALpac’s CEO Michael Brooks. “High commercial property tax rates send business and economic development elsewhere, and work at cross purposes with infrastructure investments, particularly transit. Further efforts should be made in those cities to bring commercial property taxes down to more reasonable levels.”

For the fourth consecutive year, the highest estimated commercial taxes per $1,000 of
assessment are maintained by Montreal, Halifax and Ottawa. Although consistently at the top, all three cities experienced a decrease in commercial rates in 2016. Calgary saw the largest increase, with a portion of the business tax being consolidated into property taxes for non-residential properties. Despite the increase, Calgary’s commercial tax rate is still one of the lowest along with Vancouver and Saskatoon.

Edmonton, Saskatoon and Regina were the only other cities to see an increase in residential rates. Large tax bases and highly assessed property values allowed Toronto to decrease residential tax rates for the eighth consecutive year, while Vancouver saw a reduction for the thirteenth consecutive year.

The continued reduction of excessive property tax burdens on commercial and industrial properties will make cities more competitive, promote job growth and investment, result in increases to the property assessment base and subsequently generate more stable and sustainable revenue.

ASHRAE 90.1 adds multi-res lighting proviso

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Developers of multi-residential buildings can expect more pointed direction on their lighting choices as North American jurisdictions update their building regulations. The newly released 2016 edition of the ASHRAE 90.1 standard for energy efficiency includes first-time requirements for lighting within dwelling units. Previously, the standard’s ascribed lighting power density applied only to common areas such as lobbies, corridors and laundry rooms.

“In 2016, there is an added requirement that no less than 75 per cent of lamps in permanent lighting installations in dwelling units have to be of a high efficacy — at least 55 lumen per watt,” reports Eric Richman, senior research engineer at the U.S. Pacific Northwest National Laboratory who serves as chair of the ASHRAE 90.1 lighting subcommittee. “That could be a good compact fluorescent or an LED.”

ASHRAE 90.1 is regarded as the de facto guidance document for energy performance in all types of buildings except low-rise residential given that regulators across the continent reference it in their codes and bylaws. Proposed changes to Canada’s National Energy Code for Buildings (NECB), now open for public comment, include lighting criteria harmonized with ASHRAE 90.1-2016, while the United States Department of Energy conventionally adopts the standard as the minimum compliance requirement that states and municipalities must enforce in their building regulations.

All 90.1 lighting requirements are premised on the light levels that the Illuminating Engineering Society (IES) deems adequate to carry out tasks in various types of space. From there, the standard devisors employ energy modelling to determine how the required light level could be achieved with available technologies. This is then expressed as an allowable wattage per square foot, known as the lighting power density (LPD).

ASHRAE 90.1-2016 introduces more stringent lighting power densities for dozens of designated types of space, attributed to the inclusion of LED technology in the 2016 modelling.

“The same thing happened going from 2010 to 2013,” Richman notes. “Most of the space type LPDs went down because there were more efficacious products available for the modelling.”

Yet, he stresses that the standard does not mandate LEDs nor prohibit less efficient lighting options. Designers could theoretically specify any legally available product provided the cumulative LPD for the space can be attained.

“The number is technology-neutral,” he says. “It’s going to be impossible to light the space with all incandescents, but you can mix and match. If you do a good job of designing, you might be able to use incandescents for a part of the space.”

Quirkily, and in contrast to most other building types, the multi-res LPD has actually become more generous in the 2016 standard because of changing design practices and IES light level recommendations. “If IES increases a recommendation, which has happened in the past, then our LPD number is likely to go up,” Richman explains.

Ultimately, the efficacy requirement for fixed installations in dwelling units is considered more significant. Even if unit occupants choose less efficient floor and table lamps, the new multi-res lighting proviso addresses energy efficiency in a vast amount of hardwired wall and ceiling lighting that was previously exempted from consideration.

For developers, the resulting capital cost increase should be modest relative to the overall construction budget. LED or compact fluorescent ballasts are comparably priced to other types of lighting even if the bulbs are more costly than halogen or incandescent. Meanwhile, improved energy efficiency within suites can be marketed to both prospective homebuyers and renters.

The new requirement isn’t necessarily imminent, however, since ASHRAE’s triennial cycle for revising the 90.1 standard tends to be well in front of provincial, state and municipal regulators’ slower pace for updating their building regulations. The majority of such documents will continue to reference the 2013, 2010 or even 2007 versions of 90.1 as the threshold standard for energy performance for awhile yet.

Barbara Carss is editor-in-chief of Canadian Property Management.

Cleaning associations ISSA and ARCSI vote to merge

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The memberships of ISSA, the worldwide cleaning industry association, and the Association of Residential Cleaning Services International (ARCSI) approved to merge as of January 1, 2017.

The ARCSI will be officially known as “ARCSI, A Division of ISSA.”

“We couldn’t be more excited about this merger and the benefits, resources, and power it will bring to our membership,” says ARCSI CEO Ernie Hartong. “Drawing on ISSA’s resources, we will be able to grow our membership and provide wider options for education programming. We are also poised to drive the message to consumers of the benefits of using a professional residential cleaning company and, with the support of ISSA, we can bring that to fruition.”

ARCSI members will retain their ARCSI memberships, but those memberships will expand to include global ISSA membership and benefits. ARCSI members will also have access to ISSA member benefits, including expanded educational opportunities, market exposure, networking opportunities, business tools and data and other industry information.

“ISSA’s mission is to change the way the world views cleaning in all sectors of the industry,” says ISSA Executive Director John Barrett. “The line between commercial and residential cleaning has grown closer in recent years, and the merger of ISSA and ARCSI is yet another move toward creating one strong, unified, industry.”

Members of ARCSI and ISSA voted on the merger at their annual meetings, which took place during ISSA/INTERCLEAN North America.

Morguard recognized for “Best Conversion”

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Morguard Corporation was recognized by Hilton with the inaugural Best Conversion for Dual Brand award for the proposed 361 Queen Street redevelopment project in downtown Ottawa. The proposed redevelopment is the first dual brand conversion of an existing building, under the Hilton banner in Canada, and is set to be the first Hilton property in downtown Ottawa.

The $30 million plan calls for the redevelopment of two existing towers that will be transformed into a 17-storey Hilton Homewood Suites, providing 173 guest rooms for extended-stay accommodations, and a 10-storey Hilton Garden Inn, providing 171 guest rooms for short-stay accommodations.

In addition to the combined total of 344 guest rooms, the property will offer 4,500 square feet of conference space and full-service amenities, including a restaurant, bar, fitness facility and pool, to meet the market need in Ottawa. The project is slated for completion in spring 2018.

“Morguard is rejuvenating its prime property in downtown Ottawa with a modern and sustainable design, supported by the strength of Hilton’s quality and service,” said K. Rai Sahi, Chairman and Chief Executive Officer, Morguard Corporation. “This is a long-term value investment for Morguard in the Ottawa market – a market where we own or manage more than five million square feet of real estate valued at $1.8 billion.”

Adds Jeff Cury, Senior Director of Development for Hilton in Canada: “Hilton’s Development awards are presented to the developers whose leadership and passion reflects our own; we are very pleased to be working with Morguard in bringing the first Hilton property to downtown Ottawa. The dual branded Hilton Garden Inn and Homewood Suites by Hilton will fulfill the market’s needs by providing both transient and extended stay accommodations to business and leisure travelers alike.”

The proposed redevelopment project at 361 Queen Street also calls for enhancements to the entrance and lobby of its adjoining office building at 350 Sparks Street, including a redevelopment of the main floor into new retail space. The introduction of several hundred brand new hotel rooms, as well as additional conference and banquet facilities, is seen as a welcome addition to the already buoyant downtown Ottawa market and local businesses, most notably for those located in the adjacent office building. A permit application has been made to the City of Ottawa.

How to Invest for Success in a Hot Rental Market

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“The rise of permanent renters” has ignited a hot market for apartment buildings. However, investor demand far exceeds supply. There are several things borrowers need to know in order to qualify for financing and prosper in this complex, competitive real estate sector.

“We are seeing prices going up drastically, multiple bids, the whole bit,” says Vancouver-based Russell Syme, assistant vice-president, commercial financing, at First National Financial LP, Canada’s largest non-bank mortgage lender.

He points out three main requirements to qualify for financing: property management experience, equity and liquidity.

If the prospective borrower does not have sufficient experience managing multi-unit income properties, the lender may insist on having third-party property management.

“During the past 10 or 20 years, people were able to buy rental apartment buildings with relatively little focus on operational efficiency. They could potentially still do very well financially over time because of the drastic increase in values that we have seen in the marketplace. I don’t think that will be the situation going forward,” Syme says.

“I don’t want to discourage people, but having that experience, or partnering with somebody who does, is a good way to go if you are buying an apartment building. The values are high, so you need to find other ways − through managing the property − to add value. Buy something that is not operating at its best and improve management of it . . . that’s how you do well on these kinds of investments.”

The lender wants to know what the borrower intends to do to increase rents over time and what the borrower might do to reduce vacancy rates. “The primary source of repayment for a loan on an apartment building is cash flow, so that’s what we are looking at,” Syme says.

Financing considerations

The lender will want to see net-worth statements from all beneficial owners, satisfactory credit reports, resumes outlining the borrower’s real estate experience and details of additional real estate holdings or assets, including current debt.

Required property information includes a current rent roll, an account of annual expenses such as insurance, utilities, property taxes and details of recent improvements.

The lender will require a minimum down payment of 15 per cent of the lending value for an insured mortgage, although the amount may vary depending on location, quality and condition of the building and the potential for rent increases. Typically, the down payment would be substantially higher in a small community highly dependent on one or two industries. “In those communities, you see wide swings in vacancy levels. It might be zero vacancy today, but if one of the industries in those communities has a downturn, the vacancy rate in that market might be 25 or 35 per cent and you can’t rent out those empty units no matter what you do,” Syme says.

In addition to the down payment, the lender may expect the borrower to have a minimum net worth of 25 per cent of the loan amount. Syme also looks at liquidity – i.e., a borrower’s access to cash to cover unexpected expenses such as repairs to a roof or replacement of a boiler.

First National’s preference is that the borrower not be an absentee landlord. “It’s tougher to make sure the property is operating well if you can’t visit it regularly,” Syme says. “There is nobody who is going to care as much about your building as you do, so if you know how to operate a building and what to look for, it helps a lot.”

Russell Syme is an Assistant VP, Commercial Financing at First National Financial. Get to know Russell here.

Follow First National on LinkedIn for other great commercial real estate financing content from our specialists.

First National

B.C.’s Woodfibre LNG project gets investment green light

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Construction for the $1.6 billion Woodfibre LNG project in B.C. could begin in 2017. The board of directors has approved construction of the project near Squamish, the first major LNG project in the province to make a final investment decision.

This project will be the cleanest LNG project in the world and one of the largest private-sector investments in the Lower Mainland’s history.

Woodfibre LNG will bring to Squamish an estimated 650 good paying construction jobs per year during an estimated two-year construction period, 100 full-time jobs to the Woodfibre site during operation, plus a dozen or so administration-related jobs to Squamish during the life of the project.

Premier Christy Clark welcomed the news that the Woodfibre LNG project has received board authorization to proceed.

“This marks the beginning of a tremendous opportunity for British Columbia to play a significant role in the global fight against climate change, using the world’s cleanest LNG to help countries transition away from coal and oil,” said Premier Clark. “At home, this project will create hundreds of jobs for First Nations and all British Columbians.”

The Woodfibre LNG project has undergone a rigorous, science-based assessment at both the provincial and federal levels. A substituted environmental assessment, designed to meet both federal and provincial requirements, led to provincial approval in October 2015, and federal approval on March 18, 2016. The provincial environmental assessment certificate includes 25 legally binding conditions.

The Woodfibre LNG project is a small- to medium-sized LNG processing and export facility to be constructed at the former Woodfibre pulp mill site, located about seven kilometres southwest of Squamish. Once in operation, the facility will export about 2.1 million tonnes of LNG per year over 25 years. This will amount to an LNG carrier travelling through well-established shipping lanes three to four times per month.

Pending permit approval from the B.C. Oil and Gas Commission, construction for the Woodfibre LNG Project could begin in 2017, with operation in 2020.

Q3 condo sales in the GTA climbed 22 per cent: TREB

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Greater Toronto Area condominium apartment sales in the third quarter of 2016 increased 22.1 per cent year-over-year to 8,014, according to the Toronto Real Estate Board (TREB). Over the same period, new listings for condominium apartments fell by 13.3 per cent.

“While the low-rise market has been top-of-mind in the supply discussion, it is very important to note that supply pressures have also been experienced in the condominium apartment market segment over the past year,” said TREB president Larry Cerqua in a press release. “The completion of new units was down substantially during the first three quarters of 2016 compared to the same period in 2015. This arguably played a role in the decline in new condominium apartment listings on TREB’s MLS System.”

The average price of a condominium apartment in the GTA during the third quarter was $415,643, a 9.6 per cent increase year-over-year. The MLS Home Price Index benchmark price for apartments increased by a similar amount.

“The annual rate of condominium apartment price growth has accelerated over the past year as the supply of units available for sale became more constrained while demand remained strong,” added Jason Mercer, TREB director of market analysis. “With this said, however, annual rates of price growth remain well-below those for low-rise home types. Condo apartments continue to be an affordable entry point into home ownership for first-time buyers.”

Karl Lagerfeld-designed lobbies featured in new Toronto condo

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Capital Developments and Freed Developments have unveiled “Lobbies for Lagerfeld,” two lobbies designed by Karl Lagerfeld, marking his first Canadian project.

Inside Toronto’s Art Shoppe Lofts + Condos, Lagerfeld’s project features bold textures and monochromatic colour scheme in a way that is both luxurious and modern. Described by the developers as ‘not typically Canadian, but with a touch of the north,’ the condos feature a dramatic palate of mirrors and glass, as well as large bookshelves curated by the designer.

“In many ways, Toronto is a leader in North America when it comes to high-rise residential development,” said Jordan Dermer, managing partner of Capital Developments, in a press release. “This project’s location, size and presence – fronting on a full city block of Toronto’s Yonge Street – demanded that we pursue a very bold vision for the Art Shoppe Lofts + Condos. Karl was the perfect partner to achieve this vision, and his exceptional team was instrumental in making this all come true.”

“We wanted to elevate design to a new level not yet seen in the country,” added Peter Freed, president of Freed Developments. “The Art Shoppe Lofts + Condos will be a legacy project for Toronto. Bringing Karl Lagerfeld to Canada for the first time is something we are incredibly proud of.”

“Working with Karl was an incredible experience,” said Todd Cowan, managing partner at Capital Developments. “He was engaged in all aspects of the design process and the resulting lobby interiors are a true reflection of his visionary style.”

Art Shoppe is a mixed-use development that will span a full city block near Toronto’s Yonge St. and Eglinton Ave. intersection in one of the city’s busiest neighbourhoods, which will soon feature the upcoming Crosstown light rail transit (LRT) line. This new LRT line will support the existing subway and help relieve strain to public transportation while increasing access to this growing neighbourhood.

MRCM president named Industry Leader of the Year

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The president of Associa’s Maple Ridge Community Management (MRCM), Michael Le Page, was recently named Industry Leader of the Year by the Association of Condominium Managers of Ontario (ACMO).

The award recognizes outstanding achievements and professionalism in Ontario’s condominium industry. Le Page is an ACMO member with over 30 years of experience in condominium management. In addition, he is a board member for the National Association of Condominium Managers (NACM), a reserve fund instructor for the Canadian Condominium Institute (CCI), lectures year-round at industry events and has authored numerous industry-related articles.

“The award is indeed an honour, however it is shared with the team I have the privilege of working with. Their level of engagement and commitment to our clients, our team and our shared success has allowed MRCM to accomplish great things and prepare for even more in the future,” said Le Page, in a press release. “At MRCM, we are proud of our past and excited about our future as we go forward in partnership with Associa.”

Le Page was honoured during the association’s annual awards luncheon, which took place on October 28 at the Toronto Congress Centre.

Pure Multi-family REIT sells Texas property

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Pure Multi-Family REIT announced the successful and profitable sale of Livingston Apartments, located in Plano, Texas, for gross proceeds of US $34.3 million, or US$190,555 per apartment unit.

Built in 1998, Livingston is comprised of 180 residential units and is situated on 11.8 acres of land. Pure Multi-Family acquired Livingston in August 2013 for US $25.5 million.

“We are pleased to have achieved an annualized gain on the equity invested of approximately 35 per cent,” said Stephen Evans, Pure Multi-Family’s CEO. “We intend to utilize the 1031 like-kind exchange to reinvest the net proceeds, on a tax-deferred basis, as part of our capital recycling initiatives. Pure Multi-Family continues to divest select non-core assets on an opportunistic basis and intends to reinvest the net proceeds into newer, high quality Class A assets in its target markets, to reduce the average age and improve the overall quality of its portfolio.”

About Pure Multi-Family REIT

Pure Multi-Family is a Canadian based, publically traded vehicle which offers investors exclusive exposure to attractive, institutional quality U.S. multi-family real estate assets. Additional information about Pure Multi-Family is available at www.puremultifamily.com or www.sedar.com

Timbercreek Asset Management expands global team

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Timbercreek Asset Management, recently named one of Canada’s Fastest-Growing Companies in the 28th annual PROFIT 500 list, has appointed two new senior hires.

Brad Trotter joins as managing director, U.S. & European debt, and Cam Goodnough joins as managing director of corporate development. Both men will help launch strategies to build and grow the firm both domestically and globally. Trotter will be a key member of the senior leadership team in Timbercreek’s New York office. He will focus on strategic growth opportunities outside of Canada and help the firm determine and drive expansion of its existing debt platform. With 25 years of experience across North America, Europe and Asia as a Business Leader and CFO with GE Capital, he has led more than $25 billion of real estate debt and equity transactions, managed portfolios of up to $22 billion in size and directed large teams across multiple geographies.

Goodnough will work out of the firm’s Toronto-based corporate head office and will focus on evaluating strategic initiatives and support product development around new verticals, geographies and initiatives. He will also assume the role of vice-president of finance and corporate development for Timbercreek Financial. His experience in capital markets and investment banking spans 17 years, with firms such as CIBC Wood Gundy, Merrill Lynch Canada, RBC Capital Markets. He has previously worked as managing director with the Financial Institutions Group at TD Securities.

“Whether looking at institutional, ultra high-net-worth, or broader based retail audiences, we have seen continued growth in capital allocations to the alternative asset classes this past year,” said Blair Tamblyn, senior managing director and chief executive officer at Timbercreek Asset Management. “We believe these key additions will better position us to continue to identify compelling, active investment opportunities for our clients in multiple jurisdictions.”

Timbercreek now manages more than $5.5 billion in assets across its various lines of business. The firm recently opened its newly built corporate headquarters in Toronto and expanded its global reach with the opening of a regional office in Hong Kong.

Canadian locales among sale of luxury resort retail portfolio

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Whistler Creekside Village in B.C. and Blue Mountain Village in Ontario are among several North American ski resorts whose retail assets were recently sold in a $103-million deal to a private real estate consortium between The Imperium Companies, MMG Equity Partners and Blue River Family Office Partners. retail portfolio

CNL Lifestyle Properties sold the seven-property portfolio, which consists of 423,482 square feet of ground-floor retail located within each luxury resort.

“These stabilized yet dynamic assets are unique in location, diversification, and tenancy,” said Lori Schneider of Marcus & Millichap’s IPA Division, who brokered the deal. “The portfolio is very well suited to the buyers’ investment strategy.”

This portfolio is said to be the first of several acquisitions of destination real estate amongst the partnership.

“We are excited to merge our deep real estate and financial backgrounds amongst the partners with our love for the outdoors,” said Kyle A. Mowitz, partner, The Imperium Companies. “Servicing our tenants and continuing to maximize the guest visitor experience will be amongst our main goals of this acquisition and the many more to come.”

Other properties in the portfolio are: The Village at Mammoth, California; Village at Snowshoe, West Virginia; Village at Copper, Colorado; Stratton Mountain Village, Vermont; and The Village of Baytowne Wharf, Florida.

Photo of Whistler Creekside Village in B.C. courtesy of Tourism Whistler

 

FinTech meets multifamily capital: Amar Nijjar, R2Crowd

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Financial technology, also known as “FinTech”, is defined by Wikipedia as an economic industry composed of companies that use technology to make financial services more efficient. FinTech companies are generally startups, trying to disintermediate incumbent financial systems and challenge traditional corporations that are less reliant on software, using new applications, processes and business models. As of recently, FinTech has entered Canada’s apartment sector, inserting innovation where convention once reigned.

On the cusp of this innovation is a company called R2Crowd, a strategic partner with JLL, a Fortune 500 company and an approved participant with TSX private markets. To find out more about how FinTech is disrupting the multifamily capital formation process, we met up with Amar Nijjar, Founder & CEO of R2Crowd, and his team at their head office in downtown Toronto. Matthew Bruchkowsky, Senior Director from Colliers Multifamily Appraisal Group was also on hand for the discussion.

CA: Tell us a little bit about your company, R2Crowd, and what it offers Canadian apartment investors.

AN: Think of R2Crowd as a technology bridge that connects retail investors with apartment owners in need of capital to grow. The traditional capital formation process is very tedious and cumbersome. We have developed and invested in very advanced technology that can exponentially scale the distribution of investment product. The current way of capital formation in the real estate sector is like the 8-tracks of the 1960s, while we are more like Spotify. Technology is a huge enabler and it is shaking up several other traditional industries, as well. Just look at Uber versus traditional cab companies…AirBnB versus hotels…PayPal versus traditional payment providers…Google versus the Yellow Pages. The list is very long.

CA: What does it mean to ‘crowd fund’ and what does it take?

NA: First of all, let me begin by shattering the two biggest myths in the industry: that crowd funding is un-regulated, and that crowd funding means going to small retail investors. Both those myths are not true. We are heavily regulated across Canada by various securities commissions especially because we are fundamentally changing the way this industry has worked in the past (for the good). Our crowd, as a matter of fact, is not retail but accredited investors, family offices and institutions. On certain deals we are able to raise capital through the retail channel by using what’s now available in Ontario (and the rest of Canada): Offering Memorandum. As much as we are disrupting the traditional capital formation process in this space, the fundamentals of our investments are still the same. We are still matching sound investments with qualified investors. What’s changed is how we go about doing that.

CA: So, if an apartment owner comes to you with a proposal to develop or purchase an apartment building, how does your group help them?

NA: We are able to raise as much as 95 percent of the capital stack for our clients. This can be broken down into debt and equity pieces. First let’s look at debt. Debt, which is 70 to 75 percent of the capital stack—is pretty vanilla in nature and is called senior debt. We arrange that through our JLL Debt Capital Markets business. Lenders are very competitive in that space with over 50 lenders that are active at any given time. CMHC product is the real commodity in this space with over a dozen lenders competing for every basis point of pricing, and we are able to get our clients not only competitive pricing but also a very flexible structure, guiding them through each step along the way. But over the last few years, the non-CMHC (i.e. conventional financing) has seen a complete renaissance with very aggressive terms, such as 30-year amortization, two-year IO periods, partial recourse with earn outs down the road at pricing of around 200-250 bps over the GOC.

Now, let’s look at equity. Equity is like the secret sauce in every capital stack. It is complex but we make it simple. We understand LP, JV, Co-tenancy structures better than anybody else in the marketplace and are able to give sound advice to our clients on the level of preferred returns, cash on cash distribution and total IRR required to bring a project to fruition. Up until now, such complex advice was only available through large investment banks who typically did not touch projects under a certain size. At R2Crowd, we welcome them all and have different boxes to fit them in, based on their risk-return profile.

CA: Tell us about your partnership with Colliers Appraisal Group.

AN: I have personally known the appraisal group at Colliers for a number of years. One of the most important due diligence items for us at R2Crowd is the valuation of properties. Colliers has done an exceptional job of ensuring that CAP rates, rental rates, expenses and allowances used in valuation are real and have a lot of rigour behind them. Moreover, Colliers is a large global real estate firm and we are pleased to work with them as they have a national research group and multiple offices across Canada.

CA: How did you come up with the idea of R2Crowd?

AN: Two years ago, my colleague Chad Gemmell (Co-Founder & COO) and I were on a flight to Calgary to attend the Calgary Real Estate Forum. We had four hours to ponder our idea and started sketching the future. We were so excited that we couldn’t sleep. So, I guess that’s where this idea was hatched, 36,000 feet above ground. Literally from a big picture perspective.

CA: In a short time, you’ve accomplished a great deal—including a partnership with JLL, becoming an approved participant with Toronto Stock Exchange, and accepted by MARS as an innovation partner. What have these accomplishments meant for your business?

AN: It’s all about credibility and nothing speaks about that better than our track record and our partnerships. JLL is not only one of the largest advisory firms globally but also one of the most well respected and ethical companies. JLL’s management is simply one of the best that I have personally come across having worked for over a decade with some of the very large financial institutions in the past…especially from the view point of recognizing talent, nurturing it and respecting diversity. When we came up with this idea two years ago and proposed it to our management it was an instant hit as it complemented our traditional business quite nicely and we loved working with JLL and our colleagues who are simply the best in the industry. Similarly, we have now formed partnerships on multiple fronts including TSX Private Exchange, MARS, Colliers on the valuation side and many more.

CA: More broadly, how is technology changing the capital stack in the multifamily sector?

AN: First, through disintermediation. It puts more money both in the investors’ pockets and property owners’ at the same time. Second, through efficiencies. Investors can log onto our web portal by going to www.r2crowd.com and after that they are able to do full due diligence at the property level (see drone videos, pictures of the property, complete financial and 3rd party reports, etc.)

CA: Tell us about your team. It appears that you guys have a lot of fun together.

AN: We are very blessed to have an exceptionally talented, smart, dynamic and hard-working team of 11. I am personally also very proud to have a team that is diverse, not only by ethnicity but also by gender and background. My guys are happy to work on the weekend if they have to but I am also happy to let them take the time off when they want to. We work hard, play hard and have lots of fun along the way. Each of us bring a unique and complementary skillset to the team.

CA: When it comes to the availability of capital, what are some areas of concern you see for the multifamily sector over the next few years?

AN: Some of the shadow banks and Alt lenders in Canada have grown quite significantly over the last decade. Both the Ministry of Finance and provincial and federal governments have been very concerned about this, and rightly so. They have made several changes to the way loans are underwritten by these institutions, for instance. These Alt lenders certainly had brought a lot of froth to the market and it would be interesting to see what additional regulatory changes are brought forward by the government. For example, the formation of a new regulatory regime in Ontario. FSRA and dismantling of FSCO has been recommended to the Minister of Finance by the Review Panel after extensive consultation in the industry.

CA: What shifts are you seeing in the Canadian multifamily landscape?

MB: The market has shifted as renters are looking for higher quality space, and have shown a willingness to spend a higher percentage of disposable income on housing. For this reason, we have seen an increased investment for purpose-built rental, and as well, investment to common areas, mechanical and insuite programs to strengthen product quality within older stock. In many markets the economics have shifted to make purpose-built rentals feasible, making this an attractive alternative to building condos. More and more developers and lenders have been engaging the Colliers Multifamily practice to understand the value of purpose-built rentals. We expect this to be a theme going forward in the Canadian multifamily market.

CA: What trends do you see evolving over next five years in the multifamily space?

AN: Based on what Matthew Bruchkowsky and his research team is telling us, it would appear that rents are continuing to go up, especially in the purpose-built rental market. CAP rates will continue to see compression until the five year GOC’s reverses the trend. Certain markets, like Alberta, face uncertainty, but the Toronto market continues to perform exceptionally well. Beyond that, as the momentum in the  crowd funding space continues to build over the coming few years, we certainly see  the multifamily asset class as a strong investment vehicle for a lot of investors to park their savings in.

CA: Any final words?

AN: I would finish off with the following two quotes.

  1. “The impact of technology is perhaps a bit overstated in the short term but is definitely understated in the long run.”
  2. “It’s not a sprint but a marathon….change is happening.”

About Matthew Bruchkowsky

Matthew Bruchkowsky is Senior Director at Colliers International within the Valuation and Advisory Group, and the National Lead of the Multifamily Valuations Group. Matthew has valued over $20 billion in multifamily assets and has recently focused his attention on tracking trends in the purpose-built rental world. Matthew is an Accredited Appraiser, Appraisal Institute of Canada (AACI) and a Professional Land Economist (PLE) of Ontario Land Economists.

About Amar Nijjar

Amar Nijjar is the founder of Real Crowd Capital. He is responsible for strategic direction, business development, operations, and sits on R2CROWD’s Board of Directors and Investment Committee. Amar has funded over $5 billion and underwritten over $20 billion of real estate during his career. He is also an Executive Vice President at JLL (formerly Jones Lang LaSalle), where he leads the Debt Capital Markets group. Amar has an undergraduate degree in Chemical Engineering and holds an MBA from York University’s Schulich School of Business.

Erin Ruddy is the editor of Canadian Apartment Magazine.

Putting the ‘gold’ in golden years: Maxime Camerlain, Chartwell

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In the not too distant past, aging Canadians faced a grim decision over where to live out their so-called ‘golden years.’ They could lean on younger family members for support, thus allowing them to remain independent for as long as possible in the comfort of a familiar space, or they could settle into a nursing home, where reliable paid help was always on hand but the ambiance was more akin to a Long Term Care home.

In 2016 the options are far less stark. Baby boomers today—a group known to be collectively healthier and more active than past generations—are choosing to live out their complete lives on their own terms. Looking for a quaint country club vibe? Not a problem. Prefer a cool, urban setting close to all the amenities of downtown? Nowadays you’re apt to find that too. And regardless of the location, you can rest assured knowing you’ll be surrounded by a supportive, engaging community with programs and services structured to meet your every need, all within the luscious confines of property akin to an upscale holiday resort.

Sound too good to be true? Not according to Maxime Camerlain, Chartwell’s VP of Marketing. “We consider to have a dozen larger competitors in various markets but there is actually quite a larger number of smaller operators – Chartwell being the largest owner and operator in the country”, he said.

“I learned a long time ago that if you didn’t build it for them, the baby boomers would just build it themselves,” he quips. “As an industry, we’ve been around for about 25 -30  years, but in the last few years things have really begun to change. We’ve discovered that these baby boomers—many of whom took care of their own aging parents—have a clearer set of expectations of what retirement is going to be for them. And they don’t all want the same things. We have to give them more variety in order to appease the demands.”

Camerlain points to the Canadian landscape today and notes that retirement communities offer the most complete buildings of any other asset class in real estate. “We put everything in there,” he says. ”Pools, gyms, hair salons, lounges. So now we are at that point where even though amenities are still important—what is becoming even more important is the location of the building. When you think about it, that’s the basis for everything in real estate. Location, location, location.”

The old perception of a retirement home as somewhere off in the secluded countryside next to a quiet lake, is changing. The reason, says Camerlain, is that many aging Canadians don’t want that element of seclusion. “Most have spent their entire lives in an urban or sub-urban settings surrounded by restaurants and theatres,” he says. “Why would they want to suddenly give that up and head for the hills?”

Bustling neighbourhoods where still-active residents can freely roam are the hot commodity of the day. So much so that if Chartwell had its pick of development sites anywhere in Canada, nine times out of ten it would be in an amenities-rich neighbourhood. The phrase Camerlain uses for this is “externalizing the experience.” As an example, he points to Chartwell’s newest project in downtown Toronto, a 12-storey, 332-suite residence called The Sumach by Chartwell. A new partnership between Chartwell, The Daniels Corporation, Welltower and the building will provide retired occupants with a maintenance-free adult lifestyle set among Regent Park’s diverse range of dining options, arts and entertainment venues, and health and fitness centres. And though each suite will offer generous, private living spaces equipped with full kitchens, the residence will also include 82 underground parking spaces, 100 bike racks, a pet spa, close to 5,500 square feet of retail spaces, an outdoor terrace and a BBQ area for entertaining.

“At the Sumach, we are putting our residents in a property where they will feel safe and secure surrounded by people just like them, but with access to a great neighbourhood,” says Camerlain. “In that sense the neighbourhood itself becomes the ultimate amenity.”

Sharing space

Camerlain, who got his start in real estate in the student housing sector, draws the analogy of the student residence, in which a group of similar-aged individuals are all living together under a single roof. Keg parties and all-night study sessions aside, there are many similarities.

“The whole experience of living with people your own age has a lot of value,” he points out. “It brings a feeling of safety and security. There are common interests, common needs, but that said, not everyone is going to want the same things. One might prefer to stay on the property, another to take in the surroundings of the neighbourhood. But we know that our properties that often have the most success are the ones in an area buzzing with activity.  The biggest misconception about our industry that it’s boring and nothing happens. Actually it’s hard to keep up.”

Another misconception, Camerlain points out, is that retirement residences feel like hotels—clean and sterile, lacking in personality. “We strive for that blend of resort and home,” he says. “We found that you don’t want to fall into the trap of making a property seem too much like a hotel, because nobody wants to live in a hotel every day of the year. We also strive to give residents variety. For example, we are starting to build two or three different dining rooms with different menu options so that residents aren’t always eating at the same table. These are the little things that elevate the experience, yet still provide that feeling of home.”

Variety: the spice of life

In its thirteen year history, Chartwell has built, expanded and acquired properties across four provinces—Quebec, Alberta, Ontario, and B.C.—and has a portfolio of 186 retirement residences with eight more in development. With such a vast portfolio and a national brand to uphold, you’d think the design and service offerings within each building would be relatively consistent. But not so, says Camerlain.

“This company was built by the combination of four portfolios,” he explains. “So right from the beginning we started off with a very diverse offering of homes. Very small for us would be 40 to 50 suites per building. Typically these smaller properties are exclusively independent with some support. Now we have a number of larger buildings, as well, but no two are exactly alike. Each building has its own atmosphere, history and décor. And they evolve. Maybe twenty years ago, a building was fully independent, but the clientele has since needed more care. So now that building has become more care-driven.”

Camerlain says that despite the variation, overall Chartwell is moving in the direction of buildings with a wider mix of units. “Back in the day most of our homes had the same suites—small with no kitchen, or maybe a kitchenette. Now we’re finding people want more choice. If they want to be able to cook a meal they can.”

Aside from suite-style, the levels of care offered to residents varies from property to property as well. From independent living with minimal support to assisted living with customized services, Chartwell offers the gamut, and even has “complete campuses of care” where every option is available under one roof. And for those residents suffering from memory loss, designated wings or floors called “Memory Living” exist.

“Residents with dementia and Alzheimer’s require a different level of care,” says Camerlain. “Often times these people are quite physically fit. There are programs specifically for them, and support for their families. They require a safe, secure area and even a separate outdoor space.”

Staff and residents

Unlike your average apartment building, a retirement residence requires a huge staff with a special blend of skills to manage daily, on-site operations. “It’s a very diverse mix of people. You have a general manager, you have a food services manager, you have a care and wellness manager, you have a lifestyle and activities manager, and so on, much like a resort,” Camerlain says. “Along with the unique skillsets that go with each position, you also need people management, business acumen, and a general appreciation of what it takes to deal with seniors and their families. You have to have that natural empathy—respect for the evolution of life. You have to like this work, and if you do, you are never going to want to do anything else.”

And while it takes a great mix of staff to run a retirement residence, it also takes a mix of residents to fill one.  But Camerlain says you don’t necessarily have to be wealthy to find your perfect housing solution.  “People often get intimidated by the monthly cost. But you have to keep in mind that, typically it includes things like utilities, meals and housekeeping,” he says. “There’s an exercise to be done that involves calculating your living expenses right now, even if your mortgage is paid out. The cost becomes less daunting when you factor in these things. Still, if you want to live in the top of the top, then yes, there is going to be a higher price tag associated with those offerings. But I would tell you that generally speaking, as a business, the question of how we are going to build good, affordable seniors housing for the future is one we are all asking.”

Economy of scale

Finding a model that addresses the affordability issue is something Quebec has been successful at, and Ontario is watching its neighbour closely. “In Quebec, the issue of affordability was addressed many years ago,” Camerlain points out. “Real estate developers discovered that there was a certain limit of rent that could be charged, and therefore the only way to achieve profit was through volume. Today you’ll find that the average retirement home in Quebec has about 325 to 350 units, whereas the traditional home in Ontario has about 125 to 150.”

What this means, of course, is that the larger the building, the lower the cost per unit. According to recent CMHC statistics, renting a unit in a Quebec home will cost the resident about $1,626 per month. In Ontario, the average rate per month is $3,499. The different is that, in Ontario that price will include things like meals and housekeeping.

“The Sumach in Regent Park was inspired by the Quebec model in terms of volume, but takes the best of the Ontario system too,” Camerlain says. “At 332 units, the rate range is a lot more affordable, yet it has all the amenities with meals being à –la-carte. It is a different style home though, because it’s being marketed as a new rental design concept. It is our jumping board into a segment of the business we think has a lot of potential.”

That segment is the highly vocal, physically fit 65- to 79-year-olds who don’t want to be confined to a traditional seniors residence. “Perhaps they have a winter spot in Florida and they just want a nice, maintenance-free dwelling for when they come home, one that’s right downtown and accessible,” Camerlain says. “Well the Sumach is just such a place. The only thing it doesn’t provide is care. In that respect, it is much like an independant apartment but with all the amenities of a resort.”

Camerlain concludes that, despite the variation—the ages and stages, the personalities and levels of care his industry is striving to accommodate—the one thing that everyone seems to want at the end of the day is a nice place to congregate and share a drink. “Don’t underestimate the power of a good Happy Hour,” he says.

Today’s top amenities:

  • Good, age-appropriate programming (i.e. aqua fitness, yoga, etc.)
  • Well-equipped fitness centres
  • Pet-friendly features, like a pet spa or a dog-walking service
  • Kids zones for visiting grandchildren (i.e. a games room)
  • A place to have a drink with friends for ‘Happy Hour’

What the future holds

A few industry experts share their visions for the future of retirement homes in North America:

  • Destination retirement communities, with people from across the country gravitating to these purpose-built, expansive communities where residents can age in place
  • More choices, including condominiums, townhouses, and bungalows, arranged in small and large settings to cater to increasing consumer expectation and market demands
  • Larger suites in retirement residences
  • More varied and lavish amenities and services (Example: home theatre in every suite)
  • Greater range of innovative programming, including opportunities for continuing education
  • Higher levels of health-care services supporting aging in place

Erin Ruddy is the editor of Canadian Apartment Magazine.

The changing world of property management: Andrew Lowe, Oxford Properties

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Andrew Lowe is a seasoned veteran of the property management business. Ask him a question on virtually any industry topic and you’re sure to get an insightful, educated response. As the Director of Residential Real Estate Management at Oxford Properties Group, he regularly shifts his time between the board room and the buildings, discussing big picture matters and delivering hands-on management to the 225 staff he oversees at Oxford’s 18 rental communities across Canada.

“I really enjoy that aspect of my work,” he says of his fluctuating duties. “I love putting on the suit and tie and talking with the executives about our business and our financials, then I love taking the tie off and being at the site-level with our cleaners and maintenance staff, our property managers and our leasing staff. I love working with them, helping them develop their skills and teaching them to take pride in what they do.”

Lowe’s career began in the hospitality sector after he completed Hospitality Management at the University of Guelph and quickly rose through the ranks of several hotel establishments. By the ripe age of 24, he’d already solidified himself as a capable manager in his own right—an experience that came as a badge of honour and a source of difficulty. “Being promoted to manager so young was a feather in my cap, but it wasn’t always easy,” he reflects. “People don’t see you as a leader until you’ve proven yourself. Then as you gain that experience, you gradually earn their trust and respect.”

From St. Johns, Newfoundland, to Sault Saint Marie and Kingston, Ontario, Lowe eventually found himself in Toronto. “That was around the time the RTA legislation had changed,” he recalls. “Suddenly you could take an apartment building, invest significantly in it, and let the market drive the rent levels. That meant tenants had higher expectations, and the needs of the business and staffing requirements had to follow suit. Customer service was now an important part of tenant retention, which is why Minto recruited me from the hotel business.”

Lowe was hired on as Minto’s Director of Customer Experience, a job that entailed developing new policies and procedures to create a culture of customer service. It was a brand new era in apartment management: tenants once paying $700 a month were now paying double, and the service they received needed to be in line with that cost hike. “So there was a big shift to a more service-oriented management style,” he says, “and that’s something we’re continuing to see today.”

From Minto to Vertica and then on to Transglobe, Lowe eventually joined Oxford in 2010. At that time, the company had $500 billion in asset value – today it has $1.2 billion. “We want to continue to grow and get closer to two million,” he says. “We have some exciting development opportunities currently underway, both in Toronto and out west, though it’s still early in the process.”

Creating value for stakeholders

New developments aside, Lowe believes that creating value for Oxford’s stakeholders is not only a constant pursuit, but a pursuit he holds dear above all others. “By stakeholders, I mean everyone—employees, customers, owners, business partners—it’s everybody involved in our properties,” he says. “We are trying to create value in what is still seen as a challenging industry. There is this perception of a renter that perhaps they are in a transitional stage of life, still developing in their careers and not able to be home-owners yet. For us to create that value proposition for them is what I love most.”

Known as a hands-on manager who supports training and career-pathing, Lowe says he takes pride in continuously challenging both his people and the status quo. “What we do today doesn’t always mean it’s going to work tomorrow. So we are always evolving, always looking to the future. And I think at times we can focus too much on the real estate aspect,” he says. “We can easily find ourselves looking for what’s wrong. I think what’s hard for leaders is to find what’s right, to look for things we can celebrate. I like to think I can add that value back into our operation, find those reasons to say thank you, to recognize and give praise when employees deserve it.”

Lowe points out that when it comes to apartments, there seems to be a pervasive lack of pride that exists for both the tenants who live there and the staff who run them. It’s a perception he hopes will change. “The general feeling is that if you work in the apartment industry, you’ve landed here by happenstance,” he says, noting that this is oftentimes true. “But when I look at our cleaners and our maintenance staff, I know their roles are critical to our operation. I know that a lot of them might be new to the country, or their education might be limited, but I also know that they made a choice. That choice was to work—and they work in an industry that is quite thankless. So I value that choice every day, the fact that they are coming in and mopping that lobby or turning that apartment around. They are working hard for us and they should be celebrated for that.”

Oxford’s aggressive back-to-back leasing policy

Apartment work can be gruelling, and indeed “thankless” at times, as Lowe points out. Then, add to that the demands of Oxford’s back-to-back leasing strategy and for many, the real pressure is on.

“If you ask me what business we are in, I could say real estate or customer service or rental apartments – but I like to simplify it even further. I like to say we manage vacancy,” Lowe says. “Every day a unit sits empty is money lost. We can never make it up. So in that respect, we all report up to vacancy. We’ll have great assets, well-maintained units, good landscaping, and they all report to my “vacancy boss.” We’ll have knowledgeable, well-trained, service-oriented staff all reporting up to vacancy. Vacancy is the CEO, because everything we do supports reducing that risk.”

To support the rigours of minimizing its vacancy, Lowe says one of Oxford’s main pillars of business is hiring and developing the best people from the start. “We want our employees to live and breathe our culture and our brand,” he says. “We want to empower them to make decisions on behalf of the customer and on behalf of the business without always having to refer to someone above. We’re guilty as an industry of saying, “Here is the key to the car,” but then we don’t teach that person to drive.”

To prepare new employees, each individual must embark on a two-week training plan. This enables them to hit the floor running, Lowe says, noting that it takes a lot longer to embed that all-important company culture. “I always say it takes up to a year for an employee to become Oxfordized. What that means is, although they may get the gist of their day jobs and their tasks fairly quickly, certainly within a month or so, it takes a lot longer to be able to deliver customer service and excellence, to move from good to great and to feel empowered.”

And just as staff training is important, customer service is another critical area of focus for Oxford. “What helps to set us apart from our competitors is the world class experience we strive to deliver. Our teams genuinely care and they want to solve the problems and right the wrongs. If they don’t care, if they don’t genuinely want to solve, then maybe Oxford isn’t the right place for them – and that’s okay, because who wants an unhappy person in their home?”

Industry risks and challenges

Whether it’s new purpose built apartment developments with all their wealth of amenities and finishes, or the 40-year-old apartment towers that make up the majority of Canada’s rental stock, tenants today have more choice when it comes to choosing their living space, and technology is the driver of that choice.

“Airbnb is going to impact our business just as Uber impacted the Taxi business,” warns Lowe. “My opinion is that, as an industry, we better start keeping an eye on it. We need to figure out how we can adapt and remain competitive. We want to remain the best option out there for our customers for years to come and not have to worry about individuals re-renting their apartments, or trying to create their own business out of it.”

From the ease with which people can privately rent out their own accommodations, to the immediate communication channels offered through social media, Lowe says that advances in digital technology have both good and bad implications for business. “I think the biggest risk social media brings with it is how it can implicate brands,” he says. “Nowadays, individuals can post emotional responses to things without any restrictions whatsoever. People can film encounters they’ve had with staff members, and those videos can go viral in seconds. In the end, how all this will shape the future of our industry is still debatable, but I’m of the mind that buying decision still happens on location. It comes down to three things: price, quality and the individual they are speaking to in that moment. Nevertheless, the risk social media can bring to brand reputation is real.”

Despite technology and the way it is affecting the industry, for Lowe, the number one challenge remains talent acquisition. “We don’t want just warm bodies filing a role,” he says. “When we are looking for people, we do our due-diligence and try to acquire service-minded individuals who are good candidates for a specific job. When hiring, we use a tool called “predictive indexing” and we ask all potential employees to fill it out. The employment outcome isn’t solely based on the results of the test, but it helps us gauge their natural tendencies and whether or not they are well-suited for that specific role. If also helps us from a management perspective because it gives us insight into what type of recognition style, or leadership style, would work best for that individual.”

Juggling expectations: the GTA gap

Lowe notes another interesting management challenge that seems to be impacting his business today, and that is the growing gap between expectations in the GTA versus other jurisdictions. As he points out, circumstances in Toronto have put performance pressures on high.

“Our hustle and bustle, our continuing growth, is changing the way we operate and live our lives. The city is seeing steady migration, and this creates traffic and transportation challenges. It’s forcing us to adapt. Rush hour doesn’t exist anymore. Rush hour has become a full day occurrence. The speed in which we expect things, whether it’s a response to an email or a solution to a problem, is immediate. That is not necessarily the case outside the GTA. So balancing our expectations, our hyper competitiveness and our methods, can be a struggle. We need to find a way to navigate this discrepancy effectively, to remain competitive and consistent throughout the company.”

And that instant satisfaction is not just something the business craves, but it’s what the tenants crave too. Lowe is optimistic that with his high calibre team, Oxford’s great training plan, and his own positive, people-oriented management approach, that need for instant satisfaction will translate into long term tenancy, which is, of course, the ultimate goal.

Erin Ruddy is the editor of Canadian Apartment Magazine.