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Canadian Real Estate Market Outlook

The Year in Review
A look back at the year that was. From business to politics, from pop culture to athletics, 2008 was historic on many levels. The world witnessed human achievement at its best…and its worst and through it all, people sought to make sense of the world around them.

Stefan Ciotlos, President, CB Richard Ellis Limited

The Outlook for the Economy for 2009 and Beyond
An insightful examination of key trends in the North American economy with a specific view towards their future direction over the short and medium terms, including the outlook for the Canadian and U.S. dollars, interest rates, inflation, and GDP growth.  How will the U.S. economy perform in 2009?  When will it start to recover?  What will be the implications and outlook for Canada?  How much deeper will be recession likely to be in Canada or will the recovery begin by the third quarter as some are projecting?

Dr. Warren Jestin, Senior Vice President & Chief Economist, Scotiabank

The Canadian and U.S. Political Outlook: Now What?
A discussion on how the national political landscapes are evolving in both Canada and the United States. What can we expect from the first three months of the Obama administration? What does the future hold for the Conservatives and Liberals in Canada? How are the policies of these governments affecting the economy?

Andrew Coyne, National Editor, Maclean’s

The Outlook for Commercial Real Estate and Deal Flow Across Canada
An overview of key commercial real estate leasing and investment trends across Canada in the office, industrial, retail, and multi-residential sectors. How did they perform in 2008?  What is the outlook for 2009?  What will be the most significant implications of the credit market conditions on cap rates and transaction activity?  How will the economy affect leasing markets?

John O’Bryan, Vice Chairman, CB Richard Ellis Limited
 

9:30 a.m.

STRATEGIC LESSONS FROM THE RECENT PAST: WHAT CAN YOU LEARN FROM THE RECESSION AND REAL ESTATE MARKET TRENDS OF THE EARLY 1990S?

The last major and prolonged recession in Canada started in 1989 and lasted several years into the 1990s. Asset values plunged significantly across all real estate sectors. Leasing activity evaporated. Lenders became reluctant owners of their portfolios. Workouts and distressed real estate became everyday terminology in the market. Some former owners resurrected themselves as property managers on behalf of the lenders.

This session will feature a very insightful discussion with some senior executives who led their respective organizations through these turbulent times. The primary goal of this panel will be reflect upon the key trends from almost two decades ago and assess what were the most significant strategic lessons that were learned from those experiences. How can these lessons be applied in the current prevailing market environment? Are we encountering headed in the same direction as the early 1990s? Or what are the most important differences?

Moderator:
Brydon Cruise, President & Managing Partner,
  Brookfield Financial Real Estate Group

Panel – The following were their roles in the late 1980s and early 1990s:
Gord Arnell, Chairman, Brookfield Properties Corporation
Lorne Braithwaite, President & CEO, Cambridge Leaseholds
Jon Love, President & CEO, Oxford Properties Group
Jim Wright, Managing Director & Head of Corporate Real Estate Group,
   Citibank Canada
 

LENDERS’ ROUNDTABLE ON THE DIRECTION OF THE DEBT MARKET FOR 2009 AND BEYOND:  WHO IS LEFT STANDING?

A wide-ranging panel discussion that will examine how underwriting practices and activities are changing and what are the major sources of debt capital in the Canadian market at this time. This session will focus specifically on what borrowers can expect in 2009 going forward. Some of the questions that will be examined:

• How much money is available for commercial mortgages in 2009 compared to prior years and from what major sources?

• Who will be the major providers of debt in Canada and what will they be looking for?

• How will the strategies of pension funds, insurance companies and other institutions vary from those of private sources of debt capital?

• How do foreign lenders view the Canadian market?

• How are lenders assessing a deal and price it in today’s market?  How is risk now being priced now?  What is happening with widening loan spreads, reduced amortization periods, lower loan to values, and recourse? How are lenders assessing a deal and pricing it in today’s market?

• What property classes are lenders avoiding, reducing exposure to, or increasing pricing for? Are smaller communities and other geographic areas a tougher sell? Will lenders be looking for more syndication?

• What has happened to “relationship” borrowing through the second half of 2008 and early 2009?

• Will the CMBS market ever return? What is likely to happen to the CMBS loans that are maturing in 2009 and beyond?

Moderator:
Louis Forbes, CFO, Primaris Retail REIT

Panel:
Ross Brennan, Executive Vice President, Canada, Otéra Capital
David Cole, Managing Director, RBC Capital Markets
Andrew Huntley, Vice President, Mortgage Investments, AIMCo
Dietmar Klein, Managing Director & Head of Real Estate Lending
   North America, DekaBank
Moray Tawse, Vice President, Mortgage Investments, First National Financial LP
 

Session A1
THE AFTERMATH OF THE CMBS MARKET: WHAT LIES AHEAD FOR LENDERS, BORROWERS AND INVESTORS?

This session will assess the current state of the frozen CMBS market and the vapourization of this $4B annual source of commercial mortgage financing for users and securitized fixed income products for investors. The session will open with a brief discussion on:

• How did the greater structured finance market lead to the collapse of the CMBS market; how has the CMBS market irreversibly linked the commercial mortgage market to the volatility inherent in the public capital markets; and what have been the benefits and consequences of that linkage?

• What are the major differences between CDO (managed pools) and ABCP vs. CMBS (static pools)? Should CMBS have been tarred with the same brush?

• How are banks and other financial institutions responding to the debt financing needs of their clients with alternatives sources of capital to CMBS?

• What is the appetite of investors in fixed income and securitized products in the secondary market? Will buyers of CMBS product re-materialized? Is it likely to rebound to any degree in 2009?

• What is likely to happen to the CMBS loans that are maturing in 2009 and beyond?

Moderator:
Robert Shiller, Vice President & Director, Commercial Brokerage,
   TD Securities Realty Group

Panel:
Maria Berlettano, Vice President & Director, J. Zechner & Associates Inc.
Charles Gamm, Vice President & Senior Credit Officer – Canadian Structured
   Finance, Moody’s Investors Service
Darrell Wheeler, Managing Director, Global Head of CMBS Strategy &   
   Analysis, Citigroup Global Markets Inc.
 

Session A2
IS DEBT THE NEW EQUITY?  ARE EQUITY FUNDS FILLING A VOID IN THE DEBT MARKET?

With the financial markets being significantly shaken, many private equity investors are looking for a place for their money and they’ve identified opportunities within the real estate debt market.  Not only have a number of real estate funds been raised to buy existing debt (both senior and subordinate), but several funds have decided to originate debt as well – morphing into lenders.  This session will examine this trend as debt as emerged as the new, safer environment to equity investment.  Among the questions that will be examined: 

• Who is playing in this new asset class?

• Where are the best opportunities for origination?  How will they last?

• What are the return expectations and hold periods for debt buyers across various debt tranches?

• What is the outlook for debt markets over the next twenty-four months? 

• Will real estate debt substitute for direct ownership and investment in assets?

• Is there cash on the sidelines? Whose?  When will it wade back into the market? What types of assets will it seek out?

• Are global equity funds coming into Canada as a safe haven? Are Sovereign Wealth Funds moving into Canada?

Moderator:
Doug Podd, Partner, Brookfield Financial

Panel:
Peter Aghar, President & Chief Investment Officer, KingSett Capital
William Jandrisits, Director, Finance, Starwood Capital Group
Kevin Weir, Portfolio Manager, Mortgages, bcIMC
Blair Welch, Partner & Managing Director, Slate Properties Inc.

Session A3
THE CFO PERSPECTIVE:  HOW SIGNIFICANT IS THE DEBT SUPPLY-DEMAND MISMATCH?  WHAT IS THE IMPACT ON DEALS, DEBT REFINANCINGS AND REAL ESTATE VALUES? 

This panel will look at the trends and issues related to the debt markets from the borrowers’ and investors’ perspectives.

• How much debt are they carrying, when does it roll, how will they refinance?

• What about new acquisitions and development? How are they financing it?

• What are the most significant weaknesses that they see in the market?

• What has the impact be on equity markets and cap rates??

• Where debt is available, how are underwriting standards being rewritten, and how has the debt market reduced its risk?

• Is there still a “wall of capital” waiting to get into real estate, or was it merely a “wall of available credit”, since evaporated?

• To what extent have cap rates moved up? Who has the lowest cost of capital now? Can public real estate entities compete?

• What are the opportunities in this market? Who will be the winners and who will be the losers?

Moderator:
Stephen Sender, Managing Director, Industry Head, Real Estate,
   Scotia Capital Markets Inc.

Panel:
Mario Barrafato, Senior Vice President & CFO, Dundee REIT
Rags Davloor, Senior Vice President & CFO, RioCan REIT
Tamara Lawson, CFO & Secretary, InnVest REIT
Karen Weaver, Executive Vice President & CFO, First Capital Realty Inc.

 

INFORMAL LUNCHEON

CONCURRENT SESSIONS (Select B1, B2 or B3)

Session B1
MEZZANINE AND HIGH RATIO FINANCING:  TO WHAT EXTENT IS THIS MARKET NOW GROWING?

With a significant change to Loan-to-Value ratios being offered by primary commercial lenders, how is the gap of 40% of more being filled?  Has this trend created an increasing opportunity and activity for mezzanine financing? What has happened to availability of this product type and other non-traditional sources of real estate capital in the current market? Who is in the market? What are the vehicles for these loans? Among the other questions that will be addressed:

• How is this type of financing being priced in 2009?

• Are any the previous major sources of mezzanine financing still active? 

• What kind of appetite do they have for investments for the next 24 months? What are their underwriting criteria and lending strategies at this time with respect to the Canadian market? What will be their priorities in 2009 and 2010 by product type and market across the country?

• What are the exit strategies for mezz debt? 

Moderator:
Rob Goodall, President, Canadian Mortgage Capital Corporation

Panel:
Scott Coates, Managing Director, Mortgage Investments, KingSett Capital
Norman Kahn, Partner, Aird & Berlis LLP
Jeff Lastiwka, President & CEO, JayCap Financial Ltd.
Derek Wasson, Senior Vice President, Quest Capital Corp.

 

Session B2
MAJOR DOWNDRAFT IN THE REAL ESTATE CAPITAL MARKETS:  HOW WILL CANADIAN REITS AND REOCs RECOVER?
Many will agree that 2008 was a very difficult year for most Canadian listed real estate entities.  This session will open with a brief review of the factors affecting the performance of these equities.  How can these companies manage to stay strong in the current market, and resume growth?  At apparent below NAV values, is there a continuing threat of being taken private by a pension fund or foreign opportunity buyer? How can Canadian REITs and REOCs get more traction, or is this the time to do it?

Moderator:
Michael Smith, Managing Director, Real Estate, Macquarie Research Equities,
   Macquarie Securities Group

Panel:
Frédéric Blondeau, Director & Portfolio Manager, Presima Inc.
Charles Dillingham, Vice President & Portfolio Manager,
   Morguard Financial Corporation
Kevin Hall, Senior Portfolio Manager, Canadian Equity Investments,
   Guardian Capital LP
Dennis Mitchell, Portfolio Manager, Sentry Select Capital Corporation


Session B3
THE VIEW OF THE INTERMEDIARIES ON SOURCES OF CAPITAL AND CREDIT IN TODAY’S MARKET

A wide ranging panel discussion with commercial real estate intermediaries and mortgage brokers will examine the trends, issues and challenges of sourcing credit and capital in the tightening Canadian market.  They will provide insights and perspectives on what borrowers need to be aware of in the current lending environment.

Some of the other questions that they will discuss include:

• How has the debt market evolved in the past 12 months from the broker’s perspective?  What has happened with spreads? 

• What sources of capital have disappeared? Who, if anyone, is filling the void?

• How important are lender/borrower relationships especially in the current situation?

• How do the strategies of pension funds, insurance companies and other institutions vary with private sources of debt capital?  How have their underwriting standards changed?  Has their lending bias increased towards particular property classes and geographic locations?

• What advice can brokers offer borrowers on mezzanine financing and other non-traditional forms of financing?

Moderator:
Terry Whalen, Chief Investment Officer, Chartwell Seniors Housing REIT

Panel:
Chris Bell, Managing Director, Real Estate Investment Banking,
   CIBC World Markets
Trevor Blakely, Managing Director, BMO Capital Markets Real Estate Group
Randy Buckley, Vice President & Director, Murray & Company
Steve McEwen, Partner, Montrose Mortgage Corporation

 

A discussion with senior real estate and institutional executives on their perspective of Canadian real estate fundamentals, trends, opportunities and strategies for 2009; a comparative of the Canadian market with U.S. and global conditions; their insights the extent of the liquidity problem and its continuation over the next twelve months; and their strategies going forward. 

• What will be the overall impact of illiquid credit markets on cap rates and real estate values across Canada for the next twelve months? 

• What is the current status of capital, financial and real estate markets outside of Canada? 

• What opportunities have emerged in the market due to the current lending restrictions?  Are real estate fundamentals in Canada weakening? Where? How bad is it?

• What kinds of transactions will offer the best possible returns in 2009? Are there any increases anticipated in buying opportunities? 

• Are there any possible improvements expected in the credit and capital markets in the over the next twelve months? What will be the key determinants of such a change?

• What, if anything, will be done differently now as a result of these factors?

Moderators:
Brydon Cruise, President & Managing Partner,
   Brookfield Financial Real Estate Group
Louis Forbes, CFO, Primaris Retail REIT

Panel:
Michael Cooper, Vice Chairman & CEO, Dundee REIT
Marc Davidson, Managing Director & Portfolio Manager, AEW Partners Funds
Blake Hutcheson, Partner & Head, Global Real Estate, Mount Kellett Capital
William Maher, International Director and Head, North American Investment
   Strategy, LaSalle Investment Management
Paul Zemla, Chief Investment Officer, Bentall LP

 

© 2009  York Communications / MMPI , all rights reserved.