First Quarter 2019 / Multi-Residential Investment Review Quick Stats Greater Toronto Area

During the first quarter of 2019, the The positive outlook for ongoing sound $236 million Greater Toronto Area (GTA) rental market fundamentals, along with the Total GTA multi-residential transaction housing market once again posted loosening of rent control for newly volume in the first quarter rising rental rates amid tight supply occupied units that took effect in late – despite above-average deliveries of 2018, have continued to encourage new $266,763 new rental and condo units. However, development proposals for purpose-built Average price per unit for this influx impacted rental-rate growth rental buildings. First-quarter 2019 was buildings of 20 units or more only slightly, as average rates for condos the first full quarter that followed the - up 19.5% year-over-year leased during the first quarter were still Ontario government’s announcement up 7.7% ($170) year-over-year to $2,376 of the change in rent control, and a total $2,376 per month, according to Urbanation. of 2,203 new rental units were proposed during the quarter, representing a 12% Average monthly rental rate for The reason that the uptick in housing increase compared with the first quarter condominium apartments in the GTA in supply had minimal impact on rental- the first quarter of 2019 of 2018. rate growth was that demand continued to rise as well. The GTA’s population It remains to be seen how much higher 3.7% grew by a record of more than 150,000 rents can go in the core of the city, what Average capitalization rate across residents during 2018, putting additional the effect of new supply deliveries will all GTA multi-residential product types pressure on demand for housing. The be, and how these forces will affect the high cost of renting in downtown balance of demand between the urban Toronto is pushing demand outwards, and suburban rental markets. 40 causing rental rates outside the core Number of investment sales to increase more rapidly than those Nonetheless, all these factors – tight transactions during the first quarter downtown. Year-over-year rental growth supply, growing demand and resulting in the “outer 416” areas of Toronto (6.5%) rental-income increases – continue to and the suburban “905” regions (10.9%), drive record-breaking valuations for outpacing the downtown core (4.5%). existing purpose-built rental buildings.

Partnership. Performance. avisonyoung.ca Multi-Residential Investment Review / First Quarter 2019 Greater Toronto Area First Quarter 2019 / Multi Residential Investement Review Cap Rates

Sales volume for multi-residential assets GTA Multi-Residential Capitalization Rates

in the GTA remains characterized by tight 8% supply rather than lack of investor interest. In the first quarter of 2019, $236 million 7%

in assets changed hands (9% of overall 6% GTA investment volume). This represents Multi-Residential Investment Review / First Quarter 2019 a relatively slow start compared with 5% Average Cap Rate Cap Average 3.7% the record-breaking $2.7 billion in total 4% Investment Volume sales volume during 2018. However, 3% there is no reason to doubt the market’s '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 Q1'19 potential to exceed that result by the end GTA Multi-Residential Investment Volume of 2019, given asset prices that continue $3,000 to outperform the market, safe returns, $2,500 cheap financing and strong market fundamentals. $2,000 $1,500 Among buildings of 20 units or more $1,000 Multi-Residential Investment Review / First Quarter 2019 that sold during the quarter, the average $500 price per unit was $266,763 – up 19.5% Condominium Rental Rates $236 Investment Volume ($ millions) Volume Investment compared with the first quarter of 2018. $0 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 Q1'19 The top transaction was the $30-million sale of 15 Walmer Rd. in Toronto’s Annex GTA Condominium Apartment Rental Rates $2,400 neighbourhood, representing nearly $2,376

$385,000 per unit and a cap rate of 2.2%. $2,350

Starlight Investments, among the sector’s $2,300 most active players in 2018, also made $2,250 the top five with its purchase of a 79- $2,200 unit Mississauga townhouse complex for almost $27 million. $2,150

Average Monthly Rental Rate ($) Rate Rental Monthly Average $2,100 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19

SIGNIFICANT MULTI-RESIDENTIAL SALE TRANSACTIONS - FIRST QUARTER 2019 Property Total Price Price per unit Purchaser Vendor 15 Walmer Road $30,000,000 $384,615 Walmer Bloor Holdings Inc. Rialto Apartments Ltd.

1539-1647 Williamsport Drive & Private individual(s) / Amaranth Resources Ltd. / $26,750,000 $338,608 Starlight Investments 3468-3532 Fieldgate Drive Fleetwood Holdings Ltd.

1056 Queens Avenue $25,500,000 $286,517 Green Eitz (Oakville) Inc. Caretenders Financial Services Inc.

29-31 Upper Canada Drive $23,400,000 $205,263 Westdale Properties Lipman Management Inc.

65 Times Avenue $21,000,000 $328,125 Equiton Partners KingSett Capital

For more information, please contact Avison Young's Multi-Residential Group: David Lieberman†, MBA Jonathan Hittner* Principal Vice President avisonyoung.ca 416.673.4013 416.436.4417 [email protected] [email protected]

Properties Neil Musselwhite† © 2019 Avison Young Commercial Real Estate (Ontario) Inc., Brokerage Some of the data in this report has been gathered from third party sources and has Senior Associate not been independently verified by Avison Young. Avison Young makes no warranties 289.795.4430 or representations as to the completeness or accuracy thereof. Investment sales data sourced from Avison Young, RealNet Canada Inc., Altus InSite, Sanford Mandel Valuation [email protected] Inc., Urbanation Inc., and TREB. * Broker † Sales Representative