CPM Nov 2018

Apartment CANADIAN

VOLUME 19 / NUMBER 1 / JANUARY/FEBRUARY 2022

THE PATH TO A RESILIENT FUTURE LET THE KEN SOBLE TOWER SHOW YOU THE WAY

plus

PA R T O F T H E

MARKET OVERVIEW

PM#40063056

HOUSING INSTABILITY

RISK MANAGEMENT

P A R T

O F

T H E

Yes, we can!

Since MetCap Living established itself as a leader in property management, we have routinely been asked one, simple question; “Can you help us run our property more effectively?” And, for well over thirty years, the answer has remained — Yes, we can! Our managers are seasoned professionals, experienced in every detail of the day to day operations and maintenance of multi-unit rental properties. From marketing, leasing, finance and accounting, to actual physical, on-site management, we oversee everything.

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EDITOR’S NOTE>>

Apartment CANADIAN

CLIMATE RESILIENCE

/cammediaedge /cdnapartmentmag /mediaedgecam

It’s 2022—and yes, we’re still talking about COVID-19. Omicron has shifted the conversation in a somewhat more positive direction given the variant has been deemed less deadly than earlier strains, but the fact remains we have crossed the New Year’s threshold again under the same shadow of uncertainty.

The good news for the rental housing sector is that the market continues to be performing well. Vacancy rates have returned to more normal pre-pandemic levels and downtown properties have regained some much-needed popularity.

This year, “climate resilience” is a term you’ll be hearing a lot of. According to Wikipedia, it is generally defined as the adaptive capacity for a socio-ecological system (i.e. building) to: (1) absorb stresses and maintain function in the face of external stresses imposed upon it by climate change, and (2) adapt, reorganize, and evolve into more desirable configurations that improve the sustainability of the system, leaving it better prepared for future climate change impacts.

This being our annual retrofit issue, we hope you find the articles on this and other related topics to be both helpful and informative. Climate change has taken a temporary backseat to COVID-19, but the environment continues to be an urgent priority. Collectively, multi-residential building owners need to face certain realities about their aging assets if they wish to remain competitive and successful in the long-term.

Please follow us on social media for daily news and updates and, as always, be sure to visit www.reminetwork.com for timely features relevant to your business.

Sincerely,

Annette Carlucci

Graphic Designer

Thuy Huynh

Production Manager

Rachel Selbie

Contributing Writers Andy Schwartze, Sarah Thompson National Sales

Bryan Chong Melissa Valentini

Digital Media Director

Steven Chester

Circulation

Rob Osiecki For sales information call (416) 512-8186

Canadian Apartment Magazine is published six times a year by:

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rent trends

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Art Director

Authors: Canadian Apartment Magazine accepts unsolicited query letters and article suggestions.

Erin Ruddy @cdnapartmentmag

Optimizing the performance of existing building systems. Can include equipment maintenance, adjusting controls, and minor retrofits like upgrading lighting or improving indoor air quality.

Editor

DEEP RETROFITS

Replacing or upgrading major systems and equipment. Can include HVAC changes, window replacements, and other envelope and system upgrades.

RENEWABLE ENERGY

Turning to on-site renewable energy including biomass, wind and micro-hydro. Solar photovoltaic (PV) electricity generation is most commonly used in existing buildings.

FUEL SWITCHING Switching natural gas and other carbonintensive heating furnaces, boilers and distributed equipment to low carbon sources such as high-efficiency electricitybased systems (i.e. heat pumps.)

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Apartment CANADIAN

VOLUME 19 / NUMBER 1 / JANUARY/FEBRUARY 2022

FEATURES 12 W HAT’S YOUR RISK MANAGEMENT STORY? How to paint a picture of “good risk” to insurers

26 B REAKING THE CYCLE OF HOUSING INSTABILITY Perspectives on rent control, eviction moratoriums and other tenant supports

COLUMNS 8 Transactions Apartment Market Update 10 CMHC Advancing Building Retrofits 30 Newsworthy Industry Hot Topics 32 Insurance What to Expect in 2022

by Andy Schwartze

COVER STORY

4

CANADIAN

VOLUME 19 / NUMBER 1 / JANUARY/FEBRUARY 2022

The Ken Soble Tower in Hamilton, Ontario

THE PATH TO A RESILIENT FUTURE

Editor’s Note

LET THE KEN SOBLE TOWER SHOW YOU THE WAY

34 Smart Ideas plus

PA R T O F T H E

PA R T O F T H E

MARKET OVERVIEW

HOUSING PM#40063056

18 A TOWERING ACHIEVEMENT Ken Soble building in Hamilton becomes world’s largest residential Passive House Retrofit

by Erin Ruddy

ON THE COVER:

Apartment

DEPARTMENTS

INSTABILITY

P A R T

O F

T H E

P A R T

O F

T H E

RISK MANAGEMENT

CAM_Jan/Feb_2022.indd 1

2022-02-03 11:19 AM

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RENTAL DEMAND CONTINUES TO RISE Despite Omicron, the sector is expected to perform well in 2022 The apartment sector performed relatively well during 2021, a trend that is expected to continue in 2022 in Canada’s top markets. In the second half of the year, vacancy stabilized following a modest increase as a result of the pandemic.

The return of post-secondary students to in-person classes bolstered demand for rental accommodation, particularly downtown where vacancy levels had increased more sharply.

Notable Transactions: Address

1.

Greater Vancouver Portfolio

City

# of Units

Sale Price (Millions)

Sale Price/ Unit

Purchaser

Vancouver

614

$292.5

$476,384

Crestpoint/InterRent REIT JV

2.

Weston Common

Toronto

841

$338.9

$401,902

Dream Unlimited

3.

Le Hill Park

Montreal

261

$80.1

$306,897

Minto Apartment REIT

4.

550 Jarvis St, 108 Isabella St

Toronto

262

$92.6

$353,435

Park Property Management

5.

1531, 1535, 1539 Bathurst St, 30 Tichester Rd

Toronto

224

$81.0

$361,607

Hazelview Investments

6.

Tower Hill East

Toronto

141

$110.0

$780,142

CAPREIT

7.

Borges & Reynar Portfolio

Toronto

485

$103.7

$213,720

CAPREIT

8.

eCentral (50% interest)

Toronto

466

$150.8

$647,267

Woodbourne Capital

9.

Island Park Towers

Ottawa

642

$267.0

$415,888

Homestead

Montreal

2,242

$300.0

$133,810

Banvest Inc.

10. Raamco Portfolio

8 | Canadian Apartment | Part of the REMI Network |

TRANSACTIONS >>

“R

enters had migrated to the suburbs during the height of the pandemic,” said Keith Reading, Director of Research at Morguard. “Looking to 2022, rental demand is forecast to strengthen given a solid labour market outlook and the eventual reopening of Canada’s international borders to international migrants and students.”

During the pandemic, landlords with downtown properties were forced to offer incentives to lure prospective renters. However, this trend has slowed significantly as demand continues to strengthen. By the last few weeks of 2021, rents had stabilized overall, with modest growth reported in some cases. Looking ahead, Reading is optimistic that rents will continue to rise given healthier demand fundamentals.

Investment sales activity will remain robust in 2022, as investors continue to target a sector with a healthy outlook.

“Given uncertainty in the office and retail sectors, apartments and industrial have and will remain attractive to investors and the two most popular acquisition targets,” said Reading. “As a result, property values will continue to rise in keeping with the trend of the past couple of years. Coincidentally, cap rates will continue to compress. Transaction volume will continue to range at or near the record high, assuming product availability.”

RENTAL CONSTRUCTION IN THE GTA Despite the challenges posed by the pandemic, rental construction in the GTA surged in 2021, surpassing a 30-year high. Urbanation’s latest rental market report, released in January, reveals that 6,720 purposebuilt rental units started construction in 2021, nearly doubling the fiveyear average of 3,379 starts between 2016 and 2020.

As of year-end 2021, 17,912 rentals were under construction and 93,321 rentals were proposed for development.

“The GTA rental market downturn that occurred during 2020 as a result of the initial effects of COVID-19 quickly reversed in 2021,” said Shaun Hildebrand, President of Urbanation. “Expect rents to continue growing on record high immigration, rising incomes, and low homeownership affordability.”

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

| www.REMInetwork.com | January/February 2022 | 9

Advancing Building Retrofits The Energy Efficient Tower Renewal Implementation Program More than 800,000 apartment suites in Canada are currently in need of retrofits to meet today’s standards for healthy, comfortable, and resilient housing. Yet our retrofit industry remains nascent. What’s getting in the way of progress?

A

ccording to a recent Canada Mortgage and Housing Corporation (CMHC) research project, the most common barriers limiting deep retrofit uptake in aging residential towers are: • risk avoidance by owners; • absence of regulatory requirements to undertake retrofits; • an unsatisfactory return on investment on many deep energy retrofit measures, especially those tied specifically to greenhouse gas emission reductions; • and expensive retrofit design solutions due to lack of off-the-shelf products.

10 | Canadian Apartment | Part of the REMI Network |

With those barriers in mind, the Energy Efficient Tower Renewal implementation Program aims to provide an overview of the replicable steps available to the industry while promoting cost-effective, Canadian-made solutions in the following three areas: thermal bridging; ventilation systems; and, non-combustible building envelopes.

Understanding that advancing the building sector toward deep energy retrofits is a process that requires system-wide movement; therefore, limitation in areas like supportive financing, industry upskilling and regulatory change need to be addressed. The ultimate

goal is to move market acceptance beyond the early adopters (i.e. those who are ideologicallydriven and/or choose to undertake deep retrofits as a result of an organizational mandate) to the industry majority whose participation is influenced by the broader market and regulatory framework.

Promoting “made in Canada” products CHMC’s research determined that there may be significant opportunities and a strategic business case for advancing made-inCanada, high-performance retrofit products.

It also asserts that the federal government—

CMHC REPORT >>

UPDATE ON THE RAPID HOUSING INITIATIVE The Government of Canada’s $2.5 billion Rapid Housing Initiative (RHI) continues to invest in housing projects intended to help alleviate homelessness while creating thousands of jobs in the housing and construction sector. In late January, Prime Minister Trudeau announced that over 10,000 new affordable housing units will be created through the RHI, exceeding the initial goal of 7,500 new units. A third of the units will support women and children, and another third will assist Indigenous Peoples.

“We know that finding a safe and affordable place to live is a challenge for many Canadians across the country,” said Prime Minister Trudeau at a press conference. “Through the Rapid Housing Initiative, we are building more housing units, increasing affordable housing, and working to end chronic homelessness. As we build a better future for everyone, we will continue working to improve access to housing, particularly for our most vulnerable, while putting home ownership back in reach for all Canadians.”

The RHI is delivered by CMHC under the National Housing Strategy (NHS).

Launched in 2017, Canada’s NHS is an ambitious, 10-year plan to invest over $72 billion in much-needed housing development. It provides capital contributions (upon signing a funding agreement with CMHC) under two streams— Cities Stream and Projects Stream — to expedite the delivery of affordable housing units.

including CMHC, Natural Resources Canada, National Research Council, The Canadian Commission on Building and Fire Codes, Innovation, Science and Economic Development Canada (ISED)—can play a key role in areas such as codes and enforcement, promoting and communicating, and funding new technologies and products specifically for aging apartment towers.

As part of the research, industry stakeholders were engaged to identify ways of transforming the Canadian retrofit market.

Questions posed focused on two primary challenges: Challenge 1: How do we enable faster, cheaper and more cost-effective holistic retrofits in multi-unit residential buildings?

What technical solutions can help to accelerate retrofits in the Canadian market through products, materials, knowledge and training? What policy solutions will support and transform the retrofit market and guide this acceleration, such as building code updates, research and design programs, training requirements and certifications, or data collection?

“As I’ve said many times before – everyone in Canada deserves a safe and affordable place to call home,” added The Hon. Ahmed Hussen, Minister of Housing and Diversity and Inclusion and Minister responsible for Canada Mortgage and Housing Corporation. “The Rapid Housing Initiative will support those who need it most by quickly providing more than 10,000 new affordable housing units to vulnerable families. This is just one of the many ways our government’s National Housing Strategy continues to support Canadians from coast to coast to coast. Today’s results represent a historic step in our work to ensure that no Canadian is left behind.”

Advancing building retrofits benefits everyone in the following ways: •

It helps improve our affordable housing supply

•

It helps improve housing quality and climate resilience

•

It creates job growth and Canadian industry development

•

It’s our duty in the face of climate change

Challenge 2: How can we ensure successful tower retrofits in occupied buildings in a way that is efficient and effective for builders and respectful for tenants? What resources and training do constructors need to execute high performance envelope refurbishments and systems upgrades with minimal resident

disruption? What planning, consideration, and specialized workforce is required to work efficiently in occupied buildings in a way that is respectful of tenants? What technology, materials or other construction techniques and innovations can make retrofits quicker, faster and cheaper?

If you are an apartment owner or manager seeking information on deep energy retrofits and Canadian-made products and services, please visit: https://assets.cmhc-schl.gc.ca | www.REMInetwork.com | January/February 2022 | 11

What’s your risk management story?

How to paint a picture of “good risk” to insurers

by Sarah Thompson Regardless of portfolio size, owners of multi-residential rental properties will need to demonstrate best-inclass risk management and maintenance to secure even baseline coverage in 2022. Pandemic measures are easing, but the real estate sector has yet to achieve that “return to normal” it’s been striving toward. As such, the year will continue to be about how real estate owners and operators can position themselves to maximize opportunities while still coping with the impacts of COVID-19 — and the most critical piece may be the ability to tell a risk management story that paints a picture of a “good risk” to insurers.

12 | Canadian Apartment | Part of the REMI Network |

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FEATURE >>

I

n 2022, the real estate industry can expect to see the following trends and challenges:

their risk management measures will be more successful at securing appropriate coverage for their properties.

1. Pressure on the multifamily housing market Multifamily housing coverage (for both high-rise and low-rise developments) will remain problematic in 2022, although insurance capacity is expected to increase in some sectors. A long-standing rise in the frequency of claims, often due to water damage, will continue to affect multifamily portfolio owners. As a result, many mainstream carriers are only offering coverage with reduced limits, requiring multiple insurers or layering of policies to meet baseline coverage needs.

The pressure continues in 2022, with underwriters scrutinizing every detail — from loss history to electrical and plumbing updates.

It is estimated that in the habitational and residential real estate market overall, rates will rise 20 per cent or more. As such, owners and portfolio managers are securing coverage on the spot when they receive an initial quote, without shopping around.

The risk management story has become critical. Real estate owners and operators who take the time to paint an accurate picture of

2. Importance of reassessing valuations Anyone considering renovations or reconstruction knows that costs are increasing. Statistics Canada recognized a record increase in the spring of 2021, when costs had increased by 7.5 per cent in the second quarter alone.

Exacerbated by shortages of supplies and labour, not to mention the dramatic ups and downs of material prices, the cost of construction has become a major concern over the last several months. The lumber shortage is just one much-talked of example: futures per thousand board feet were US$610 in early November, down from a record US$1,711 in May, but still far up from about US$250 in April 2020.

With prices so volatile, it wouldn’t be surprising if a catastrophic incident led to a need for reconstruction that far exceeded typical policy limits. That’s why it’s critical to determine how much your property is worth now. Obtaining an updated valuation can help to ensure your policy limits are still appropriate so you’re ready to manage your risks and mitigate losses.

“Real estate owners and operators who take the time to paint an accurate picture of their risk management measures will be more successful at securing appropriate coverage for their properties.”

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14 | Canadian Apartment | Part of the REMI Network |

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STABILITY AND BALANCE

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FEATURE >>

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16 | Canadian Apartment | Part of the REMI Network |

4. Continued repurposing Most have heard of empty big box stores or anchor mall tenants finding new life as warehouses. But some unusual locations — even empty apartments — have been known to become restaurant spaces, ghost kitchens, or even small entertainment venues. Repurposing will continue to gain popularity in 2022, as interest rates are expected to remain relatively stable.

It’s important to remember, however, that when a building’s purpose changes, so does its assessed risk. Not only does the space need to be designed for the new purpose, but it may take on a whole new set of risks the owner hadn’t considered.

It’s critical to discuss these issues with a broker before repurposing.

Looking ahead…

The real estate market won’t be easy to navigate in 2022. Owners and operators looking to reduce their risk will need to rely on both old and new tricks to get the best results. Yet the key to success may be managing your risk story to demonstrate both care and resilience in order to secure sufficient protection.

Philip Sarvinis | Bill Gladu | Jeremy Horst | Michael Pond | Duncan Rowe | Jack Albert | Beau Gaudreau | James Cooper

Trusted Advisors

3. Growing reliance on catastrophe modelling Catastrophe (CAT) modelling is crucial when it comes to helping property owners understand the extent of their risk, estimate policy limits, and secure their coverages accordingly. Underwriters are beginning to require CAT modelling and other predictive tech for large portfolios. And with CAT losses in the first half of 2021 reaching $42 billion — of which $40 billion was related to natural disasters — real estate owners are beginning to rely even more on CAT modelling and other tech tools.

That said, low-tech risk solutions and controls, such as water mitigation and disaster recovery planning, will never go out of style. It’s still a good idea to provide proof that risk mitigation plans are bespoke to the facility, to train staff to engage those plans, and conduct frequent on-site inspections.

rjc.ca

Sarah Thompson is Associate Vice President, Real Estate Practice for Hub International.

COVER STORY >>

A TOWERING A Ken Soble building in Hamilton becomes world’s largest residential Passive House Retrofit

By Erin Ruddy Once an aging seniors’ residence with an uncertain future, the Ken Soble Tower in Hamilton, Ontario, has officially become the world’s largest residential structure retrofitted to the Passive House EnerPHit standard. The 18-storey, 146-unit affordable housing development underwent extensive upgrades that have since led to a remarkable 94 per cent reduction in greenhouse gas emissions and a 91 per cent reduction in heating energy demand. At its peak, the total energy required to heat and cool one unit in the building would be equivalent to the energy needed to power three incandescent light bulbs.

ACHIEVEMENT

| www.REMInetwork.com | January/February 2022 | 19

COVER STORY >>

“We could not be more thrilled that the Ken Soble Tower project has achieved Passive House EnerPHit certification,” said Chris Ballard, CEO, Passive House Canada. “With over 10,000 towers across Canada in need of deep energy retrofits, the team at ERA Architects, PCL and CityHousing Hamilton have shown great leadership and we congratulate them on this tremendous achievement.”

Built in 1967, Ken Soble Tower is the oldest high-rise, multi-residential building in CityHousing Hamilton’s portfolio, and a fixture of the Hamilton skyline. It was fully occupied until 2014 when a mix of aging infrastructure and increasing capital costs led to it falling into disrepair.

The decision to pursue Passive House certification came about in 2016 after numerous studies and consultations with residents and community members led to a majority vote in favour of taking the ambitious path. While upgrading the building (vs. demolishing it) made good financial sense, it also ensured the evolving neighbourhood would continue to benefit from the much-needed affordable housing supply. Striving for Passive House certification elevated the project to historic new heights.

EnerPHit certification To meet the rigorous new standards, a team specializing in apartment retrofits was brought on to fulfill the requirements of the EnerPHit 20 | Canadian Apartment | Part of the REMI Network |

certification program; this included visionaries from ERA Architects, a Toronto-based architecture firm with experience in low-carbon retrofits, and experts from PCL, Canada’s largest general contractor with expertise in building revitalization and in-house envelope engineering.

The result has been transformative, with data that speaks for itself.

Supporting both resident health and climate resilience, Ken Soble Tower is now a model for other aging dinosaurs on the brink of extinction. The project gives hope—and a detailed case study—for what can be achieved through deep energy retrofits. In addition to these upgrades, the project included a reconfiguration of all indoor and outdoor spaces to accommodate aging-in-place. Over 20 per cent of the 146 apartment suites now meet barrier-free standards, with expanded community facilities that support seniors’ programming.

During construction, embodied carbon in the structure was saved through the re-use and revitalization of building materials.

“Congratulations to CityHousing Hamilton on their innovative vision for the Ken Soble Tower project,” said Marc Pascoli, Vice President and District Manager of PCL’s Toronto District Office. “Achieving EnerPHit certification reflects the expert rigor, best practices and collaborative efforts between our client, consultants, trades, and PCL. The outcomes we’ve achieved demonstrate that high-performance

COVER STORY >>

building envelopes are possible on large-scale retrofit projects, paving the way for ultra-efficient retrofits to support a low carbon future.”

Built to last Using 2050 temperature projections as a guiding foundation for the overall design, Ken Soble Tower is now climate resilient, supporting indoor health and comfort during both extreme heat and cold climate events anticipated in future years. Building performance was achieved in part through an ultra high-performance building envelope, with exterior and interior insulation to meet the stringent airtightness requirements.

Other key upgrades included triple-glazed windows, heat recovery in all building penetrations, and the modernizing of all obsolete and unhygienic HVAC systems to provide fresh air to each suite.

To achieve EnerPHit certification, the team had to prove that the final building was capable of performing to Passive House standards. As such, a comprehensive air tightness testing and quality management program, developed by PCL’s in-house envelope engineer and construction team, was employed. After the final whole-building airtightness tests demonstrated that targets were surpassed by more than 50 per cent—at 0.235 air changes per hour (ACH) at 50 pascals pressure (Pa)—it was declared “mission accomplished.” | www.REMInetwork.com | January/February 2022 | 21

COVER STORY >>

“We are very proud to have worked alongside CityHousing Hamilton to realize the renewal of the Ken Soble Tower as affordable and resilient housing, and one of the largest EnerPHit projects in the world,” said Graeme Stewart, Principal, ERA Architects. “Showcasing that low carbon retrofits are the path for a resilient future, offering health, safety and comfort to residents, the Ken Soble Tower is a true model for addressing the growing climate and housing crises of our time.”

What’s ahead for Ken Soble Tower The Ken Soble Tower is slated to become a teaching tool, offering realtime lessons in retrofit design. CityHousing Hamilton, in partnership with the University of Toronto, ERA and PCL, will study and measure the impacts of the building on its residents and surrounding environment, including building performance, resident health and safety, and economic impacts, among others. At a larger scale, the Ken Soble Tower will showcase how multi-residential postwar structures may be rehabilitated to the Passive House standard, resulting in significant reductions in energy consumption, greenhouse gas emissions and energy intensity of the building.

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Quick facts about the project: •

CityHousing Hamilton (CHH) is the Housing Corporation owned and operated by the City of Hamilton.

•

All 146 units of the Ken Soble Tower will be rented at affordable rates, with 74 units being “deeply affordable” (set at 69.2% of the median market rent).

•

The new building aims to achieve 75% energy savings and a reduction in greenhouse gas emissions of 88% compared to the NECB 2015.

•

Through the Affordable Housing Innovation Fund the federal government invested close to $3.7M in this project and has a financial commitment of $6.3M through National Housing Co-Investment Fund.

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Modernizing payments for Canada’s commercial property industry Canadian property managers have a lot to gain from making payments faster, easier, and more transparent. In a post-pandemic economy, many Canadians are reducing their use of cash as a payment method and are relying instead on digital payments. In fact, a recent Interac survey revealed that two thirds of Canadians believe businesses that fail to adapt in order to allow digital payments will struggle.

The demand for digital payment options from businesses will only increase and property managers will need to accommodate this shift in consumer behaviour. With every dollar counting more than ever before given the challenges faced by businesses during the pandemic, efficient ways of paying and managing finances in ways that improve cash flow is now paramount. Improvements to accounts payable, accounts receivable, and methods of payment cannot be overlooked in this recovery-focused environment.

Pre-pandemic, day-to-day financial management

often involved processes that were paper-based, cheque-driven, and manual. These are typically slower and less efficient ways of working and require businesses to spend valuable resources processing and reconciling payments. The pandemic, alongside changing consumer preferences, has naturally reinforced the need for digitization and moved businesses to lessen their reliance on manual processes to boost overall operational efficiency.

Eighty-three per cent of finance professionals surveyed by Interac affirm this notion, saying that applying digital transformation to their function is now a priority .

These needs are fuelling demand for innovative business payment solutions, such as Interac e-Transfer® for Business. As an enhancement of the existing Interac e-Transfer service, new features were built to meet the needs of Canadian businesses through higher transaction limits, fast money transfers with instant confirmation and rich remittance data, allowing businesses to reconcile

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transactions with less paperwork. In other words, it can help streamline accounting processes and accelerate a paperless office strategy.

For a property manager or landlord, this could mean being able to accept or request payments directly from tenants with immediate access to funds, paying contractors and invoices for work specific to the property with greater ease and retaining payment confirmations. Further, property managers and landlords could send a reminder for rent payment via request-to-pay capability and easily reimburse tenants for costs incurred on behalf of the property manager or for payment returns.

Receiving payments instantly in this way can also be a game changer if a manager is largely reliant on cheques, eliminating any uncertainty around when one will arrive in the mail or whether it will clear. With Interac e-Transfer for Business, property managers can receive payment instantly, reducing the number

of cheques and cash they receive, eliminating the risk of late payments, and gain easy visibility into what the payments are for using structured data.

Eight in 10 (80 per cent) business decision makers surveyed agree that moving from traditional payment options to digital ones will be essential to post-pandemic growth . Assessing how a business can revamp its payment processes and financial management to become more efficient and effective with tools like Interac e-Transfer for Business can help to equip the commercial property industry as it embarks upon growth and recovery plans.

Those interested in using the solution are invited to learn more by visiting Interac.ca/business, In The Know and to discuss the offering with their financial institution.

Interac and Interac e-Transfer are registered trademarks of Interac Corp..

(1)Interac commissioned Hill+Knowlton Strategies to conduct a national survey of adult Canadians. A total of 1,000 adult residents of Canada were surveyed online in April 2021. The sample was randomly drawn from a panel of potential survey respondents. An associated margin of error for a probability-based sample of this size would be ±2.5%, 19 times out of 20.

(2)Interac commissioned Phase 5 Consulting to conduct an online survey of 152 financial decision-makers in Canadian midsized businesses with 100-499 employees. Participants were recruited via an online research panel. Fieldwork was conducted in English and French in May 2021.

(3)Interac participated in RFi Group’s online commercial banking and payments syndicated survey of decision makers at 363 commercial enterprises with revenues between $10M and $100M. Fieldwork was conducted in English and French in June 2021.

Note: Finance transformation describes any strategic initiative meant to create new opportunities for the finance function to add value to the business and align with overall company strategy.

Breaking the Cycle of Housing Instability Perspectives on rent control, eviction moratoriums and other tenant supports

by Erin Ruddy Amid the dual crises of a nationwide housing shortage and the COVID-19 pandemic, policymakers and advocates looking for solutions to housing instability have been turning to policies like rent regulation, eviction moratoriums and other emergency means to keep vulnerable tenants in their homes. But are these policies working—and how are they impacting supply and affordability in the long-run?

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FEATURE >>

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Challenges facing rental housing practitioners Meanwhile, for those in the business of rental housing, the most frequently cited challenge thoughout 2020-2021 was the inability to evict tenants during eviction moratoriums, even after practitioners felt they’d demonstrated a commitment to working with tenants affected

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new report released by the Urban Land Institute delves into the benefits and drawbacks of prevailing housing strategies while looking at ways to encourage new development. Entitled “Stable Residents, Stable Properties: Perspectives on Rent Control, Eviction Moratoriums, and Other Contemporary Approaches,” the report asserts that the stability of renters cannot be separated from the stability of the rental properties in which they live.

Offering strategies to offset housing disparity, the detailed analysis includes the perspectives of more than 300 renters, tenant advocates, public officials, housing affordability researchers, property owners and developers, and identifies numerous factors that threaten the well-being of tenants and housing providers alike.

As the saying goes, “desperate times call for desperate measures,”—hence why the consensus among respondents was that interventions were necessary to prevent a surge in homelessness.

“The onset of the COVID-19 crisis and associated economic disruption has created considerable challenges beyond the baseline level of vulnerability,” the report contends. “The combination of eviction moratoriums, rental assistance, stimulus payments, and enhanced unemployment benefits has spared many (though certainly not all) households the most disastrous financial consequences.”

In 2020 and 2021, moratoriums and other supports in the U.S. helped contribute to an eviction rate that was half its 2019 size. Better still, the “eviction tsunami” feared when the federal moratorium expired in August 2021 didn’t fully materialize, although filings by landlords increased.

Still, the long-term trajectory remains unclear.

As the Omicron variant rips through North America creating further economic upheaval, many are predicting a sustained upward and elevated eviction trend is on the horizon—a scenario that would benefit no one. As one interviewee put it, “Eviction causes loss…not just a loss of home(s). People lose their communities.

Kids lose their schools.”

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FEATURE >>

by the pandemic. Many said they felt moratoriums led to fewer tenants seeking emergency resources or working to access rent support. Some cited concerns that regulations were affecting their ability to remove tenants who were destructive to property or threatening other tenants.

Furthermore, an emerging pattern suggests that many housing providers have faced the “twin financial difficulties”

of decreased rent collections and increased payroll and operating expenses related to enhanced health and safety measures. A 2020 survey of owners and operators by the National Apartment Association found that respondents spent about half their rental revenues on mortgage payments and property taxes, which are often inflexible and must be paid to avoid default or tax foreclosure.

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An additional 38 per cent of earnings was spent on “keeping properties up and running.”

In terms of rent collection, a survey of landlords conducted by the Housing Crisis Research Collaborative found that the share of landlords who collected 90 per cent (or more) of charged yearly rent in 2020 fell from 89 per cent to 62 per cent, while 9 per cent of respondents collected less than half.

As in Canada, smaller property owners were more likely to face considerable nonpayment challenges, which can develop beyond lost profits and affect the owner/manager’s ability to address both acute and long-term maintenance issues. When deferred for too long, issues with the building can compound into larger, more costly problems leading to health, safety, and “quality of life” issues for tenants.

“Deteriorating housing quality eventually exacerbates the shortage and heightens competition for the remaining modestly priced, decent rental homes, creating further instability,” the report concludes. And thus, the cycle of instability continues.

What are the recommended strategies?

There are ways to break the cycle of housing instability and move toward a more stable, balanced supply. For instance, as the COVID-19 crisis shifts from an acute emergency to an endemic reality, the goal should be to move beyond emergency measures like eviction moratoriums and create a more sustainable policy framework.

Strategies explored in the report include: • Increasing funding for emergency rent assistance and long-term supports, like permanent supportive housing and financial coaching programs; • Creating more rental housing for low- and moderate-income households, through approaches like zoning reforms that allow for more multifamily housing; • Implementing “anti-gouging” policies that prevent landlords from raising rents above a certain percentage; • Improving access to tenants’ rights information and empowering renters to know their options for defending themselves.

As this is a merely a succinct overview of some of the discussion points raised in the report, please visit https://knowledge.uli.org for more information.

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Industry Hot Topics Rental rates continue to rise in sign of strengthening market

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verage rental rates for all Canadian properties in the final month of 2021 reached $1,789 per month — up 3.8 per cent from a year ago, according to the latest report from Rentals.ca and Bullpen Research & Consulting. December was the fourth consecutive month average asking rents were positive since the onset of COVID-19, which sparked 16 consecutive months of annual declines.

“Average rental rates moderated in December after rents surged following the April market bottom, where rents had fallen by over 9 per cent annually,” said Ben Myers, president of Bullpen Research & Consulting. “It is too early to tell if Omicron will have a prolonged deflationary impact on the rental market,

but Bullpen Research & Consulting and Rentals.ca still believe there will be significant upward growth in rents in 2022 in Canada’s major markets.”

Vancouver topped the list of 35 cities for average monthly rents in December for both one- and two-bedroom homes. Coming in at $2,176 and $2,983 respectively, these numbers represent an annual increase of 13.2 per cent and 9.7 per cent, and a month over month increase of 2.1 per cent.

Toronto finished second for monthly rents in December with one-bedrooms averaging in at $2,013 and two-bedrooms at $2,715. Year over year, Toronto was up 9.2 per cent for one bedrooms and 11.6 per cent for two-bedrooms. Month over

month, rent in Canada’s largest city was down 1.4 per cent and 2 per cent respectively.

The majority of municipalities in Canada, including Montreal, Calgary and Mississauga, saw an increase in average rents since December 2020, while North York, Scarborough, Hamilton, and Edmonton were the few centres that experienced a decline. Regina had the lowest average rent out of all the municipalities with an average of $1,014 per month, unchanged from the previous year.

“December is typically one of the slowest months for rental activity every year, and 2021 appears to be no exception,” said Myers.

The national average for a single-family home in December was $2,570 per month – an annual increase of 8.9 per cent, but still below pre-COVID-19 highs. (The average rent had declined 9.3 per cent in the pandemicimpacted 2020 to $2,360.)

Condominium apartments experienced an annual increase of 11 per cent to $2,227 per month in December. Condos were hit the hardest during the early pandemic period as some tenants fled the big cities, causing condo rents to fall by a whopping 18 per cent over the course of 2020.

Meanwhile, rental apartments have not experienced the same levels of increases as single-family homes and condo apartments, increasing annually just over 1 per cent from $1,603 per month in December 2020 to $1,623 per month this December.

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Greystar Real Estate Partners and Ivanhoe Cambridge form joint venture in Chile

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reystar Real Estate Partners LLC and Ivanhoé Cambridge announced they have formed a joint venture to pursue multifamily real estate opportunities in Chile. The new partnership represents the first global institutional capital investment in multifamily real estate in Chile, marking an important milestone for the industry and country alike.

It also marks the first investment Ivanhoé Cambridge has made in this emerging market.

Over the years, Greystar and Ivanhoé Cambridge have partnered on multiple North American and international joint ventures. For this venture, the partners say they intend to develop and acquire multifamily projects in the Santiago market, as well as submarkets that are centrally located, well-connected, desirable, and with strong rental demand. Their mandate is to seek “innovative, sustainable, accessible, and efficient ways to bring purpose-built and professionally managed rental housing communities to new markets, and to enrich lives and achieve superior investment returns through renter-centric designs and exceptional service delivery.”

“Our joint venture with Ivanhoé Cambridge in Chile is a landmark achievement and key indicator of the continued growth and strength of our global strategic alliance as we expand further into international markets,” said Tom Livelli, Managing Director at Greystar. “Together with Ivanhoé Cambridge’s capital investment and Greystar’s in-house capabilities and extensive local relationships, we are opening the door to transform the renter experience in Chile, where we continue to see a bright future and tremendous long-term potential.”

“We’re delighted to launch this new investment strategy in Chile and to diversify our portfolio in Latin America,” added Adriano Mantesso, Managing Director, Head of Latin America at Ivanhoé Cambridge. “We believe in the growth potential of the residential rental market in major cities across the region, increasingly attracting global institutional capital and meaningfully transforming the renter experience. We are very excited to once again join Greystar as an early mover in delivering the next generation of rental housing communities in a new market and contribute to setting new standards in resident services and community design for the people of Chile.”

Garbage chute decommissioning stalls in Toronto

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fforts to facilitate garbage chute decommissioning in multi-residential buildings have had modest results in Toronto. A new report to City Council reveals that just 24 permits allowing landlords to seal chutes have been issued over the past 12 years, representing about 57 per cent of the 42 applications that have been submitted to the chute closure program since it was launched in 2010.

“Closing the garbage chute in a multi-residential building has the potential to eliminate the convenience of garbage on every floor and also has the potential to encourage residents to sort and bring their divertible waste for management in Blue Bin and/or Green Bin organics thereby reducing waste sent to landfill,” the report notes. “A chute closure also provides the opportunity for property owners to have greater control over the waste stream by encouraging residents to sort their waste and reduce contamination of the waste streams, and as a result, help to reduce their volume-based solid waste fees.”

Under current rules, a building must receive municipal solid waste collection services and landlords must have appropriate waste diversion receptacles and a tenant communications strategy in place to qualify for the program. City staff conclude the first requirement has been a major obstacle to uptake. Many multi-residential buildings do not meet the specifications for municipal solid waste collection, which prescribe loading facilities, minimum radii for truck turning and emergency route access that often can’t be accommodated in the existing building design and site configuration.

The report outlines possible options for expanding the garbage chute decommissioning program to buildings with contracted solid waste collection services, but also observes there is no funding in the 2022 budget to do so.

It’s speculated that more landlords would apply for chute closure permits if buildings with contracted waste collection were allowed to participate.

“In some cases, where a non-permitted chute closure was identified by Municipal Licencing and Standards or where Solid Waste Management Services staff have received chute closure permit requests, waste diversion outcomes were not found to be the main driver. Rather, the closure was in place or being sought due to other operational concerns in the building, such as, but not limited to, pest management and other maintenance reasons,” the report observes. | www.REMInetwork.com | January/February 2022 | 31

INSURANCE >>

What to Expect in 2022 Trends impacting Canadian apartment owners

by Andy Schwartze As we move into 2022, there are two main developments in the world of insurance that are worthy of attention. The first relates to property insurance rates, and the second, to developments in the field of cyber insurance.

Nobody needs to be reminded that property insurance rates spiked significantly over the past three years. When one compares what was being charged in 2018 versus now, the difference is significant. In part, the increase was triggered by a long-delayed rate adjustment that should have started way back in 2013. The fact that most insurers were reluctant to do so, in fear of losing business to less aggressive rate hikes by their competitors, simply delayed and thus more seriously impacted the inevitable pain to come. The push ultimately came from the numerically smaller, but very influential reinsurance community, whose influence on the cost of our insurance is typically underestimated.

Most insurance professionals have a limited understanding of how reinsurance works, and how the four fundamental types of 32 | Canadian Apartment | Part of the REMI Network |

reinsurance support affect the ability of our insurers to accept and charge for their exposures. Properties that had once enjoyed seriously discounted rates were shocked to have their costs doubled. Typically, newer up to date buildings, constructed well and sprinklered, had been enjoying very thin property insurance rates. At the other end, older wood frame multi-residential buildings had also enjoyed pretty low rates, only to see them double or even triple. Both “extremes” found themselves under serious scrutiny.

Some insurance professionals blamed COVID-19, but the pandemic has become a liability issue, not a property one.

The “smart money” now believes these rate adjustments are mostly behind us and that 2022 will be a much more moderate year

INSURANCE >> for increases. Insured values will, of course, be impacted by the new inflation levels that have burst upon the scene. Replacement cost insurance means covering the entire building on that basis, not just part of it. Expect underwriting managers to increasingly request insurance appraisals. This is already common in the U.S. and the cost of these is cheap. A big high-rise can have one done for $750 and it will be usable for quite a few years before requiring an update. This year we expect the combination of insured replacement costs and rate increases to result in single digit premium impacts. There will be exceptions, but by and large the market is settling down.

This brings us to the 2nd topic—one that is much more complicated. Cyber insurance is becoming an increasing concern for many corporate managers. For the insurers who rushed into it, the results have been painful with too little underwriting, too broad a list of insured events, and not much more than a good guess at what premium to charge. This is typical of the “early days” experienced by any new insurance initiative or product.

Consider the fundamental difference between the insurance that you buy on your home, and how that compares to a policy protecting against a cyber incursion. Your home insurance is intended to pay in the event of a sudden and unexpected disaster (fire, wind, water, etc.). Now, imagine if there was an arsonist threatening to burn down your building all day, every day, and that was his sole intent. What would your home insurer say to that? Essentially, cyber crooks are a persistent threat that aren’t so “sudden and unexpected”.

Insurers in the cyber space are learning some harsh lessons.

Currently, we are hearing that these underwriters are seeing $3 in claims go out for every $1 taken in premiums. As a result, we already have what is referred to as a “hard” market for this type of insurance. In a hard market, three things happen. First of all, premium rates go up sharply. Secondly, underwriting intensifies such that we are now seeing applications as long as nine pages of detailed questions on IT systems, protocols and preventative procedures. Finally, coverages become more restrictive and start to exclude more types of uncontrollable claims. We think that the insurer approach to ransomware coverage is going to change significantly in the coming years, although it is not yet entirely clear to what extent.

The most significant leader in cyber insurance in the U.S. in 2020 was Chubb. We’ve seen a major reinsurer enter the field via an underwriting facility. An American insurance underwriting firm named after Tom Ridge, the first Homeland Security Secretary, has recently entered the Canadian marketplace. The list is growing but the underwriting is becoming increasingly complex, and the warranties are expanding. The cyber insurance space is in its infancy and will struggle to scale itself to a size that enables company managers to understand how to coordinate underwriting, rating and claims in such a way as to create a balanced and profitable niche that will go the distance. Until that happens, insurance buyers will have to remember that they find themselves in an earlystage insurance space that still has much to learn.

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Throughout the last few years, ESG considerations have been playing an increasingly important role in the functioning of most Canadian companies, whether at the board level where directors are tasked with overseeing ESGrelated risks and opportunities, or at the operational level where management is dealing with matters such as supply chain management. ESG is now trickling down to smaller organizations, too.

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