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Briarlane takes on new partners
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C A N A D A ’ S O N LY N A T I O N A L P U B L I C A T I O N F O R A P A R T M E N T O W N E R S A N D M A N A G E R S
VOLUME 5 / NUMBER 4 / OC TO B E R 2 0 0 8
26 Cover Story
Briarlane Takes on New Partners
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When employees steal Convenience is key
Founded by company President Brad Smith, Briarlane Rental Property Management Inc. recently announced that four senior vice-presidents, Susanne Maguire, Monish Comar, Patricia Brawn and Andrus Kung have become partners in the firm.
To upgrade a little ... or a lot!
contents...
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10 When Employees Steal Employees who steal will eventually be caught, but by then, the damage is done.
14 Greater Profits Though Due Diligence When purchasing a multi-residential property, a comprehensive look at a building’s profit and loss statement will help you better estimate the projected revenues and create a healthy cash flow model.
18 Technology Holds the Key to Competitive Advantages When integrated with a strategic business plan, property management software tools offer more efficient portfolio management and a higher degree of risk mitigation.
22 Convenience is Key Property managers and building owners need a laundry room that operates at peak efficiency, with a minimum of management time.
38 To Upgrade a Little …. or a Lot Timely upgrades to older elevators will keep them running efficiently and allow you to budget for major repairs or modernization.
42 Ontario Reverses Holdout Stance on Sprinklers Ontario will join every other Canadian province when a requirement for sprinklers in new multi-residential buildings above three storeys goes into force in April 2010.
46 Video Cameras Identify Plumbing Problems A video camera allows you to inspect underground sewer lines and other piping to determine the condition of the inside of the pipe.
48 Multi-facts 50 Regulations
6 Canadian Apartment Magazine
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editor’snote
Preparing for the future Briarlane Property Management Inc., the subject of this month’s cover story, recently announced that four long-time senior executives have become partners in the company. The change highlights the need for succession planning. If you decide to retire, will your business survive? Brad Smith, Briarlane’s President, is only 54, but he realized if the company was to continue to grow, clients needed to know that the management team was in it for the long haul. Making his Vice-Presidents, Susanne Maguire, Monish Comar, Patricia Brawn and Andrus Kung, partners in the company did two things. It assured his clients that the management team would be in place for many years and it allowed him a way to sell his company and retire at some point in the future. Also on the topic of business planning, we welcome a new columnist to Canadian Apartment Magazine. He is Michael Stoyan, a chartered account with the firm of Fuller Landau. He offers our readers timely tips to consider when purchasing a multi-residential building. First and foremost is completing due diligence, which involves a comprehensive look at the property’s profit and loss statement. If you decide to buy, how you structure the deal from a tax standpoint, will have longterm implications on how the income is taxed. Our regular contributor, Andy Schwartze, offers advice on how to deal with employee theft. When the theft is uncovered, and it always is, both you and your customers will be left wondering, how this could have happened. But, by then, the damage is done. Independent financial controls, while never perfect, need to be applied and key employees should be monitored for signs that may indicate improprieties.
PUBLISHER Kevin Brown
ASSOCIATE PUBLISHER Joshua Fulton
EDITOR Randy Threndyle
SENIOR DESIGNER Annette Carlucci
DESIGNER Ian Clarke
CONTRIBUTING WRITERS Dave Balmer Barbara Carss Dick Casey Joel R. Nelson Larry Rothman Andy Schwartze Bradley Setser Michael Stoyan
Cover photo by F. E. Higgins For sales information call (416) 966-4874 Canadian Apartment Magazine is published six times a year by:
5255 Yonge St., Suite 1000, Toronto, Ontario M2N 6P4 E-mail: info@mediaedge.ca
Tel: (416) 512-8186 Fax: (416) 512-8344 President Kevin Brown Copyright 2008 Canada Post Canadian Publications
Randy Threndyle Editor randy@hushmedia.ca
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Quoteworthy
“You can imagine if you own several thousand residential rental units, it’s a big undertaking to decide who will look after them and how they will be managed.”
8 Canadian Apartment Magazine
– page 28
Authors: Canadian Apartment Magazine accepts unsolicited query letters and article suggestions. Manufacturers: Those wishing to have their products reviewed should contact the publisher or send information to the attention of the editor. Sworn Statement of Circulation: Available from the publisher upon written request. Although Canadian Apartment Magazine makes every effort to ensure the accuracy of the information published, we cannot be held liable for any errors or omissions, however caused. Printed in Canada
We’ll Treat It Like It Was Ours! Your properties are important investments to be handled with care and respect. You can rest assured, MetCap Living knows this first hand. With over twenty years of proven success, the MetCap Living team will ensure your ‘little nest egg’ is safe, allowing you to breathe easy, as well as relaxed and free of concern. We know your world, because we live it on a daily basis. Marketing, leasing, accounting and site management — in fact, anything and everything you require to provide a better living experience — MetCap Living can deliver. We’ll tailor our expertise and well established infrastructure to meet the specific needs of multi-unit properties. Think of us as a breath of fresh air. Always ready. Always professional.
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insurance
When employees steal Hows and whys difficult to understand
Employees who steal will eventually be caught, but by then, the damage is done. By Andy Schwartze
Few experiences can be as disheartening and depressing to the owner of a small business as the sudden realization that someone in a position of financial trust has had his, or her, “fingers in the cookie jar”. For a short time, the feeling of despair is overwhelming and a variety of confusing thoughts run the gamut; from worries about how to personally react to this unpleasant discovery all the way to wondering how customers will feel about (what is often) their money having been pocketed. All those, who are in any way associated with the corporate victim, will wonder how it could possibly have happened. Questions will be asked about “who dropped the ball”, why this was not discovered earlier and perhaps even accusations that management has been spending “too much time on the golf course”. The perceptions and the realities are often surprisingly unrelated and the hows and whys difficult to understand. Accounting is a very precise and technical skill. When practiced in a world of multiple record keeping and subjected to short independent cyclical controls (monthly, quarterly, semi annually and annually) one has to wonder how anyone could possibly get away with stealing money, 10 Canadian Apartment Magazine
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insurance either from the bank accounts of one’s employer clients or even from the employer directly. The fact of the matter is that one cannot get away with it at all. There are too many eyes and too many controls built into “the system” to enable anyone to successfully hide such theft. Sooner or later the discrepancies become obvious and someone (with integrity) begins to ask questions. Herein lies the problem: How long is it before someone notices something is amiss? By then the deed is done. Some years ago, a major Canadian computer manufacturer had to publicly admit that it had discovered an inside manager who, over a period of many years, had managed to siphon more than $10 million out of its coffers using a series of phony supplier invoices. While this went on for years, this kind of scam can never last forever and will always eventually be discovered. Unfortunately, in this case, the theft had gone on for over 10 years. The employee wasn’t greedy and was able to prolong this “annuity” nicely. When, as senior owner/managers, we employ staff, we often fail to remember a number of important distinctions between ourselves and our employees. We are motivated to succeed, we want to grow our business and, in order to do so, we work long hours, make extra sacrifices, take risks and spend our “valuable” time building relationships. Our dedication and focus is serving our customers and growing the business’s top line. And if you do it well, Mr. Owner, you will soon discover that your time and patience for the mundane wears thin. Financial control is not a relationship builder; it is a necessary evil to customer service. So we hire people as every growing business does. We hire people to do this mundane work and expect them to do (what we as
Andy’s Tip
Something is not right if an employee • Willingly works after hours • Refuses help from co-workers • Doesn’t take vacations • Becomes reclusive • Looks haggard • Changes drinking habits • Becomes short tempered • Won’t talk about family
12 Canadian Apartment Magazine
owners don’t want to do) the work efficiently, accurately, reliably and for less money than we are paid. Having put this “back up staff” into place, we focus again on building our top line. Over time, of course, business grows and we begin to enjoy the benefits of our long hours. Incomes rise and surprise, surprise - so does the number of hours spent on the golf course. Management vigilance is beginning to decay as more and more reliance is placed on support staff and, in particular, the solid long-term senior employee. (“He/she is very reliable and honest and has worked for me for years”, is a standard favourite.) In a business with a lot of transactions, or a multiplicity of bank accounts, the movement of money becomes routine. Thousands of bookkeeping entries, deposits and expense payments, by cash, cheque or credit card, obfuscate the ability of management to eye what is going on. A shrewd employee, motivated by any number of desperate pressures, arisen from a personal problem, can cover up the shenanigans of money shuffling for a long enough time to do some serious damage. The stupid ones are caught in a week, the sharp ones in up to 18 months, the brilliant ones can take years to catch. Once discovered, the culprit is generally found to have left the country or, as occasionally happens, is found to be working elsewhere and simply engages in denial, backed by a lawyer threatening to sue for defamation of character. Even an admission of guilt rarely results in more than a slap on the wrist. Lower level white collar crime, in Canada, is judged less harshly than a serious traffic violation. Few property management companies have not gone through one of these experiences. The prudent ones have insurance (although the embarrassment of making this kind of claim is painful); the careless ones receive a very expensive wakeup call, as they dig deep into their own pockets to replace their clients’ money. Some have to fold. Management controls are never perfect, but the difference between financial diligence and sloppiness is very real. A service business requires hands-on management and numerous independently applied financial controls. That’s not always easy for a smaller business. In addition, key employees have to be monitored for signs that may indicate improprieties. By making a serious effort to actively manage and control the business, a prudent owner can lower the risk of employee theft. Unfortunately, it can never be made to disappear entirely. CA M Andy Schwartze, BSc, MBA, CIP, is an insurance broker specializing in property management and real estate. He is a former President of the Insurance Institute, has taught in the community college system and provides continuing education to other brokers. He can be reached at andy@takecover.ca.
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accounting
Position yourself for greater profits through Due Diligence Ensure you build an accurate forecast of projected revenues By Michael Stoyan
When purchasing a multi-residential property, a comprehensive look at a building’s profit and loss statement will help you better estimate the projected revenues and create a healthy cash flow model. Real estate professionals know that before you sign a definitive agreement, you need to conduct due diligence. But what does due diligence entail? What are the best practices? Can you do it yourself or should you hire a firm that specializes in bringing forward business exposures or risks, enabling you to make an informed business decision? When buying a multi-residential asset, many building owners make assumptions with regard to forecasting future revenues including vacancy rates, bad debts and common area maintenance costs. They often assume a vacancy rate and estimate expenses. 14 Canadian Apartment Magazine
“On the surface, these numbers may seem to meet your projected financial model. However, closer inspection of the accounting records may present a different picture,” says Jonas Cohen, Vice-President of Fuller Landau Consulting Ltd., specializing in mergers and acquisitions, corporate finance and due diligence. “Our clients appreciate the objective view and the peace of mind we provide via due diligence.” Given today’s tighter lending environment, an accurate financial forecast is even more important than ever.
That’s where an exhaustive look at a building’s net operating income (NOI) will help you accurately value the targeted asset. Buyers know they need to verify a building’s cash flow, but they don’t always look hard enough at the numbers. They know what the variables are, but they may not have the internal resources to do a full financial forecast. To put things into perspective, a $10,000 miscalculation of the NOI can have as much as a $200,000 difference on a proposed purchase price, based on a five percent capitalization rate. That’s where a buyer can benefit from engaging
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accounting an outside professional services firm with real estate experience. Suppose you’ve assumed a five percent vacancy rate. Careful inspection of the building’s accounting records may show that the vacancy rate is closer to eight per cent. If that’s the case, your financial model is flawed. A professional services firm that specializes in due diligence not only checks the vacancy rate in the building you are considering but they also check the vacancy rates in other comparable buildings. If the asset under consideration has higher vacancy rates than the benchmark, proper due diligence will uncover the underlying reasons such as demographics or, it could mean there’s an underlying issue the purchaser has to address. Another area that needs to be vetted is cash flow and the timing of rent payments. You know the building has a certain cash flow, but do you know when the rent payments are made? Suppose you assume you are receiving rent revenues on the first day of the month. What if that is not the case? An outsourced firm that specializes in due diligence can verify when rent payments are truly made and calculate the bad debts expense. If you’re collecting rent cheques that are three weeks overdue, or there are bad debts that have not been written off, then you’re financing your tenants’ cash flow at the expense of your own. Capital expenditures, versus day-today operating expenses is another area of due diligence where an experienced due diligence firm can help you create an accurate financial forecast. As a buyer, you have to make certain that the seller hasn’t capitalized items that should have been treated as an operating expense. This would have the effect of overstating profit. If profit is overstated, you could be paying too much for the building. In addition, the buyer needs to have an accurate forecast of future capital expenditures in order to develop an accurate cash flow model that will be acceptable to lenders. 16 Canadian Apartment Magazine
Acquisition Structures and Tax Implications How you structure your proposed acquisition from a tax standpoint has to be considered. You could structure your acquisition through a corporation or, as a partnership or, as an individual purchase or, as a trust. Each of these structures has different rules on how and at what rate the income from the property will be taxed. For instance, will the income be taxed at personal or corporate tax rates. If there are start up losses, will those losses be trapped in a corporate structure or will they flow through a partnership. “If you are financing the purchase, how the debt is structured will affect how the profits are taxed”, says Gordon Jessup, Tax Partner at Fuller Landau. If, for instance, a partnership acquires the property and the partnership is the debtor, this impacts your ability to claim capital cost allowance. You cannot claim capital cost allowance in order to create a loss, so in a structure where you have multiple people coming together to buy a property, it is generally better to have them borrow the money individually and have them contribute the proceeds into a partnership structure. The partnership calculates the income at the partnership level, claims the capital cost allowance and allocates it out to the partners who can then claim the interest expense. This may create a better tax result than if the debt was held inside the partnership. It’s all part of your overall tax planning. Depending on what your goals are, you may want to use another tax structure like a family trust as a way of income splitting. For example, the purchase could be structured in such a way that income from the property could accrue to children for their education. Keep in mind that various tax strategies can be implemented regardless of an acquisition. All property owners should explore possible tax savings especially if they are considering a future sale, have long-term holdings, or have succession planning objectives.
Lastly, how a property is purchased will have tax implications when you sell. A professional services firm specializing in the structure of real estate will know how to structure the transaction to your specific benefit. If you are buying multi-residential properties, it’s likely you already have your own in-house accounting department. You might ask: “Why do I need to hire an outside accountant?” There are a couple of reasons why an outside accounting firm specializing in real estate can compliment your existing accounting firm or department. First, an outside accounting firm is not duplicating the work your inhouse department is already doing. Their job is to identify the risks that you, as the buyer face and to examine tax structures that will work to your advantage. Secondly, hiring an outside firm won’t disrupt your day-to-day operations. Your people are focused on their day-to-day responsibilities and they’re not forced into a situation where they have to produce reports or meet the deadlines of sellers or lenders. It also keeps financial information confidential so people inside your business do not have access to sensitive information. As you can see from the few examples we have cited, due diligence and structuring a transaction is a complicated process. There is no cookie cutter approach or onesize-fits all plan. In these cases, an external accountant should be seen as an extension to your in-house accounting department. A specialty firm can provide your internal CFO the information they need to close and structure a successful deal in today’s challenging real estate market. CAM Michael Stoyan is a Partner with Fuller Landau LLP, Chartered Accountants and Business Advisors, an accounting and consulting firm. To contact Mike call 416-645-6545 or email mstoyan@fullerlandau.com.
technology
Technology holds the key to strategic, competitive advantages Software packages offer top-to-bottom solutions
When integrated with a strategic business plan, property management software tools offer greater transparency, more efficient portfolio management, and a higher degree of risk mitigation. By Bradley Setser and Joel R. Nelson
Real estate professionals have a tremendous advantage in technology. The benefits of the latest innovation in real estate management tools are inherent—and within reach of all employees of a real estate organization, from the CEO on down. Within a few years, property management software packages have evolved from being tools of convenience into end-to-end, top-to-bottom solutions. They constitute the technology strategy portion of a strategic business plan whose principle elements include greater transparency, more efficient portfolio management, and a higher degree of risk mitigation. A growing number of real estate professionals are recognizing these advantages and embracing these technologies. Transparency is on the market now. For example, dashboards can improve asset management by offering every real estate 18 Canadian Apartment Magazine
practitioner—from property and maintenance managers to top executives—an unprecedented degree of operational visibility. Ready access to real-time reporting, task notification and analytics (including drill-down to underlying data) is dashboards’ real calling card. Dashboards tailored to roles give managers and users a real-time, dynamic view of daily tasks; this sheds light on issues that need immediate attention. The most notable of these dashboard views is the executive dashboard, a configurable tool for providing executives a personalized, instant view of portfolio analysis and such key performance indicators as budget, profit-and-loss, and space management. All this adds up to dramatically faster decisionmaking capability. Similarly, the development of portals is beginning to catapult real estate owners and managers ahead of their
GSI
GAS SOLUTIONS INC.
Project Overview: 31 St. Dennis Drive in Toronto has 329 Suites and 8,000 sq. feet of retail space. A pre job inspection revealed that the Boilers required replacing. They currently had 3- 1 million BTU plus 1- 1.6 million BTU copper low mass atmospheric DHW boilers. 5-119 gallon storage tanks plus 1- 700 gallon cement lined tank and 1 building re-circ line. They were repairing these weekly plus constant complaints of no hot water during peak demand times.
Challenges:
Pre Retrofit
To change over this buildings boilers in January with the least amount of down time and interruption to the tenants and retail stores.
Approach: v Disconnect 2 of the dead boilers v Install 4 EVO Duo Six Rack Pack Custom rack @ 2.4 Million BTU’s operating at 97% efficiency. v Install 4 -250 gallon new insulated storage tanks v Connect common vent and tie into existing DHW line
Heating: January 19th 2008, cannot shut off heating to building v 6-2.1 Million BTU copper Low Mass Atmospheric Boilers v 3 for the east wing v 3 for the west wing
After Retrofit
Heating set up: v Remove 2 of the dead heating boilers, and with space from the removed DHW boilers set up the 1.5 + 2.0 EVO boilers. v 1 set for the East side v 1 set for the West side v 6.3 million BTU’s removed and 3.5 million BTU’s installed per side
Energy Results: v Over 16 million BTU input replaced with 9.4 million Btu’s of Hamilton Engineering EVO Condensing Boilers. Estimated savings, 361,328 cubic meters of gas or approx. $165,850 per year!!
GSI GAS SOLUTIONS INC.
Steve Cambria 207 Madison Ave. S. Kitchener ON M2G 3M7 T. 519.579.7124 F. 519.745.6724 C. 416.346.6259 steve@gassolutionsinc.com
New DWH
technology
“The most advanced software systems feature fully integrated solutions that consolidate portfolio, financial, lease, and other data into one database, giving all network users instant, secure, real-time access.” competitors by uniting external stakeholders—prospects, tenants, investors, employees, prospective lessees, and service providers—with the operating information system via a common site. This step drives efficiency into every transaction involved in managing their business. Vendors, owners, tenants—each can have a dedicated portal that provides instant information and interaction with the central operating database. That facilitates such benefits as: • Dynamic marketing of available space • Online applications and leasing • Online electronic transactions such as invoicing and rent payment.
managers, while ideally generating greater confidence among investors.
The level of service enabled by portals can provide one of the greatest competitive advantages when used to their fullest extent. The most advanced software systems feature fully integrated solutions that consolidate portfolio, financial, lease, and other data into one database, giving all network users instant, secure, real-time access. The following items are some strategic advantages that such technologies give to real estate professionals.
Business Intelligence
Global Portfolio Management Managing a global portfolio through a single, advanced system allows the integration of operating data with portfolio financials by automatically rolling up general ledger data and auto-generating portfolio transactions. Combined with handling multiple sets of accounting rules, VAT/tax rules, language translations, and currency conversions, this capability allows consolidation of multinational portfolios for both operations and investment 20 Canadian Apartment Magazine
Risk Mitigation Running all elements of real estate data in one integrated system gives executives visibility into a single source of real-time information while eliminating redundant data-entry and minimizing human error. Such integration also provides real-time management reporting with full drill-down capability—a key factor in risk mitigation. REITs and investment advisors can ensure the integrity of their investor reporting by centralizing and integrating operational data with portfolio financials.
Placing operating and market data in one centralized database eliminates the need for static reporting and data warehousing. The result: accessibility to key performance indicators, portfolio analysis, and the ability to project portfolio scenarios are virtually instant. Factors such as market conditions, revenue and expense, rate-of-return, budget projections, valuation scenarios, and variables can be automated and adjusted by a few keystrokes and clicks of the mouse.
Cost Savings Enhancing the bottom line is one of the principle motivators for embracing a technology strategy. As just one example, companies are finding they can save 20 to 80 percent on the processing costs of payables by adopting electronic transactions; approving and delivering thousands of pages’ worth of document digitally online avoids the labor, materials costs and time associated with printing and mailing.
Additional services As mentioned above, advanced portal solutions permit dynamic exchanges of real-time information and transactions with stakeholders outside your company. Tenants can submit work orders, pay rent, and reconcile common-area charges. Work orders are submitted directly in your operating data, notifying maintenance employees, creating a purchase order, initiating e-procurement for replacement if inventory is down, and generating accounts receivable for bill-back to the tenant—all in an automated process. Likewise, vendors can submit invoices online, initiating the accounts payables approval and payment process right in your software system. High-performance real estate technology providers are moving to capitalize on the possibilities presented by the current issues facing our industry. Real estate industry leaders, eager for competitive discriminators and service enhancers, are gearing up to commit the investment costs to implement new technology as a key element of their success. The synergy between the real estate business and the technology supporting it continues to gather momentum in the wake of growth and globalization. The signals are clear: To compete in any real estate realm, you need technology on your side. Integrating the latest real estate applications into your strategic business plan and staying alert to new developments will pay big dividends in a highly competitive marketplace. CAM Bradley Setser is the Vice-President of Marketing for Yardi Systems, a company that specializes in software solutions for the real estate industry. Joel R. Nelson is the Senior Real Estate Industry Analyst for Yardi Systems.
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will seamlessly integrate a smart sub-metering solution into your plans. It’s risk-free; there’s no upfront capital cost, and cash flow is improved because Enbridge Electric pays the utility and bills the suites directly. From installation and maintenance, to meter reading, billing, customer service, education and emergency response, Enbridge Electric delivers the industry’s most comprehensive smart sub-meter offering. As part of North America’s leading energy distributor, Enbridge Electric is the smartest solution.
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communityfacilities
Convenience is Key Property managers and building owners need a laundry room that operates at peak efficiency, with a minimum of management time. By Dick Casey
Over the past several columns, I’ve discussed the pieces involved in turning your existing common-area laundry room into an inviting community laundry. We’ve looked at the location of the room and how moving it closer to other amenities brings greater convenience for residents. Again, convenience was the operative term when we discussed equipment mix to ensure adequate capacity to serve residents. Controls and activations also were touched upon in terms of ease of use, as was having equipment to meet the needs of disabled residents. Now let’s look at another area of convenience — your own. Both you and the route operator your property is working with for laundry service want the community laundry to run not only at its maximum efficiency, but also at maximum capacity and with a minimum of management. So what kind of things should we take into consideration? Whenever I have the discussion of convenience with someone in multi-residential, it isn’t long before we’re on the topic of “being green.” Water rates are rising, especially 22 Canadian Apartment Magazine
in Canada, where work has begun in earnest to upgrade an aging infrastructure. Therefore it’s imperative for properties to do all they can to conserve this resource. Often this need can be addressed on the washer side with a high-quality frontload washer. In terms of water savings, a frontload washer could reduce water consumption by 93 litres or more compared to older topload models. The higher spin speeds of these washers add to the efficiency equation by removing more water from loads. That translates into shorter drying periods and lower utility consumption. Don’t forget to take a look at cycle times for your washers. Remember, when the washer is completing cycles faster that means it isn’t using as much electricity as those with longer times. When multiplied by the number of machines, a few less minutes in cycle time can offer additional utility savings. Programming is another area to consider in the laundry room. As your costs increase, you’ll want to adjust vend rates to
giving you
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professional staff Proud to be a key supplier for many years with Briarlane Property Management
communityfacilities recoup those costs. How easily can this task be accomplished? You want to not only be able to adjust vend prices easily, but also tweak the wash cycles themselves. In the past, these could be time consuming, tedious tasks and ones that were put off (which meant in the case of vend prices you weren’t maximizing profitability). Today, manufacturers are simplifying programming with easy-to-use management systems. Some are even moving toward infrared communication ports, where management can upload programs or download operations data to a PDA in seconds. These types of communication create convenience on a variety of levels, including reviewing machine use and assisting with troubleshooting problems or tracking parts and service history. Keeping up on maintenance items — as prescribed by the manufacturer of the laundry equipment — can keep you from reacting to emergencies (and likely unhappy residents). Definitely make sure dryer vents are cleaned and inspected regularly. Clean filters are another key to overall efficiency for the laundry. You’ve taken the time to install fast efficient equipment, now making sure the equipment is used correctly can save you some headaches as well. I recommend installing signage to educate residents on how to operate the machines. Many residents might not be aware that high-efficiency frontload washers require a detergent specifically made for such machines. Signage informing your residents of this fact will guard against situations such as oversudsing of machines and ensure the best wash results for residents. Signs should also offer tips on load size (again, ensuring clothes are washed and dried efficiently and to residents’ standards) as well as overall operation of the units’ controls. We’ve discussed the importance of cleaning lint filters to provide efficient operation and fast drying. This is another important message for signage in the laundry. Some route operators may have signage (maybe it’s even offered in a variety of languages) already developed to meet your needs; I encourage you to ask them. They also may have brochures offering laundry tips and machine operation instructions to accompany signs. Brochures and signage are just a couple examples of offerings that may help you decide which route operator to work with. Perhaps that’s the most important message of all to take from this column about convenience. Choosing a full-service route operator, one who is focused on customer service, will bring property managers the greatest convenience. Making a poor choice both in operator and equipment could mean far more work for you and likely less convenience for the residents you’re serving. Choose wisely. CA M Dick Casey is director of multi-housing sales at Alliance Laundry Systems, the world leader in manufacturing commercial laundry equipment. Casey has more than 35 years of experience in the laundry industry. 24 Canadian Apartment Magazine
Proud to be a member of the Briarlane Management team of excellence. Congratulations on your success.
40 Production Drive, Scarborough, ON M1H 2X8 Telephone : 416-724-2228 www.tridentelevator.com
coverstory
Photograph by F. E. Higgins
26 Canadian Apartment Magazine
Briarlane takes on new partners Senior Executives Acquire Shares in the Company By Randy Threndyle
coverstory
Founded by company President Brad Smith, Briarlane Rental Property Management Inc. recently announced that four senior vice-presidents, Susanne Maguire, Monish Comar, Patricia Brawn and Andrus Kung have become partners in the firm. Briarlane Rental Property Management, a privately-owned third-party property management company, recently announced a change in the ownership structure of the company. Four senior vice-presidents who had been with the company for many years will now become partners, or partial owners of the business. They are: Susanne Maguire, Briarlaneâ&#x20AC;&#x2122;s Vice-President of Marketing and Administration; Monish Comar, VicePresident of Finance and Controller; Patricia Brawn, Vice-President and General Manager; and Andrus Kung, Vice President Operations and Commercial Properties. Founded by company President, Brad Smith in 1998, Briarlane manages about 9,000 rental units, as well as 800,000-square-feet of commercial, industrial and retail space. Most of the properties the company manages are in the Greater Toronto Area, with properties as far west as London and east to Oshawa. Smith, who will remain as President and majority owner, says the decision to bring the senior management team into an ownership position in the company was done to benefit the companyâ&#x20AC;&#x2122;s clients and to ensure continuity. The companyâ&#x20AC;&#x2122;s clients, he says, will benefit from the restructuring as they will be assured that the same management October 2008 27
Photograph by F. E. Higgins
coverstory
From left to right: Monish Comar, V.P. Finance & Controller, Susanne Maguire, V.P., Marketing & Administration, Brad W. Smith, President, Pat Brawn, V.P. & General Manager, Andrus Kung, V.P. Operations & Commercial Properties
“Our clients are happy to hear that we have put things in place and all of the key people are going to be here for years and years.” team will be in place for many more years. Clients with large portfolios, he says, were concerned that if he decided to retire they might be forced to find a new property manager. “You can image if you own several thousand residential rental units, it’s a big undertaking to decide who will look after them and how they will be managed.” Since the company’s clients were happy with the way the current management team was handling their properties, ensuring that those people remained would secure the company’s future. “Our clients like my key people, so the best thing to do was to make my key people partners in the business, most of whom are much younger than me,” he says. “Our clients are very happy to hear 28 Canadian Apartment Magazine
that we have put things in place and all of the key people are going to be here for years and years.” Under the terms of the partnership, which became effective September 1, Smith remains as the company president and the majority shareholder. Over time his share position will decrease and the partners will become equal shareholders. Several of the new partners have worked with Smith for many years, some at other companies. Smith, who is 54-years old, began his career over 30 years ago gaining property management experience at Cadillac Fairview Corporation where he was involved in managing the company’s portfolio of regional shopping malls. At Highmark
properties he handled a large portfolio of residential, commercial, retail, office and condominium properties. Susanne Maguire is Briarlane’s Vice-President of Marketing and Administration. Maguire’s background includes experience in the management of a variety of rental residential and condominium properties situated within the Greater Toronto area. Maguire has been instrumental in developing many of the administrative and computer systems currently in use within Briarlane. Monish Comar, Vice-President of Finance and Controller, is a Certified General Accountant and graduate of the University of Toronto, Monish has many years of accounting and financial experience in the residential, commercial
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coverstory
Photograph by F. E. Higgins
and retail property management sectors. Prior to his five years leading the finance and accounting department at Briarlane, he held positions with Tridel and Oxford Properties. Patricia Brawn, the Vice-President and General Manager of Briarlane, has worked in the property management field directly with Smith for over 20 years. Patricia has been instrumental in attracting excellent site staff and standardizing procedures at company-managed properties. She also works to ensure that the services offered by the company are consistent and of high quality. Andrus Kung, Briarlane’s Vice President Operations and Commercial Properties, has a comprehensive knowledge of both commercial and residential management, gained over the last 15 years. An honours graduate from the University of Western Ontario, Andrus also holds a Certified Property Manager (CPM) designation. This formal training, combined with years of experience, has been instrumental in allowing him to implement maintenance and management procedures at commercial
30 Canadian Apartment Magazine
properties. His work has protected client investments while at the same time maximizing revenues. Kung is noted for working with owners to design and implement capital work plans that prepare the client for the future. Commenting on the new ownership structure Smith says: “We wanted to ensure continuity and make sure there are people here who can look after our clients. It also allows me the potential to retire at some point down the road.” Continuing the current management structure will help with the company’s philosophy of building enduring client relationships by offering sound advice and effective management strategies. Briarlane’s senior executives, says Smith, know that the key to effective property management is not the size of the management organization, but rather its ability to recognize that each property has its unique characteristics. The team, he says, delivers its service in a personalized fashion using highly qualified and experienced personnel. Smith says much of the company’s success is due to the fact that the company is strictly a third-party property
manager and does not own any real estate other than its own office building. “Our clients like the fact that we don’t have any conflicts of interest. We’re not competing with them in acquiring property or cutting special deals for our own properties,” says Smith The company’s clients, he says, are often multi-generational family-run businesses that need a third-party property manager who can handle the day-to-day operations of the business. “There’s a lot of day-to-day grind in what we do. We’re responsible 24/7 for toilets and all other repairs,” he says, adding “If you’re an owner/operator it can be quite overwhelming to have to do all these things yourself.” There is also the acquired knowledge gained from running a large portfolio efficiently that smaller individual owner/operators can rarely achieve. As a third-party property manager, Briarlane has the staff to handle the complex issues that face many property owners. Many clients, says Smith, feel that their time is better spent “managing the manager” and freeing up their time to look for
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coverstory new business opportunities. And, when clients find a new property, the Briarlane management team is able to quickly and effectively turn an underperforming property into one that benefits the owner’s portfolio. One such property was a 150-unit building in on Glen Erin Drive in Mississauga Ontario. The building was purchased by Osgoode Properties, an Ottawa-based company owned by Stephen Greenberg. When Greenberg purchased the property in 2005, 46 suites or over 30 per cent of the building was vacant. Since the building was Greenberg’s first purchase in the Toronto area, he set about finding a local property manager to renovate the property and increase its profitability. Smith, who was introduced to Greenberg through the real estate agent involved in the sale, says Briarlane won the management contract based on his references and a list of recommended property improvements that he and his staff prepared. “What we recommended was exactly what Stephen wanted to do, so we hit it off right away,” he says.
Improved Security Among the first improvements was a better security system for the building. All the locks in the suites were re-keyed and a key fob system was introduced to improve security in the common areas and entrance of the building. The key fob entry system works using a proximity reader, so residents don’t have to actually put the fob into the door. The reader detects the fob and lets tenants into any area they are entitled to enter. If, for instance, they don’t have underground parking, they can’t get into the garage, but if they are paying for parking, they can get into the garage. The key fob registers on Briarlane’s computer, so the property managers can keep track of everyone who comes into the building, what time they entered and where they went. The key fobs increase resident security as, if someone moves out of the building and doesn’t return their key, that key fob can simply be eliminated from the system, rendering it inactive. “It eliminates the problem 32 Canadian Apartment Magazine
where we don’t know where all the keys to the building are and it makes the building much more secure,” says Smith. In addition to controlling the parking areas, the key fobs also give residents access to the main entrance doors and the laundry room. To further increase security, cameras were installed at the all the building entrances, in the parking garage and in the elevators. Cameras also record everyone who enters the lobby or the laundry room. “If you come into the building, you’re on camera,” says Smith. To further increase security in the laundry room a card payment system was put in. It allows residents to pay for laundry services by simply loading the card with a set amount of cash. The card can then be used to operate the machines. Not only does that increase resident convenience, it also reduces
theft as there is little or no cash in the laundry room. The fire alarm system, which dated to the 1970s, was also replaced. Under current fire codes, new fire alarms have to meet audibility levels in every room. Since the fire alarm system couldn’t be upgraded to meet the new standards a decision was made to replace it. Smith says the renovation also included improvements to many resident facilities like the laundry room, which got new high-efficiency machines and new decorating aimed at making it a pleasant and clean place for residents. The laundry room now has new countertops and cabinets, as well as a sitting area. A community social room, which had deteriorated into a junk storage room, was also cleaned up and made into a
Congratulations Briarline Property Management!
coverstory
“You don’t run into that many golden opportunities to do such an easy conversion.”
room where tenant functions can be held. New ceramic floors, cabinets and window blinds were added at a cost of about $11,000. The hallways and other common areas also got a makeover. In many cases that meant repairing drywall and replacing ceiling tiles. As well, new ceramic tile and baseboard was installed in the elevator landing areas on each floor. With new carpets, paint and chair rail the hallways are now decorated to the same quality one would expect to find in a condominium, says Smith. New indoor and outdoor common area lighting was installed by Mercury Lighting Limited. The new lighting both improved the look of the building and lowed energy costs. It included lighting in the corridors, stairwells, elevators and the indoor and outdoor parking areas. The energy-efficient lighting is expected to save over $14,000 per year. Inside the suite, lights were replaced with new energy-efficient fixtures.
Improved Curb Appeal Outside the building, a number of upgrades were undertaken to improve the building’s curb appeal. That involved installing a new tile floor at the front entrance and making landscaping improvements. With this building, however, there was a challenge not normally faced by property managers. In this case, the main entrance to the building does not face the street. The building’s front entrance is located on the east side of the building, but the main road, by which residents enter the property, is Glen Erin Drive, which is on the west side of the building. To someone driving by, the back of the building looked like the front entrance. Adding to the problem was the fact that the garbage bins sat in what looked to potential residents, like the front of the building. To solve the problem Briarlane built an enclosure to hide the garbage bins and improved the landscaping to make the back entrance more appealing. “Now the back entrance looks as nice as our front entrance, even though our front 34 Canadian Apartment Magazine
coverstory entrance is still on the other side of the building,” says Smith. Inside the suites Briarlane undertook a number of upgrades aimed at improving the quality of the suites and addressing a long list of in-suite deficiencies. Insuite maintenance, says Smith, had not been kept up-to-date and in many cases, residents had given up on asking for repairs. Since the building had a number of vacancies, Briarlane began by refurbishing those suites and doing the rest on turnover. In occupied suites, where a complete overhaul is difficult, repairs were carried out to bring the units back to proper standards. On turnover, suites are given new bathroom fixtures and tub surround and kitchens get new countertops and ceramic backsplashes. The kitchens also get ceramic floors and new appliances. The upgrades, says Smith, are meant to bring the units to condominium quality. Using ceramic tile, he says, is only a little more expensive than vinyl tile and has the advantage of looking better and lasting longer. He estimates that about 85 per cent of the suites have been renovated in the past two years. In one area, Briarlane was able to dramatically increase the building’s revenue. On inspecting the building the company found that 13 floors in the 14-storey building had an empty room opposite the elevator landing. The rooms, which had balconies but were otherwise vacant, had apparently been set aside for storage. Instead they had sat unused and collecting dust for over 30 years. Each of the 450-square-foot rooms was converted into a bachelor apartment at a total cost of approximately $400,000. The annual rent on the 13 units is just over $100,000, giving a payback period of four years. “You don’t run into that many golden opportunities to do such an easy conversion,” says Smith.
Sub-Metering Another in-suite improvement currently under way is sub-metering, which will see each unit pay its own electricity bill. Smith says new sub-metering systems are much easier to put in as there is no 36 Canadian Apartment Magazine
requirement to install a glass meter for each unit. Instead, a computer chip monitors each unit’s electrical consumption. The chip relays the information back to a computer which tracks the amount of electricity going into the apartment. Each chip is government approved and only licensed companies can install and monitor the sub-meters. While the property managers are not responsible for monitoring the electricity usage, they do get a weekly printout of current usage on each unit in the building. Smith says that is useful information as it allows you to speak directly with the tenants who are using the most electricity. “Often we find they have two refrigerators and/or a high consumption appliance like an electric barbeque,” he says. But in one apartment in another building they found a marijuana grow-op in one of the bedrooms. High electrical usage “kind of waves a red flag,” to building managers, says Smith. “For operators of apartment buildings, it’s a big problem these days.” In buildings where sub-metering has been done, tenants typically begin paying the electric bill on turnover. Smith says their experience has been that most tenants benefit from sub-metering. The tenant’s rent is decreased and they pay only for the electricity they use. Under sub-metering, the amount of electricity used by the common areas is calculated and subtracted from the total electrical consumption of the building. The remaining amount is attributed to
each unit on a square-footage basis. That amount is then subtracted from each unit’s rent. Smith says most tenants like submetering as they can save money by reducing their electrical consumption. Before, they might have gone to work and left the lights on or the air conditioner running. Now, he says, when they switch off the lights, they are saving money. Some tenants have reduced electrical consumption by 20 to 30 per cent. “It’s a win-win situation,” says Smith, adding, “It’s good for Ontario, because we’re using less electricity. In Europe everybody pays for what they use, and that’s the way it should be here. Then people are cost-conscious. Once you give people carte blanche to abuse, they are going to bend the rules.” Smith says Briarlane’s ability to take over problem properties and make them profitable is one of the main reasons that building owners have stuck with the company. At the Glen Erin Drive building, vacancy rates went from 30 percent two years ago to zero today. “Owners of buildings like to hire us because not only are we excellent operators but we have expertise in renovating buildings. We can get the work done properly at good prices and we can get the income up as fast as possible.” At Glen Erin Drive Smith estimates the company spent about $1.2 million or about $7,300 per unit, a cost offset by the now achieved significant increase in the value of the units and the higher per suite rental rates. CA M
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propertymaintenance
To upgrade a little ... or a lot Timely upgrades extend elevator life and reduce downtime Minor upgrades to older elevators will keep them running efficiently and allow you to budget for major repairs or modernization.
38 Canadian Apartment Magazine
It is said that old soldiers never die…they just fade away. It can also be said that old elevators never die, they just become erratic. I know that doesn’t rhyme but it is a realistic description of what can happen with older elevators. They reach a point where they cannot be kept “alive and kicking” no matter what medicine (read maintenance and service) we offer them. (Just like our old soldier.) Eventually our “old soldier” will give up the ghost and go to his reward! Our old elevator, of course, will just fail in some major component and then not be available for use by the building occupants “for a considerable period of time.” That causes problems…especially for cash flow and happy tenants! Several floors of angry tenants does not a happy owner make! At this point there is no choice but to upgrade the equipment to modern standards. And now you have to do this under pressure and under a severe time constraint. “Gotta have that elevator working NOW,” says the tenant’s association “or else,” also does not a cost effective repair make!
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October 2008 39
propertymaintenance
“The annual use of each elevator will easily reach 350,000 cycles ... and even more!”
Could this confrontational situation have been avoided and, if so, by what means? Well, using our “old soldier” analogy again, we could have extended his life by the use of proper medicines (read maintenance and service again) and perhaps a couple of transplants (read component upgrades). Eventually we know that our old soldier will come to his final days no matter what medicines we use and so will our old elevator. However, we will have extended his (its) life for a number of years and provided a good “quality of life” for the tenants in the interim. This analogy is to illustrate the concept of minor upgrades to older equipment to keep it operating in the most efficient and reliable manner while we budget for that major repair or “modernization” that we know is coming! Like the boy scouts say…we must be prepared! The components which require the most attention “on a continual basis” are, logically, those components which are subject to the most wear, use or abuse! This list would include: • Automatic door operators (top of the list you notice!) • Car doors and their related components (rollers, tracks, sills, guides, door re-opening devices, etc) • Landing doors and components at common use entrances (lobbies, garage levels, sub-basements) • Controllers To give a little credence to the “wear factor”, consider a building where 500 tenants use the two elevators in their building just twice a day. If we do the math, we realize that 500 tenants times two will mean that the lobby doors on the two elevators will (each) be used a total of 182,500 times! Now let’s add visitors to these tenants and pizza delivery people and sales people and newspaper boys and other delivery persons plus move-ins and move-outs (very hard on elevator equipment). The annual use of each elevator will easily reach 350,000 cycles…and even more! Demand for elevator service in your building does not decrease with age…
40 Canadian Apartment Magazine
propertymaintenance in fact it will most likely increase! Consider the elevator controllers, which receive this extraordinary demand for service each year, sending signals to open doors, start motors and activate brakes. And they are expected to operate flawlessly “each and every time”, even as they are aging, slowing down and wearing out just like our “old soldier”. Age slows everything down and decision making (read elevator response time) becomes slower. Without proper care and attention for your “old soldiers” dramatic changes in operation will manifest themselves. Call backs will increase and tenants will become more and more demanding. Your elevators are the hardest working and most visible equipment in your building and require lots of TLC (Tender Loving Care). Take heed of the regular reports received from your maintenance company. The men and women who maintain and service your elevators are well trained, knowledgeable and
motivated…they are the experts! They provide the TLC for your “old soldiers.” They ensure that your elevators operate efficiently and most importantly, safely! If they have noted that a certain major component is reaching or has reached the end of its service life and should be replaced, it makes good business sense to make it happen! Proper service and preventive maintenance by a competent company on a regular basis will keep the elevators operating in a manner suitable for their age and condition, extending their working life and ensuring “happy tenants”. Eventually, however, the accumulation of failed or worn out components, both major and minor as our “old soldier” ages will require that a major upgrade (read modernization) is due! The time to perform the modernization will vary by building and usage and tenant density thus it must be tailored to the needs of each. Your maintenance company is your “best friend” for keeping you informed
of the condition of your elevators and advising when “the time has come” for a modernization. Delaying or “putting off” the modernization beyond when all the indicators say “it is time”, will just cause tenant unrest and accelerated wear of already “aged” or “worn- out-in-service” components. Erratic operation will become more noticeable, thus confirming the advice of your maintenance company. Like death and taxes, the “big one” is a certainty for our “old soldier”. It is just a matter of when! The moral of this story is that upgrading a little on a regular basis will permit a more cost-effective, timely and convenient modernization. (Read “upgrade a lot!”) CA M
Dave Balmer is an employ of Quality Allied Elevator, an elevator maintenance, installation and modernization company, located in Markham Ontario. He can be reached at 905-305-0195, or www. qualityalliedelevator.ca.
October 2008 41
security&life safety propertymaintenance
Ontario reverses holdout stance on sprinklers Mandate for Multi-Res Construction Begins April 2010 By Barbara Carss
Ontario will join every other Canadian province when a requirement for sprinklers in new multi-residential buildings above three storeys goes into force in April 2010. The new regulation, which amends the Ontario Building Code (OBC), was announced in June 2008. Meanwhile, an earlier private member’s bill that would give municipalities the authority to mandate sprinklers in all new residential construction is still before the Ontario legislature and could become law in the future. Although the Building Code has required sprinklers in commercial, industrial and institutional buildings, including hotels and seniors’ care homes, it has exempted multiresidential buildings until now based on a cost/risk analysis that concluded the potential gain in lives saved would be limited compared to the investment required. Instead, the code prescribed other design standards for high-rise residential buildings relating to smoke and heat control, exits and areas of refuge that were considered to provide an equivalent level of safety. The recent amendment follows from a public consultation earlier this year. “Ultimately it was a government decision to increase fire safety in multiresidential buildings greater than three storeys and it 42 Canadian Apartment Magazine
was recognized that sprinklers do increase safety. Also, it was recognized that Ontario was not in line with other provinces. Ontario is the last Canadian jurisdiction to require sprinklers in multi-residential construction,” says James Douglas, a Manager with the Building & Development Branch in the Ministry of Municipal Affairs and Housing. The new rules will apply for building permits issued after March 31, 2010. Sprinklers will also be mandated for building additions and major renovations that involve substantial changes, such as gutting whole floors or stripping a building to its structural frame and rebuilding within. Change of major occupancy, such as converting from commercial to residential uses, will also trigger the requirement for sprinklers. In all cases, sprinklers would be necessary only in the areas where the changes have occurred, not the entire building. “Installing a new kitchen or bathroom in an existing unit would not trigger the requirement for sprinklers,” Douglas clarifies. “Keeping the same unit layouts and not really structurally altering the building would not be a significant change.”
security&life safety that were previously required in the absence of sprinklers will no longer be needed. Extra precautions to control smoke movement in stairwells, elevator shafts and all levels of the building above the origin of any potential fire, or to alternatively provide designated areas of refuge on each floor, will become unnecessary. Builders will also have greater flexibility to use non-masonry firewalls in some circumstances.
in the future, particularly for programs aimed at creating affordable rental housing. For example, the City of London currently offers incentives in tandem with Canada Mortgage and Housing Corporation’s (CMHC) Residential Rehabilitation Assistance Program (RR AP) to encourage the conversion of largely
vacant and obsolete commercial buildings in the city’s downtown core. Grant recipients can receive forgivable loans of up to $48,000 per unit, to a maximum of six units, when they create new residential units and commit to affordable rents ranging from $389 per month for bachelor units to $769 per month for three-bedroom units.
CONVERSION COMPLICATIONS The costs and complications of complying with additional fire and smoke separation requirements have already made sprinklers a preferred option when older commercial and industrial buildings are converted to residential uses, particularly with timber beam or steel frame buildings. “We have sprinklered every conversion project we’ve ever done because it makes everything else much, much easier,” reports Les Klein, Principal and Co-Founder of Quadrangle Architects, the designers of several notable loft conversions, including the Candy Factory and Toy Factory in Toronto and the Kaufman Lofts in Kitchener. “You can almost say that for any building of three storeys or more or in excess of about 6,000-square feet, sprinklering is what makes conversion feasible.” That’s not to say it’s simple. Even if a building is stripped to its structural frame, piping will have to be installed and it will have to pass through floors and ceilings. The piping will also be visible, although this hasn’t necessarily been a marketing drawback since exposed elements, such as piping, beams and columns, have become part of the design aesthetic of many conversion projects. Beyond Toronto’s flourishing market for downtown condominiums, several Ontario municipalities offer, or have offered, development incentives to convert derelict commercial buildings to residential uses. The requirement for sprinklers upon a major change of occupancy is likely to affect the economic feasibility of such programs
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security&life safety
“We have sprinklered every conversion project we’ve ever done because it makes everything else much, much easier.” COSTS AND TRADE-OFFS Cost estimates for sprinklers in new construction range from the Canadian Automated Sprinkler Association’s projection of $1.50 per square foot to development industry estimates of $5.25 per square foot. More detached observers suggest the likely price is somewhere between those two figures. For their part, advocates for the development industry argue that the new regulation is the wrong measure to address the predominant life safety concerns in the residential sector, which tend to be found in older buildings that do not comply with more recent OBC standards or which relate to inadequate or non-functioning smoke detectors. “Our high-rise buildings are built out of non-combustible concrete and, based on the data that is available, they are the safest form of housing that you can buy and live in,” says Richard Lyall, President of the Residential Construction Council of Central Ontario (RESCON). Proponents counter that sprinklers aren’t interchangeable with smoke detectors. Rather, they are fire suppression tools that come into play 44 Canadian Apartment Magazine
after smoke detectors have given building occupants warning. Sprinklers then slow or extinguish flames, reducing property damage and providing enhanced protection for occupants who haven’t yet evacuated the building. “Non-combustible construction addresses only the ability of the building to remain standing under fire conditions. It does not address the life safety issues in terms of safe egress from the building or prevention of conflagration,” says John Roberts, Senior Associate with LRI, a firm specializing in fire protection engineering and building and fire code consulting. Fire prevention authorities and consumer protection organizations have expressed concern about modern furnishings and interior building materials that burn faster and hotter and release more toxins than wood and other natural fibres. Some studies have concluded that traditionally accepted calculations for burn rates and adequate evacuation time are no longer accurate. Fire safety advocates see this as another argument for sprinklers, although they concede that sprinklers would offer the greatest protective boost in the single-
family residential sector, which is not covered in Ontario’s new Building Code amendment. The high-rise condominium sector has been generally more affordable and is attracting a higher share of first-time homebuyers whom Lyall argues are less able to absorb passthrough capital costs that a number of new or proposed regulatory initiatives could impose. “The people who are right at the affordability line or slightly above it are the ones who are going to be paying the most for this,” he asserts. “At the same time, the industry is absorbing other costs in new requirements for energy efficiency and environmental sustainability measures.” Yet, as with energy-efficient technology, increased demand and innovation could also help bring costs down. “Now that the legislation is in place, I can see [the possibility of] great changes in technology that will probably reduce the cost of buildings over time,” Roberts predicts. The regulation will bring some counterbalancing cost savings in new construction since some safety features
security&life safety “We are finding that the conversions tend to be very costly – in some cases as much as for new construction. These are very old buildings that have all kinds of challenges with wiring, plumbing, asbestos and other things and this [a requirement for sprinklers] is just adding to it,” observes Neil Watson, a housing development consultant who works with the City of London on its Convert-to-Rent Program. “At some point the property owner may think: Is it really worth it?” However, municipal conversion programs have tended to target lowrise commercial buildings with a few storeys of vacant space above street-level retail and many of these buildings will still be exempt from the requirement for sprinklers if they are less than four storeys. Nor have such programs delivered a great deal of housing to the market. “It hasn’t been a program that’s been embraced by the business owners,” Watson acknowledges. “Ten units would probably be a good year for us.”
sprinklers, people didn’t want it,” Lyall says. “They’d rather put the money into hardwood floors or something.” In the multi-residential sector, the new requirement is imminent and developers will have to adjust – as they always do. “Right now, they view the idea of having to spend more money up front as an imposition but, just five years ago,
sustainable design was seen as a luxury and now it’s more and more seen as a requirement,” Klein reflects. “I expect, in time, builders will accept this. The requirement will suddenly become a marketing feature.” CA M This article was reprinted from Canadian Property Management Magazine, September 2008.
NEW RISKS AND RESPONSES Unlike many other systems and elements that will need to be replaced over the lifetime of a building, sprinklers are a one-time capital cost. “The only additional cost is annual maintenance,” Roberts says. Nevertheless, residential landlords, property managers and their insurers may be wary of introducing a potential new source of water damage into their buildings. Many observers foresee a higher propensity for accidental discharges in residential properties as inhabitants start cooking fires, carelessly knock objects against sprinkler heads or even hang objects from the sprinkler heads. “The problem with sprinklers is that when they go off prematurely or unnecessarily, they cause huge amounts of property damage, and there are all kinds of individual unpredicted acts that could occur and cause an accidental discharge,” Klein notes. That wariness might also extend to homebuyers. “In the low-rise sector, where builders have tried to market October 2008 45
propertymaintenance
Video Cameras Identify Plumbing Problems Provides Visual Inspection and Permanent Record By Larry Rothman
Cameras have become part of our daily lives and they are everywhere – security cameras, traffic cameras, dashboard cameras in police cars, and so on. Cameras have even become one of the most valuable tools in the plumbing business. Increasingly sophisticated fibre optic cameras that travel through pipes are used to identify damage and obstructions. Such cameras have also been employed to locate lost jewelry and other valuables, as well as locate and rescue wayward animals that have slipped into the pipes.
Video Cameras in Plumbing A video camera allows for a visual inspection of underground sewer lines and other piping and determines the condition of the inside of the pipe. A flexible rod with a specially designed, high-resolution video camera on its tip is inserted into the pipe for inspection. As the rod is pushed through the pipe, the waterproof camera records its progress and findings. The condition of a line typically cannot be determined without a visual inspection using an in-line camera. Video cameras can be used to determine the integrity of pipes ranging from two inches (5 cm) to 48 inches (1.2 metres) in diameter, including drain lines, septic tank lines, floor drains, water lines, yard drains and vent stacks. Additionally, the video camera can be used to determine the location of laterals and manholes, as well as determine the depth of piping. Access to the pipe for inspection may be gained via a floor drain, cleanout port or roof vent.
Video Camera Inspections Pinpoint Problems A video camera inspection can identify line problems, such as those listed below, that inhibit proper flow or create occasional or repeated backups. • Broken, cracked or collapsed pipe – damaged pipes requiring repair or replacement. • Offset pipe – sewer pipes have become misaligned due to shifting soil, frozen ground, settling, etc. • Blockage – grease buildup or a foreign object is restricting or prohibiting proper flow and/or cleaning of the line. • Corrosion – the pipe has deteriorated and/or broken, causing collapses in the line and restricting flow. 46 Canadian Apartment Magazine
propertymaintenance • Bellied pipe – a section of the pipe has sunk due to ground or soil conditions, creating a valley that collects paper and waste. • Leaking joints – the seals between pipes have broken, allowing water to escape into the area surrounding the pipe. • Root infiltration – tree or shrub roots have invaded the sewer line, preventing normal cleaning and/or have damaged the line. • Off-grade pipe – existing pipes are constructed of substandard material that may have deteriorated or corroded. Video images are transmitted to the camera operator and can be saved onto a videotape, CD or DVD for a permanent record. Radio transmitters on the camera record the depth and physical location from the surface so that defects and obstructions can be corrected cost effectively.
Benefits of a Video Camera Inspection • The video cameras can inspect a variety of pipe diameters and locations. • Potential problems can be identified and corrected without guessing and without excessive digging. • Video camera inspections can be scheduled at your convenience or when the lines are not in use. • A video camera inspection provides a permanent record of line conditions— before and after service. • The video cameras have radio transmitters to pinpoint the exact location of problems within your lines. • A video camera inspection allows your service technician to determine
the best course of action for correcting any problems. Video camera inspections should be part of your overall maintenance program. They are an accurate way to see what problems are in your drain and sewer lines. The video camera can also be used to inspect lines following cleaning or high-pressure water jetting to ensure that the lines are free flowing and that obstructions have been removed. CAM Larry Rothman is Director of Engineering and Plumbing Services at Roto-Rooter Services Company, a plumbing and drain cleaning company serving the U.S. and Canada which is headquartered in Cincinnati, Ohio.
Thinking of selling? We are interested in adding your building to our property portfolio.
Boardwalk is Canada’s largest residential landlord, with over 35,000 apartment units. For more information contact: Western Canada Lisa Russell, VP, Acquisitions ph: 403.206.6770 fx: 403.261.9251 e: lisa@bwalk.com
Eastern Canada Jean Denis, VP, Acquisitions ph: 514.732.2617 fx: 514.769.7464 e: jdenis@bwalk.com
bwalk.com October 2008 47
marketing multifacts Skyline Purchases $81.4-Million Office Portfolio Guelph-based Skyline has completed its acquisition of six commercial properties from The Co-operators Group on behalf of Skyline Apartment REIT at a purchase price of $81.4 million. The properties total 480,861-square feet of office space and include three buildings in Guelph, Ontario and one in each of St. John’s, Newfoundland; Quebec City, Quebec; and Regina, Saskatchewan. The acquisition represents Skyline’s first foothold in communities outside of Ontario, positioning the company for further expansion beyond its traditional investing grounds in Ontario. The company now has properties in 26 communities across four Canadian provinces. The Co-operators will remain the core tenant, having signed a 15-year lease for 90% of the total space in the properties. The remaining space is fully leased with high quality retail, professional, and business tenants. This acquisition nearly triples the office space in Skylines portfolio. “We’re happy to now have these assets under management and under the ownership of the REIT,” said Jason Castellan, CEO of Skyline. “Knowing that we were entering into a 15-year sale-leaseback ensures a long-term, stable return for our investors, while aligning ourselves with a well respected national company in The Co-operators.” Based in Guelph, Ontario, The Co-operators is a group of Canadian companies offering home, auto, life, group, travel, commercial and farm insurance, as well as investment products and property development. With assets of more than $7 billion, The Co-operators is owned by a group of Canadian co-operatives, credit union centrals and likeminded organizations. Based in Guelph, Ontario, Skyline is the asset manager for Skyline Apartment REIT, a private real estate investment trust focused on acquiring and managing apartment buildings and commercial space in diverse communities across Canada. Driven by a desire to be the very best at pursuing steady, calculated, real estate growth grounded in fundamentally sound properties, Skyline takes pride in its ability to continually identify accretive real estate investment opportunities to complement its growing REIT portfolio. Skyline currently holds 3,766 residential suites across Ontario and 747,391 square feet of commercial space.
League Adds to its Executive Team League Assets Corp., manager of the IGW REIT, one of North America’s fastest growing private real estate investment trusts, has announced the following appointments to its executive team. Graham Bruce Carrothers, General Counsel Carrothers brings to League 15 years of experience in securities and corporate/commercial law, and extensive experience in securities compliance and continuous disclosure obligations. Prior to joining League, Carrothers was Corporate Counsel to Vecima Networks in Victoria and prior to that, In-House Counsel and Corporate Finance Analyst with Global Securities of Vancouver. He was called to the BC Bar in 1994. He has a Bachelor of Law degree from UBC, a Bachelor of Commerce degree from Dalhousie University, and he completed the Canadian Securities Course in 1997. As League’s General 48 Canadian Apartment Magazine
Counsel, Carrothers will be responsible for planning and directing all aspects of League’s legal affairs in conjunction with external counsel. David Yan, Vice President of Member Services Yan is a wealth management specialist with 20 years of experience in the financial services industry. Prior to joining League, Yan was Regional Vice President for the wealth-management arm of TD Canada Trust, capping an increasingly responsible career with the TD group going back to 1993. Prior to that he was in management at Canada Trust. He has a Bachelor of Commerce degree from UBC, and has completed the Leadership Academy Program at the Richard Ivey School of Business, the Canadian Securities Course and the Institute of Canadian Bankers Association Personal Financial Planning Diploma program. He will lead League’s team of Member Services managers, responsible for training and instilling League’s corporate values. Andy Searle, ACMA - Senior Accountant Andy Searle comes to League after 19 years in the United Kingdom with the international accounting firm Deloitte & Touche LLP. Assuming progressive levels of responsibility throughout his tenure there, at the time of his departure he was the Financial Controller for three of the five divisions of Deloitte’s UK Consulting Practice. He is an associate member of the Chartered Institute of Management Accountants (CIMA) in the UK, having achieved full membership in March 2008. His responsibilities at League will include control of all financial processes during a time of rapid corporate expansion. On behalf of its 1,200 member-partners, League is currently managing and developing assets with approximate build-out values totaling $2-billion.
CAP REIT Completes Acquisition of British Columbia Apartment Property Canadian Apartment Properties Real Estate Investment Trust (CAP REIT) announced in September that it had completed the previously announced acquisition of a 137-suite 10-storey apartment building in Victoria, British Columbia. The property is located on the edge of the downtown. The purchase price of $14.2 million was satisfied by new CMHC-insured financing of $10.2 million for a five-year term at an interest rate of 4.35%, with the balance from the Acquisition Facility. Occupancy in the property is currently 100%, and residents pay their own utility costs. Current average rents are well below market, and management expects to achieve significant increases on suite turnover. “Our presence in British Columbia continues to grow, and we are evaluating additional acquisitions in this strong rental market to further diversify our portfolio and capitalize on the experienced property management team and infrastructure we have put in place in the region,” commented Thomas Schwartz, President and CEO. As one of Canada’s largest residential landlords, CAP REIT is a growth-oriented investment trust owning interests in 27,461
marketing multifacts residential suites and two land-lease communities comprising 1,267 sites located in or near major urban centres from coastto-coast. Since its initial public offering in May 1997, CAP REIT has grown monthly cash distributions per unit by 51%.
What Landlords Need to Know About Human Rights The Federation of Rental-Housing Providers of Ontario (FRPO) will be hosting a seminar entitled “What Landlords Need to Know About Human Rights.” The seminar is scheduled for November 5 from 8:30 am to 10:30 am at the FRPO office located on 20 Upjohn Road in Toronto. The seminar will discuss the process for dealing with human rights complaints against landlords, which has changed to make it far easier to lay complaints and increase compensation for complainants. In addition, the hearing process has changed to make it much harder for landlords to defend themselves. The purpose of the seminar will be to highlight the changes and to provide direction for landlords and property managers so that they can reduce exposure to human rights complaints; avoid “undue hardship” penalties; and minimize compensation payments. The role of human rights claims in the context of eviction proceedings and risk management strategies for responding to them will also be discussed. The seminar will be presented by Joe Hoffer, a law yer with the London law firm of Cohen Highley. Hoffer has practiced residential tenancies law for over 20 years. For more information visit the FRPO website at w w w.frpo.org.
CMHC & Conventional Mortgages for: Multi-Family Rental Properties Senior’s Housing Projects Commercial Properties Construction Projects Vancouver Brian D. Kennedy or Jonathan Wong Phone: 604-685-1068 Fax: 604-683-2787 Email: vancouver@peoplestrust.com Calgary Dennis Aitken or Doug Eveneshen Phone: 403-237-8975 Fax: 403-266-5002 Email: calgary@peoplestrust.com Toronto Michael Lombard Phone: 416-368-3266 Fax: 416-368-3328 Email: toronto@peoplestrust.com ™
www.peoplestrust.com
Reserve Tickets for FRPO’s Annual General Meeting The Federation of Rental-Housing Providers of Ontario will be holding its Annual General Meeting on December 4, 2008 at the Metro Toronto Convention Centre. At the meeting, FRPO will announce the winners of its seventh annual Achievement Awards, recognizing excellence in the residential rental housing industry. For more information or to reserve tickets, visit the FRPO website at www.frpo.org.
Yardi Wins Digie Award Yardi Systems, a leader in asset and property management software, recently received Realcomm’s prestigious Digie, or Digital Innovation Award, presented annually to the most groundbreaking real estate companies, individuals and solution providers. Yardi won in the Best Technology in the Real Estate Transaction category for developing an integrated solution that promotes sustainability through an interconnected, paperless processing flow. The process was developed for CB Richard Ellis and is part of CBRE’s “Planet Building” initiative that aims to improve operational sustainability and efficiency and make the nearly two-billion-square feet of commercial real estate under CBRE management carbon-neutral by 2010. “This initiative generated many new operational efficiencies, including consistent end-to-end business processes and stronger fiscal controls,” said Anant Yardi, president of Yardi Systems. The award was presented at Realcomm 2008, an annual conference of real estate industry leaders. October 2008 49
regulations
How safe is your apartment? Improving apartment safety and security Most apartment and condominium buildings in Canada are both safe and secure. But, the best way to ensure your safety is to make certain you are aware of – and use – the safety features in your building and surrounding spaces. To help you reduce the risk of an accident in your building, Canada Mortgage and Housing Corporation (CMHC) has a number of tips on how to make your apartment safer. They include: • Never leave children unattended on a balcony or near an open window. Don’t count on screens to prevent falls. Falls are one of the leading causes of injury and death among young children. Children are often tempted to climb up to apartment windows or balcony guardrails to get a better view, and in such instances, a fall can happen in a matter of seconds. • If you have children, make sure windows that are more than two metres above ground level have mechanical safety devices to prevent them from opening more than 10 cm. Lock balcony doors with a childproof lock, and keep cribs, beds, chairs and anything else a child could climb on away from all windows and balcony railings. • Repair damaged floor surfaces and keep floors free of clutter to prevent tripping. • Don’t use throw or scatter rugs on hard surfaces and clean up spills immediately – especially if you or someone who lives in your apartment is 65 years of age or older. • Use night lights in hallways, particularly between the bedroom and bathroom.
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• In the bathroom, use non-slip mats in and beside the tub. If needed, install grab bars and use a bath stool or bench. • Use a short ladder or a stepstool with a handle and rubbertipped feet to reach upper cabinets, change light bulbs and so on. Store heavy or often-used items on lower shelves that are within easy reach. • If your apartment is heated with natural gas, do not obstruct any vents or airflow to or from the appliances, and ensure that the appliances and venting systems are serviced annually. • Install a carbon monoxide detector if you have any combustion appliances in your unit or live above a parking garage. Always operate the range hood or open a window when using a gas range. • Make sure the common areas of your building are well lit and check stairs for worn or uneven steps. • Ensure your apartment is equipped with a working fire alarm. Test the alarm monthly and replace the batteries, if required, in the spring and fall each year. Replace the fire alarm if it is more than 10 years old. For more information or a free copy of the “About Your Apartment” fact sheet Improving Your Security and Safety or other fact sheets on owning, maintaining or renovating your home, call CMHC at 1-800-668-2642 or visit our Web site at www.cmhc.ca. CA M
Aird and Berlis . . . . . . . . . . 5 . . . . . . . . 416.863.1500
First National . . . . . . . . . . . 7 . . . . . . . . 416.593.1100
Prime Corp . . . . . . . . . . . . . 3 . . . . . . . . 888.720.2020
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Brook Restorations . . . . . . 33 . . . . . . . 416.553.0333
GMC Plumbing . . . . . . . . . . 39 . . . . . . . 416.742.1150
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CB Richard Ellis . . . . . . . . . IBC . . . . . . 416.362.2244
H& S Supply . . . . . . . . . . . 35 . . . . . . . 905.738.6003
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Rogers . . . . . . . . . . . . . . . . 4 . . . . . . . . 866.567.5778
CG Maintenance . . . . . . . . 23 . . . . . . . 416.633.4449
IMS Insurance . . . . . . . . . . 41 . . . . . . . 905.271.2070
Roto Rooter . . . . . . . . . . . . 43 . . . . . . . 800.438.7686
Coinamatic . . . . . . . . . . . . 39 . . . . . . . 800.561.1946
IRC Building Science . . . . . 11 . . . . . . . 905.607.7244
TD Bank . . . . . . . . . . . . . . . IFC . . . . . . 877.299.9058
Coinamatic . . . . . . . . . . . . OBC . . . . . 800.561.1946
Mercury Lighting . . . . . . . . 29 . . . . . . . 905.738.6642
Trident Elevator . . . . . . . . . 25 . . . . . . . 416.724.2228
Cosmos Electrical . . . . . . . 45 . . . . . . . 416.690.6206
MetCap . . . . . . . . . . . . . . . 9 . . . . . . . . 416.340.1593
Yardi . . . . . . . . . . . . . . . . . 13 . . . . . . . 905.671.0315
Enbridge Electric . . . . . . . . 21 . . . . . . . 866.763.5427
Peoples Trust . . . . . . . . . . . 49 . . . . . . . 416.304.2078
50 Canadian Apartment Apartment Magazine Magazine 50 Canadian
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Purpose-built by Coinamatic for the multi-housing industry, SmartCity ® provides a convenient, easy to use, one card solution for many of your residents’ most annoying problems.
At Coinamatic, we invest in innovative, purpose-built technologies for property owners and their residents.
IT’S CLOSER THAN YOU THINK...
Residents may not thank you for Technology, but they will reward you for Innovation that makes their lives safer, simpler and more convenient.
Briarlane takes on new partners
Multi-Unit Residential Mortgages
MORE THAN JUST SMART – IT’S A BREAKTHROUGH TECHNOLOGY
TD CANADA TRUST – MULTI-RESIDENTIAL MORTGAGES DIVISION
VOLUME 5 / NUMBER 4 / october 2008
Convenience is key To upgrade a little ... or a lot!