www.stonebank.ca

STONEBANK REAL ESTATE LTD., BROKERAGE

phone 416.444.4040

fax 416.444.4040apartments@stonebank.ca

435-43 HANNA AVE, TORONTO ON M6K1X1

At the onset of every new financing assignment there are several vari-ables that need to be nailed down including loan amount, amortiza-tion, and the term of the loan. For clients seeking maximum financing, determining the loan amount is of-ten dictated by factors beyond their control (valuation, debt service cov-erage etc). Selecting the loan term is very much within the control of the client and often one of the more difficult financing decisions. The current low rate environment makes long-term financing (10+ years) an attractive option.

I am often asked what I would do. It depends, is my usual non-com-mittal answer. The appropriate loan term depends on many factors, in-cluding the client’s:• motivation for the financing • expectations for the asset in the near and long-term• tolerance to interest rate risk When a property is being pur-chased mainly for the stability of its cash flow, a long-term loan pro-vides interest rate security. For properties being acquired or refi-nanced for a repositioning play, a long-term mortgage may not be the appropriate financing instrument. A shorter-term mortgage allows the client to refinance following the re-positioning, without the need to pay a breakage fee for an early mort-gage payout. Long-term mortgage debt may cre-ate future problems for clients who are not anticipating a long-term hold. If the hold period isn’t likely to be considerably more than 5 years, there is the potential that a long-term mortgage will be detrimental to a future sale, even if the rate is fa-vourable. Usually a property is sold because the vendor wants to ben-efit from an increase in value. The increase in value could result in the amount of the existing long-term mortgage being insufficient for the

With another brutal winter behind us and spring approaching full swing, now is a good time to take a pulse on what’s happening in the Southern Ontario multi-residential real estate market. What is unique about 2015 thus far is not the buildings that are being sold but the owners that are choosing to sell and the locations of those build-ings. The most common challenge for most long-term apartment owners has been “if I sell, what do I do with the money?” It appears that more and more owners are finding a reason to sell, and more often than not that reason is the price of sale.

Despite popular opinion and, essentially, general logic, interest rates have fallen again in early 2015. This drop has seen several proper-ties, previously un-saleable, become saleable. If there was a gap in the achievable price and the vendor’s price, that gap has dissipated. This further shrinkage of cap rates has left many owners with a brand new outlook on their investments.

The Greater Toronto Area (encompassing Mississauga, Burlington, Oakville, Brampton, York Region, and even Durham Region) has seen a tremendous impact. Toronto has been aggressively priced for quite some time now, and continues to push the boundaries of what buyers are willing to pay. However, it’s areas outside of the To-ronto-Core that have seen perhaps the greatest upswing. The com-bination of falling interest rates and falling cap rates in the Toronto-Core has created an opportunity in areas like Mississauga, Oakville, Burlington, Brampton, Hamilton, Oshawa, Whitby, and stretching even to Brantford, Cobourg, Belleville, Peterborough and Kingston. This opportunity has been bred from the theory that one must search outside of the Toronto-Core for more attractive returns. This gener-

interest rates create perfect stormbetween buyers & sellers

STONEBANK A P A R T M E N T E X P E R T S

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common financing Questions “ETCHED IN STONE” SPRING 2015

PERFECT STORM continued on page 2 FINANCING continued on page 4

PERFECT STORM from page 1

WALLACEBURG, ONTARIOPARRY SOUND, ONTARIO

Asking Price: $2,700,000Cap Rate: 7.6 %Number of Suites: 61

KINGSTON, ONTARIO

Asking Price: $10,250,000Cap Rate: 6 %112 Units, Great Suite Mix, Upside Potential

BARRIE, ONTARIO

Asking Price: $999,000Cap Rate: 6%9 Units, Downtown Location, Decent Land Size

Asking Price: $6,000,000Cap Rate: 6 %64 Units, Tenants Pay Gas & Hydro, Great Upside

FOR BUYERS: We work closely with purchasers to find them what they are looking for. Most of our deals are done

off-market, and quietly. If you are a serious buyer having dif-ficulty finding investment opportunities, please contact us.

We will find you what you’re looking for.

BRACEBRIDGE, ONTARIO

Asking Price: $3,250,000Cap Rate: 5.8%Number of Suites: 21

WATERLOO, ONTARIO

Asking Price: $2,050,00036 Bedrooms Student Housing0.4 Acres. 50% Vacant, Reposition

WINDSOR, ONTARIO

Asking Price: UNPRICEDNumber of Suites: 272 (14 Buildings - CONDO TITLED)

KINGSVILLE, ONTARIO

Asking Price: $3,790,000Cap Rate: 6.4%Number of Units: 27 Residential & 8 Commercial

STONEBANK A P A R T M E N T E X P E R T S

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_ _www.stonebank.ca

ates an inherent relationship between cap rates inside ver-sus outside of Toronto.

When cap rates last fell in To-ronto the change in the other areas outlined above was not as dramatic because there was no equally dramatic change in a purchaser’s abili-

ty to pay more. Today’s inter-est rates have afforded pur-chasers that ability. It is also today’s interest rates that are giving several owners a new outlook on their investments. There is no telling how long this harmonious relationship will last. Eventually rates will climb. For now, however, I wish you good fortune in this land of great opportunity.

featured propertiesfor sale

FOR OWNERS: When you’re considering selling we know there are three things you value above others: Highest price, discretion, and ease of transaction. We have a strong record of successful sales at, or above, vendor’s expectations. We can achieve your goals quietly off market, or

vigorously through full marketing. If you’d like to learn more about the difference, and which suits you best, please contact us.

Cap Rate: 4.35 %Proper ty Type: ApartmentNumber of Suites: 100

Cap Rate: 3.95 %Proper ty Type: ApartmentNumber of Suites: 46

Cap Rate: 4.15 %Proper ty Type: ApartmentNumber of Suites: 31

soldsold

sold

HAMILTON (MOUNTAIN) - 43 UNiTS (2 bUiLDiNGS),

$4,500,000, SiGNifiCANT UPSiDe iN ReNTS

COBOURG - 66 UNiTS, $8,100,000, 4.75% CAP

BRAMPTON - 63 TowNHoUSeS, $10,800,000, 5.15% CAP BARRIE - 48 UNiTS, $7,200,000, 5% CAP

KITCHENER - 58 UNiTS, $5,550,000, LARGe UNiTS, UPSiDe

PoTeNTiAL

NIAGARA FALLS - 68 UNiTS, 5.9% CAP, $8,850,000

CAMBRIDGE - 100 UNiTS (5 bUiLDiNGS), $10,100,000,

6% CAP

LONDON - $1,750,000, 5.4% CAP, 23 UNiTS

GUELPH - 80 UNiTS, $9,600,000, 5.1% CAP, NeAR

HoSPiTAL

KINGSTON - $1,250,000, 16 UNiTS, 6.4% CAP

TORONTO - 300 UNiTS, $55,000,000, 4.3% CAP GUELPH - 20 UNiTS, 5.2% CAP, $2,450,000,

GooD bUiLDiNG

TORONTO - 60 UNiTS, $7,850,000, 4.6% CAP LINDSAY - 29 UNiTS, $2,500,000, 6.5% CAP

ORILLIA - 24 UNiTS, oN THe wATeR – DeVeLoPMeNT SiTe,

6.5% CAP, $1,700,000

NEAR COLLINGWOOD/WASAGA BEACH - 30 UNiTS,

$4,100,000, 5.5% CAP, TowNHoUSeS

GUELPH - 18 UNiTS, ALL 2bR’S, ATTRACTiVe PRoPeRTy,

5.65% CAP, $2,550,000

TORONTO (BEACHES) - MixeD USe, 32 bACHeLoRS,

7 CoMMeRCiAL, UNPRiCeD

BELLEVILLE - CoMMeRCiAL/offiCe bUiLDiNG,

130,000 Sqf, RePoSiTioN/DeVeLoPMeNT, $3,000,000

WINDSOR - 44 UNiTS, $52k/SUiTe, 4 bUiLDiNGS

ToGeTHeR

CONTACT US 416.444.4040 APARTMENTS@STONEBANK.CA

TORONTO SOUTH, ONTARIO OAKVILLE, ONTARIOBURLINGTON, ONTARIO

properties for sale

your long term success is our long term success.

At STONEBANK our business is our passion, and it shows. We achieve top market values and uncov-er original investment opportunities the same way - through determination and creativity. We believe

that sustained success can only be achieved by continuously improving every aspect of our busi-ness. This is the promise we make to our clients; we strive to exceed expectations.

recent transactions

MNEESH MITTALBroker of Record

AMIT PAULSales Representative

VISHAL MITTALSales Representative

FINANCING from page 1

- Kevin Crandles, Strategic Mortgage Capital Company, 416.229.4224

purchaser’s requirements and arranging a second mortgage may be too expen-sive. Also, when a mortgage is assumed, the lender typically does not release the covenants of the original borrower. A free and clear title is often demanded by a purchaser and this may result in significant breakage costs. The rate differential between a five-year and ten-year mortgage is typically in the range of 0.75% to 1.0%. Many clients stick with a standard five year term mort-gage because they believe that the benefit of a lower rate offsets the potential for a significant rate increase in five years. Clients who generally have a low toler-ance for rate risk, tend to finance with lower leverage and/or a shorter amortiza-tion. If the initial leverage is conservative, the borrower has the option to extend the amortization at maturity/renewal to offset the effect of a potential rate increase. Five years ago many clients thought that rates were very attractive and not likely to move much lower. The clients who opted for a five year financing are now benefiting from a lower rate at renewal. Borrowers who opted for a ten year term or longer and who now want to sell or refinance are often faced with an expensive penalty or purchasers who want compensation for the assumption of a “disadvantageous” high rate mortgage. Currently long-term interest rates are attractive; however, a long-term mortgage may not fit the needs of all clients.

STONEBANK A P A R T M E N T E X P E R T S

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_ _www.stonebank.ca

“Amit sold our building, at a price that was acceptable to us,

when others could not. I was very pleased with his thorough and relentless approach. He

was instrumental in making the deal “happen”. I look forward to

working with him again.”- Ephraim Fiksel -

“Thank You Mneesh. Now that the deal has closed I would like to thank you for all that you have done throughout the process. It was a pleasure working with

you. You were always there when I needed you and I appreciated your ethical approach to doing business. We considered listing

with a local agent but I knew we made the right choice going with Stonebank when you had

the ultimate buyer looking at the building the first week. You did a great job of performing as a dual

agent and I always felt that my interests were protected.”

- Bill Robinson -

“Thank you for all your real estate services. As mentioned

earlier I appreciate the constant communication, the updates and

the very professional way that you deal with your clients. We would highly recommend your

services.”- Richard Rekker -

Hard work, drive, ingenuity and experience are tHe cornerstones of our business. exceeding tHe expectations of our clients is our goal.

testimonials

our mission

» Property market value assessments focused on uncovering hidden value and eliminating possible buyer objections

» Customized marketing plans catered to the specifics of the property and the client’s goals, as your input is highly valued

» Benefits of strong relationships with industry leaders in financing, engineering and appraisals, which help complete the marketing package comprehensively and manage potential due diligence concerns

» Step-by-step, swift due diligence process, including consolidating documentation to mitigate potential buyer concerns

» We know the most aggressive buyer(s), whether it’s a REIT, private family, corporation, new/emerging entity or experienced/established, that will pay most aggressively for your property. Plain and simple.

wHat sets stonebank apart ?

All information contained in this newsletter has been secured from sources deemed reliable but Stonebank Real Estate Ltd., and it’s representative, make no warranty or representation as to the accuracy of any information contained herein. Stonebank Real Estate Ltd., and it’s representatives state that no information contained herein shall be deemed professional legal, tax, accounting, financial, or any other consulting advice, and the reader is advised to seek independent legal, tax, accounting or any other consultation, as may be deemed necessary. This newsletter publication is not intended to solicit properties already for sale, or interfere with buyer agency agreements.