of Capital Interest – April 2007
produced by Juteau Johnson Comba Inc.
Real Estate Advisors and Appraisers
2255 St. Laurent Boulevard, Suite 340
Ottawa, Ontario
K1G 4K3

Phone 613-738-2426 ex 104
Fax 613-738-0429

Editor John Comba

April 2007

First off, there was a sale of a partial interest in 1600 Carling Avenue that closed in January. However, the transfer was between existing partners and represented shares in an existing company as such, it was never registered in the land registry office. The property was marketed by Nathan Smith of Cushman & Wakefield LePage. A number of offers were received but Manulife Real Estate chose to buy Oxford’s 55% interest instead of sell the whole property. It is our understanding the purchase price was approximately $185/sq.ft. 1600 Carling is a Class “A” multi-tenant office building located in Ottawa’s west end along the Queensway corridor. It was 92.6% occupied at the time of sale and the largest tenant is Corel. This tenant occupies 45% of the building and their lease expires in 2008.

There were a total of 32 sales reported in the month of February with a total value of $243,193,101. Retail building sales accounted for 10.9% of the total, industrial buildings 0.4%, office buildings 12.8%, apartment buildings 73.0%, special buildings 0.2% and vacant land sales 2.6%.

Sales data has been provided by RealTrack, Inc. For more information visit http://www.realtrack.com or call 1-877-962-9033

SALES

There were seven transactions in the RETAIL market with a total value of $26,611,500. One of the transactions was of 150 Montreal Road which is located at the southeast corner of Montreal Road and the Vanier Parkway in the east end of Ottawa. Centrum Self Storage Corporation, 1470053 Ontario Inc. and 1470344 Ontario Inc. sold the property to CIPF IV GP Inc. for $10,706,000 or $211/sq.ft. The property is improved with a three-storey, retail/office that was constructed in 1980 with the ground floor having undergone renovations in 2001. This transaction is part of a larger portfolio sale. The broker was PrimeCorp Commercial: Aik Aliferis, Sam Firestone, Nick Pantieras & Steve Lerner.

1800 Bank Street was sold by 954100 Ontario Inc. to 2122673 Ontario Inc. for $6,400,000 or $122/sq.ft. It is improved with a freestanding commercial building and a L-shaped plaza with three floors of office space that was constructed in 1988. There are 166 paved parking spaces provided on site.

Pruner Leasing Ltd. sold a one-storey car dealership located at 1425 Ogilvie Road that was constructed in 1975 to 2125577 Ontario Inc. for $4,681,000 or $204/sq.ft.

There was only one INDUSTRIAL building sale this month. 1716571 Ontario Inc. purchased 2760 Fenton Road from Jeffrey Eisen and Robert Eisen for $975,000 or $58/sq.ft. It is improved with a one-storey industrial/office building. The property was purchased in 2004 for $768,450.

There were six OFFICE building sales this month totaling $31,068,000. The largest transaction was 2200-2204 Walkley Road. BPO (Ontario VA) Ltd., Crehoy Inc and POC (MCEG) Ltd. sold the property to Ottawa – 2204 Walkley Road and Ottawa - 2200 Walkley Road for $24,743,000 or $158/sq.ft. of building area. The property is improved with a two-storey Class “B” building and a five-­storey Class “A” building that are mainly leased to the federal government. The property previously sold in 2005 for $20,250,000. Nathan Smith of Cushman Wakefield & LePage had this property listed for sale.

Kaysush Investment Ltd. purchased 28-36 Steacie Drive from CUE Real Property (2) Ltd. for $2,425,000 or $108/sq.ft. It is improved with a one-storey office/industrial building that was 100% leased. Nathan Smith of Cushman Wakefield & LePage was also the broker with respect to this transaction.

There were ten transactions in the APARTMENT market totaling $177,599,552. The sales ranged from $84,167 to $150,000 per unit. The largest sale was the purchase of the Heron Gate Village complex for $150,925,00 or $86,888 per unit. Kanco Heron Gate purchased the complex from Otnim Properties Ltd. It is improved with a total of 1,737 residential units in a combination of high-rise apartments, garden homes and townhomes with one to four bedroom suites. The development has amenities such as a senior’s centre, party room, outdoor pools, free daycare and a recreation centre with both an indoor pool and weight room. The transaction was handled by Greg Kalil & Brian Bastable of Brookfield Financial Real Estate Group and Rustom Satchu of Satco Realty.

The properties listed below were purchased as part of a portfolio transaction between CVL Group (the vendor) and Interrent Ottawa No 3 Inc. (the purchaser).

• A three and one-half storey brick apartment building located at 225 Maclaren Street was purchased for $4,932,067 or $107,219 per unit.
• A four-storey apartment building located at 214 Metcalfe Street was purchased for $3,719,562 or $123,985 per unit. The property was previously sold in 2004 for $2,110,000.
• A 27-unit apartment building located at 235 Charlotte Street was purchased for $3,667,633 or $135,837 per unit. The property was previously sold in 2005 for $1,924,468
• A 27-unit apartment building located at 485 King Edward Avenue was purchased for $3,663,268 or $135,677 per unit. The property was previously sold in 2005 for $1,924,469.
• A 21-unit apartment building located a 335 Metcalfe Street was purchased for $3,142,963 or $149,664 per unit. The property was previously sold in 2005 for $1,496,808.
• A 19 unit apartment building located at 475 King Edward Avenue was purchased for $2,566,059 or $135,056 per unit. The property was previously sold in 2005 for $1,354,255.

Golden Dragon Ho 3 Inc. sold 346, 352, 364, 370 & 376 Tillbury Avenue to Tillbury Apartments Ltd. for $3,375,000 or $93,750 per unit. It is improved with six identical two and one-half storey brick walk-up apartment buildings that were constructed in the late 1950’s/early 1960’s.

There was only one SPECIAL building sale this month. 2125714 Ontario Inc. purchased 1311 Pinecrest Street from Tiny Tots Montessori Inc. for $513,000 or $174/sq.ft. It is improved with a one-storey building with a finished basement that was remodeled as a day care facility in 2001.

There were six vacant LAND transactions during the month of February with a total consideration of $6,426,049. Of the six transactions, there were two residential, two commercial, one future growth and one rural land sale.

Soeurs de L’ Institut Jeanne D’Arc sold 360 Kenwood Avenue to Uniform Urban Developments Ltd. for $2,375,000 or $43/sq.ft. of site area. The property is improved with five buildings. The purchaser is a residential developer and is proposing to construct 20 dwellings units comprising eight semi-detached units and twelve single detached dwellings. Among the buildings is a three-storey ecclesiastical building (La Maidon Jeanne D’Arc) designated under the Ontario Heritage Act.

Also of interest to the golfers that read this newsletter (and I think that might be one of two of those), Clublink Corporation purchased the Eagle Creek Golf Course for $5,900,000 or $327,778/hole.

NEWS

LEED is the latest in new office development it appears. The new office buildings being constructed for Telus and CUPE are to be certified as silver LEED buildings and Minto has just announced that their new 19-storey 360,000 square foot office tower at 180 Kent Street is to be a gold certified building. The building will use 35% less water and electricity than a typical building. It is also noteworthy, that Minto does not have a “lead” tenant for the building and are constructing this one “on spec”. With the federal government’s push for more green buildings and their current occupancy in the other two towers at the Minto project, it would not surprise us if they lease some or all of this building.

The Ottawa-Carleton Real Estate Board indicated that there were 1,032 residential sales in February 2007 as compared with 982 in February 2006. The average price of a residential property sold in February was $264,566, which is an increase of 6.6% from February of 2006.

The local unemployment rate as reported by Statistics Canada for the month of February was 5.6% down from 5.8% in January. The national unemployment was 6.1% down slightly from 6.2% in January and the provincial rate for this month is 6.3% down slightly from January.

Now that spring is here, the first quarter office market surveys are starting to be released.

CB Richard Ellis 1st quarter report indicates that Ottawa’s overall office space vacancy rate increased slightly to 4.7% from 4.6% as at the end of last year. The report noted that the local market continued its “slow and steady” growth pace with no significant changes since the end of last year. The report also mentions the federal government’s intention to sell 90 Sparks Street and the Skyline Campus at 1285-1341 Baseline Road. The federal government would lease back the buildings.

The vacancy rate according to Cushman & Wakefield was slightly higher at 5.5% which was down from 6.9% as at the same time last year but up from the end of last year when it was reported at 5.2%. The report notes that this was the first quarter in three years that Kanata registered negative absorption. However, it was less than 15,000 square feet. In fact, Cushman & Wakefield LePage reported a total of 104,588 square feet of negative absorption for the first quarter with Nepean at negative 34,892 square feet.

The vacancy rate as reported by jj Barnicke was even higher at 6.1% with negative absorption of 136,579 square feet. The increased vacancy was due to negative absorption of some 126,000 square feet in the Ottawa West market which has an overall vacancy rate of 10.7% an increase of 2.8% from the end of last year. The report also notes that for tenants looking for more than 50,000 square feet in the Kanata market there is only one option and for tenants requiring more than 20,000 square feet there are only two options. Therefore, jj Barnicke concludes it is “highly probable that another new office building will break ground in Kanata soon”.

According to CMHC’s February Housing Now publication, residential construction was up by 3% in February 2007. There were 300 housing starts this year, compared with 290 in 2006.