The Quebec Report
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Michel Bouchard named Executive Vice-President, Business Development at Redbourne Group
Peter Coughlin, Norman Spencer and Andre Shareck, the principals of The Redbourne Group, are pleased to announce the appointment of Michel Bouchard as Executive Vice-President, Business Development.
As Executive Vice-President, Quebec for Altus Group, Michel Bouchard managed the Montreal office and developed a broad range of services for real estate clients. He has been involved in many of the larger real estate transactions in Quebec, and with thirty years' industry experience, he is a well-respected member of the real estate community.
Michel is a graduate of McGill University in Administration, Marketing and Real Estate Valuation. He is a member of the Ordre des évaluateurs agréés du Québec (OEAQ), an accredited member of the Canadian Institute of Appraisers (AACI), and a member of the Royal Institution of Chartered Surveyors (MRICS).
In his capacity as Executive Vice-President, Business Development, Michel will work with Redbourne’s principals to enhance the growth of the portfolio under management by sourcing new business opportunities and securing future capital funding.
Established in 1995, Redbourne is a Montreal-based real estate advisory, investment and management group. Through two private equity funds and a number of other private entities, Redbourne currently manages properties in Ontario and Quebec with a value of approximately $800 million.
Montreal Posts Modest Increase in Rental Rates Across Canada, Tops in Canada
The world's leading centres have suffered an unprecedented fall in demand for office space which has contributed to the first aggregated global fall in prime office rents since 2003. Global real estate adviser Cushman & Wakefield, in its new Office Space Across the World report, says that 2009 recorded a steep and widespread fall in office demand with every region in the world recording falling prime rents for the first time.
While Vancouver rose three positions in the global ranking, the market still saw a 26% decrease in rents in 2009, the largest decrease of any major Canadian market. Calgary and Toronto also saw rental rates fall substantially while Ottawa and Montreal, further from the influence of the US markets saw greater stability and only modest changes in rental rates.
Canadian Market Summary
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Market District Rent Change
CDN $ in 2009
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Vancouver CBD 31.38 -26%
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Calgary CBD 29.61 -24%
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Toronto CBD 19.94 -24%
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Ottawa CBD 24.62 2%
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Montreal CBD 19.62 3%
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"Canada's major markets weathered the storm, though took on some water in 2009. Weak demand and rising vacancy rates forced rents down in three of our major markets," said Pierre Bergevin, President and CEO of Cushman & Wakefield in Canada. "Vancouver has since stabilized and rents are unlikely to drop much further. Ottawa and Montreal saw very little in the way of rate declines. Both markets remain tight with no new supply on the horizon. Both markets will experience some softening in rental rates over the first half of 2010 followed by greater stability in terms of demand and rental rates in the latter half of 2010."
Calgary and Toronto will continue to see softening rental rates particularly in older buildings with existing vacancy issues. While the vacancy issues in central Toronto have been driven by new development activity, Calgary has experiences a perfect storm of both a hot development cycle and significantly weaker gas prices, both of which have had a big impact on rental rates.
Cote St. Luc to Build New Intergenerational Centre
With the help of the Provincial and Federal governments, the city of Cote St. Luc will finally be able to build an indoor complex for the use of people of all ages living in the borough.
Senator Judith Seidman, Quebec Municipal Affairs Minister Laurent Lessard, D’Arcy McGee MNA Lawrence Bergman and Côte St. Luc Mayor Anthony Housefather announced last week that Côte St. Luc will construct a 5,456 square metre (58,925 sq. ft.) complex at a cost of $17.3M. Ottawa and Quebec will each contribute $5.78 million under the Communities Component of the Building Canada Fund-Quebec, while Côte St. Luc will provide the remaining third.
The centre, which will be geared mainly to seniors and children, will contain a swimming pool, wading pool, indoor terrace, portable bleachers for 200 people, multifunctional community halls, a physical fitness room and dance and warm up studios.
“In supporting this project, we are seeing to it that the population enjoys the high quality of life for which our country is famous,” Seidman said.
“We are leaving the municipality a legacy of quality infrastructure with which to face the challenges of the future... This is an excellent project for the community.”
The Mayor, Anthony Housefather, thanked all those involved especially MNA Bergman.
“He’s really the person who has done so, so much for this community and city,” the mayor said.”
“We never could have built this centre on our own,” Housefather added. “We have no such indoor pool in the whole west end of Montreal. This incredible facility will allow us not only to serve the young families in Côte St. Luc... but all of our neighbours across the west end of Montreal. For that, we’re enormously thankful.”
Housefather added that he’s hopeful that the project will break ground by the fall.
Two possible locations for the centre remain under study with a decision expected shortly.
Canam Group Posts Profit Decline
Construction products fabricator Canam Group Inc. (TSX: CAM) reported net earnings of $20.1 million, or $0.45 per share, for the 12-month period ended December 31, 2009, compared with $48.4 million, or $1 per share, in 2008. Consolidated sales were $625.8 million versus $796.1 million a year earlier.
Fourth-quarter net earnings were $5 million, or $0.11 per share, as compared to $13.7 million, or $0.29 per share, for the corresponding 2008 period. Consolidated sales for the quarter fell 35%, from $230.9 million in 2008 to $149.7 million in 2009.
Canam Group president and chief operating officer Marc Dutil attributes the decline in sales to the slowdown in non-residential construction in North America and to lower prices for raw materials. Despite fierce competition and the ensuing pressure on gross margins, Mr. Dutil explains that the company was able to remain profitable during this difficult economic period because of its excellent performance in executing infrastructure and complex large-scale structural steel projects.
Canam Group announced that it has signed an agreement to purchase an additional 65% membership interest in structural steel fabricator FabSouth for $65 million. Once the transaction is finalized, Canam Group will own 80% of FabSouth, which operates six plants with a total capacity of 122,000 tons in the southeastern United States.
Montreal Increases Real Estate Transfer Fees
Commercial real estate lawyers across the city are saying that an increase in transfer taxes on real estate sales in the City of Montreal could potentially add thousands of dollars to some real estate transactions.
As of January 29, 2010, an additional surcharge will be levied to the calculation of transfer duties on real estate property sales in Montreal. Specifically, any amount above $500,000 will be subject to a special rate of 2.0% (the previous maximum rate was 1.5%). The hike in taxes may make it more attractive for property owners to look into special vehicles to avoid the duty and make properties more attractive to prospective buyers.
“With the new transfer duties, with the hikes we have experienced, the threshold to determine is it worth putting in place such a structure will become more easily reached,” Stikeman Elliott LLP Montreal associate Sébastien Thomas recently told Kelly Harris of ‘Canadian Lawyer’ magazine.
“The cost of transferring real estate properties will be higher because of those transfer duties, now we will more easily reach the conclusion that, in that specific case, it is relevant to put in place a structured holding company to be able to benefit from those exemptions in the law,” Thomas concluded.
According to Harris’ article in ‘Canadian Lawyer’, there are four main exemptions from the tax set out under the Act Respecting Duties on Transfers of Immovables regarding real estate in Montreal:
• Transfer to an ascendant or descendant;
• Transfer between spouses;
• Where the buyer is a public organization by law; and
• Where the transferor is a natural person and the transferee is a legal person with 90 per cent of its issued shares with full voting rights are owned by the transferor.
Thomas says the fourth exemption is a tool whereby companies can create a holding company — or special purpose vehicle — that a specific piece of property can be transferred into. Transfers of properties within the same company are not subject to the duties.
Shares of the holding company, rather than the asset itself, can be sold to a purchaser to avoid the duties. There is one caveat, the property must be held in the holding company for at least two years before the shares can be sold to avoid the transfer tax.
For this reason companies that anticipate selling properties in the future may now want to consider moving them into special purpose vehicles.
“For many reasons, having a special purpose vehicle is always a wise thing to have,” says Jenny Ross, a Montreal real estate lawyer with Fraser Milner Casgrain LLP.
She cautions companies to remember the two-year rule. If a company attempts to avoid paying the transfer duties twice within a 24-month period it may be subject to the anti-avoidance rule under the Income Tax Act. As such, the property’s transfer becomes subject to 200-per-cent duty, and both the vendor and purchaser would be liable to make sure the penalty is paid.
Prior to the increase, the maximum transfer tax was 1.5 per cent for properties exceeding $250,000.
The new rules mean properties valued between $250,000 and $500,000 would be subject to a 1.5-per-cent tax and properties worth more than $500,000 would incur the greater two-per-cent duty.
Jacques Coté returns temporarily as CEO of the Société du Havre de Montréal
Mr. Jacques Coté was recently appointed as President and Chief Executive Officer of the not-for-profit organisation managing the Bonaventure Expressway project that will lead to the creation of the Quartier Bonaventure.
Mr. Coté was the first President and Chief Executive Officer of the Société du Havre de Montréal, from 2002 to 2007. For a number of months, Mr. Coté will replace Mr. Gaëtan Rainville, who has had to temporarily leave his duties for health reasons.
During this period, Mr. Coté will not act as a member of the Board of Transport 2000 Québec.
Following a thirty year career at Canadian Pacific, he became an active member of the team that created the Société du Havre de Montréal. Since 2001 he has provided consulting services in corporate strategy, particularly for organisations in the rail industry.
The mission of the Société du Havre de Montréal is to propose the major elements in a concerted plan for the development of the harbourfront and the urban areas around it, as well as an implementation structure and a financial strategy.
The corporation recently recommended to the City of Montreal that it undertake the Phase 1 work of the Bonaventure Expressway transformation project that will allow the creation of the Quartier Bonaventure, the creative and prestigious new city gateway that will provide Montreal's first dedicated corridor reserved for public transportation.
Articles by: William Jegher
William Jegher is President of Wika Consulting, a consulting company specializing in facilities management and real estate benchmarking, communications and consulting. Contact him at wjegher@wikaconsulting.com
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