Calgary’s boom and bust office market, which today is decidedly in the latter phase, is not recovering anytime soon, according to Alex Avery, managing director of Institutional Equities at CIBC World Markets.
Any bounce back for the province’s oil capital is predicated on a strong crude price recovery, something Avery believes is unlikely given a revolution in the energy extraction industry that has reversed a long-term decline in U.S. oil production. New technology in the form of horizontal fracking has driven extraction costs to US$55 a barrel in the States, undercutting the costs of production for Alberta oil sands operations
FSCO Review Panel
CRELA executive committee members attended and presented at the mortgage broker sector roundtable with the FSCO/FST/DICO Mandate Review Expert Advisory Panel.
The Government of Ontario has undertaken to review the role, structure and efficacy of all its agencies, many of which have been assigned to protect the public, and deliver programs and services.
As part of this broad Mandate Review, the government announced a review of the mandates of the Financial Services Commission of Ontario (FSCO), the Financial Services Tribunal (FST) and the Deposit Insurance Corporation of Ontario (DICO) – all agencies under the jurisdiction of the Ontario Minister of Finance.
The Minister of Finance has appointed a three-member Expert Advisory Panel (“Panel”) to consult relevant industry representatives, licensed market participants, and consumers and their advocates, and to make workable recommendations to the government by early next winter.
The members of the Panel are:
George Cooke – former president and CEO of The Dominion of Canada General Insurance Company, and current chair of the board of directors of OMERS Administration Corp.
James Daw – former Toronto Star personal finance columnist who has written extensively about all facets of Ontario’s financial system
Lawrence Ritchie – Osler, Hoskin & Harcourt LLP partner and former vice-chair of the Ontario Securities Commission.
FSCO has a wide range of responsibilities, and currently regulates the insurance sector; pension plans; loan and trust companies; credit unions and caisses populaires; the mortgage brokering sector; co-operative corporations in Ontario; and service providers who invoice auto insurers for statutory accident benefits claims. The Commission is also responsible for the Financial Services Tribunal – a body that adjudicates cases involving compliance issues arising in the sectors regulated by FSCO.
The two areas of particular concern that were addressed with the panel are given below based on CRELLA member feedback were:
- Emergence of shadow banking sector in Ontario and appropriateness of FSCO’s role in that
- Syndicated mortgages: Pros vs Cons
CRELA Sub-Committee SME (Small Mid Sized Enterprises)
The SME hosted 25 commercial bankers over a luncheon where they hear from Pinchin Enviromental Ltd. and Blaney McMurtry LLP on environmental contamination issues, regulatory frame work and potential liability issues arising out of loan made on contaminated properties.
CRELA at Minister of Finance Charles Sousa Fundraiser
CRELA executive committee member Amar Nijjar gets recognized at a dinner event with Minister of Finance Hon. Charles Sousa and Brian Tobin.
Why Warren Jestin is bullish on US recovery
Warren Jestin's feeling hopeful about a continuing US economic resurgence. Scotiabank’s chief economist told the Commercial Real Estate Lenders Association that deficit reduction in the public sector, coupled with a housing recovery, rising consumer spending and strong job growth, will propel the American economy to 3% GDP growth expected this year. Warren spoke at a CRELA lunch event hosted by JLL’s Amar Nijjar and Chad Gemmell (seen to the speaker's right) at the firm’s Commerce Court office, with over 60 lendersin attendance.
Canadian economy lagging behind U.S., but still sound
The Canadian economy may seem lacklustre when compared to the positive economic news coming from the United States, but in global terms it’s still in decent shape. Those were the sentiments expressed by Scotiabank chief economist Dr. Warren Jestin at the second business luncheon organized by the Commercial Real Estate Lenders Association (CRELA) at JLL’s downtown Toronto office on Jan. 19.
“The things that made Canada special are still in place,” Jestin told more than 60 lenders from insurance firms, banks, credit unions and trust companies. “For example, we are at record levels of employment. But U.S. employment growth is now twice what it is in Canada.”
(photo: CRELA organizing committee members Chad Gemmell, Amar Nijjar and Mike Rupar presented Dr. Warren Jestin with a thank-you plaque.)
The American dollar is strong, interest rates are low, incomes are rising, consumers are spending more and the United States budget deficit has shrunk to about one-third of what it was five years ago. These factors are combining to attract investment and fuel what should be a sustainable three per cent annual increase in gross domestic product (GDP) in the U.S.
Economic growth in China has slowed to seven per cent, which has negatively affected commodity prices, and Saudi Arabian decisions have helped drive oil prices to below $50 a barrel. Both of these factors have hurt Canada’s economy and dropped the value of its dollar to around 83 cents U.S. GDP growth is expected to be two per cent this year, but could drop further without a recovery in oil prices to at least $60 a barrel, according to Jestin.
Ontario and B.C. growth to surpass Alberta and Saskatchewan Alberta and Saskatchewan have led Canadian job creation and economic growth over the past two years, but Jestin said their resource-driven economies are forecast to take a back seat to Ontario and British Columbia while oil prices remain low. Jestin projects the dollar to be valued at between 83 and 87 cents U.S. by the end of 2016, which should help manufacturing and exports, but mixed signals have things in a state of flux.
“We don’t see the leverage that we normally get from good news south of the border really impacting the economy in any material way,” he said.
“Ontario benefits the most from the U.S. market relative to other provinces, but there was no province outside of Western Canada that benefited from the resource boom more than Ontario, too. Sales going west are going to tend to slow down as sales going south are going to tend to speed up, so we have a different configuration of growth across the economy. That configuration is probably going to be around for the next couple of years. “We don’t see recession in Alberta or Saskatchewan. We think there’s going to be growth. There will be some pockets of very weak performance in the Maritimes. Quebec will not have the pick-up that Ontario has for a variety of reasons, including big debt issues. In Ontario, we have a big deficit that will be leaning against growth as well. “B.C., in my view, is still a positive story. But if you’re thinking about B.C. beyond 2016, if there’s no LNG (liquefied natural gas), the story becomes a lot softer.” Soft retail sector
Jestin believes the Canadian retail sector will be soft throughout 2015 because employment growth has slowed, wages will remain relatively flat and the debt to disposable income ratio is at a record high. “We’re not going to find momentum on the consumer side the way we’ve seen in the past,” he said, adding wage stagnation will also adversely affect federal and provincial governments trying to balance their books since income tax and sales tax revenues will also remain relatively flat.
“We still live in the best country in the world and I wouldn’t trade it for anywhere,” Jestin concluded, “but these are issues on a go-forward basis.”
CRELA’s objective is to promote knowledge-sharing and networking within the commercial real estate lending community and to provide a voice for the industry on relevant matters. In addition to its quarterly themed luncheons, it will host a cocktail party in the lobby and reception area of CBC headquarters in Toronto on Feb. 24 and a golf tournament in May or June.
Ontario finance minister speaks at CRELA launch event
The Commercial Real Estate Lenders Association (CRELA) launched Tuesday with a real estate roundtable luncheon featuring guest speaker Charles Sousa, Ontario’s minister of finance.
The event, held at Jones Lang Lasalle’s downtown Toronto office, featured 50 senior management representatives of various financial institutions, including banks, insurance companies, credit unions, trust companies, foreign lenders, commercial mortgage-backed securities and mortgage investment corporation lenders.
“The association has been formed as a networking and professional development platform that we hope will be the voice of the commercial real estate lender industry,” said Amar Nijjar, vice-president of debt capital markets at JLL, which provides financing solutions and advisory work to clients across Canada and has placed more than $1 billion of debt business in its first 12 months of operation.
CRELA’s organizing committee is comprised of Nijjar, Chad Gemmell (JLL), Michael Rupar (Scotiabank), Daniel Simunac (Raymond James), Steve Gagro (Laurentian Bank), Neil Carpenter (National Bank Financial) and Chris Green (BMO).
CRELA will host quarterly themed luncheons attended by lenders from different facets of the industry, with sessions providing advice from legal, environmental, engineering and real estate experts. Other networking and social events will also be planned as the association gains a firmer foothold.
Minister expresses support for CRELA
In an effort to give the launch some heft, CRELA invited Sousa to address the audience a day after he announced that Ontario reduced its deficit to $10.5 billion last year — $800 million lower than he forecast in his May budget that brought about a June 12 election and resulted in the Liberal party increasing its seats by 10 and forming a majority government.
The Ontario Ministry of Finance is responsible for regulating the commercial mortgage origination, servicer and lender industry. Sousa applauded CRELA’s establishment and said his department wants to have more input from stakeholders as it reviews Financial Services Commission of Ontario mandates and possible policy changes.
“I’m keen on looking to maximize the potential of your organization and the things that you do so that you can deliver your services more effectively and export some of that expertise around the world to locations that I know are looking for what we offer here in Ontario,” said Sousa, who added he’s trying to take the politics out of government.
“I look forward to doing more and being proactive in the things we’re doing, and I welcome your input. I congratulate you on this launch and putting together this networking opportunity.
“These groups and discussions help me, too. And I will use your minds and expertise in order to do what we need to do. Having a forum like this can go a long way, and having your input on policy and legislation will help.”
Finance Minister Featured as Keynote speaker at Inaugural Real Estate Round Table
TORONTO, September 25, 2014 – JLL (NYSE:JLL) announced today the formation of the Commercial Real Estate Lenders Association (CRELA) at its inaugural round table, hosted by the firm's downtown Toronto office, and featuring Finance Minister Charles Sousa as the keynote speaker.
"This event has been the official launch of CRELA," said Amar Nijjar, Vice President of Debt Capital Markets at JLL.
"The association has been formed as a networking and professional development platform that we hope will be the voice of commercial real estate lender industry."