Commercial Archives - Avenue Living Asset Management

Transforming The SunRise

The transformation of Edmonton’s The SunRise symbolizes a fresh start for the downtown community. Bringing life to 179 new homes in a centralized location supports an important demographic of Canadians including students, young professionals, and essential workers in their search for safe, comfortable housing.

Upgrades are aimed at reducing the carbon footprint of the building and showcasing the cultural heritage and vibrancy of the neighbourhood with a unique solar panel mural designed by local artist, Lance Cardinal.

The revitalized building is a key part of our broader commitment to sustainability across our portfolio.

Investing in Alberta Real Estate | Edmonton

Avenue Living has always believed that the Prairies is a region filled with promise. We were founded here and have strategically invested in Alberta since 2006, and today we own and operate approximately 3,500 multi-family units in Edmonton alone. While others may have looked eastward, or to the coasts, we have kept our eyes firmly on western Canada.

“We’re focused on continuing to build our multi-family residential portfolio in the Prairies,” says Gabe Millard, SVP Capital Markets — Equity & Research. “There’s plenty of opportunity to deliver safe, affordable, comfortable housing to our target demographic, workforce housing residents.” Amid rising interest rates and inflation, Alberta attracts people from other provinces as well as new arrivals to Canada due to its affordable cost of living and strong employment prospects.

Promising Market Demographics

Alberta has experienced population growth in the past year, especially inter-provincial migration — in 2023, it led the country, with a rate significantly higher than other provinces. Edmonton’s population is expected to grow from 1.25 million to 1.86 million by 2033, and the city is expected to surpass the two-million mark by 2041. In 2023 alone, the province grew by 3.5%.

Many industry experts anticipate the demand for multi-family residential rentals to increase as the population ages, a trend that holds true in many municipalities. The demand for apartment-style housing tends to be high among younger populations just forming households, then rises again as people grow older and seek alternatives to single-family homes.

Alberta is known for its affordability, and Edmonton has a reputation as an affordable “big city.” In 2022, a benchmarking study ranked Edmonton among the most affordable in the country.

Industry and Employment

In addition to being an affordable city, Edmonton boasts a high median renter income, 42% higher than the national median thanks to strong employment opportunities. While the province is renowned for its energy sector, an industry that has driven employment for decades, Edmontonians also work in a variety of other industries. The city has a strong technology sector, fueled by its reputation as a leading research and education centre — the University of Alberta is home to the National Institute for Nanotechnology and the Alberta Machine Intelligence Institute. The city is also home to several regional offices of major banks.

Edmonton’s largest employer is Alberta Health Services (AHS); the government of Alberta is second. The University of Alberta is also a top employer, and one of the country’s leading research institutions. In total, there are six post-secondary institutions in the city, which provide services to 180,000 full and part-time students each year. Other leading employers include manufacturers, engineering firms, and retail — the West Edmonton Mall is the largest shopping centre in North America, and the city is also home to the continent’s largest open-air retail development.

Edmonton’s location is also a draw for the distribution and logistics sector, it’s home to a major intermodal freight facility, and CN Rail has announced intentions to consolidate operations in Edmonton.

Culture and Recreation

Edmonton has a thriving cultural scene. Known for its arts festivals (including the Edmonton Fringe), you’ll find 25 local theatre companies, contemporary dance troupes, and more. The city is also filled with museums and art galleries, including the Royal Alberta Museum and the Alberta Art Gallery.

The ICE District — the area surrounding the Rogers Place Arena — is home to restaurants, entertainment, retail, hotels, and office space, all in the downtown core. The revitalized, mixed-use district attracts tourists and Edmontonians alike.

Nearby, the Edmonton River Valley Park attracts visitors on foot or on bike. The park is the largest urban park in North America, and boasts more than 160 km of maintained pathways that connect 20 major parks. People flock to the park year-round to boat or canoe, for picnics, to run, walk, bike, or cross-country ski and skate in the winter months.

South of the valley is Old Strathcona, a historic district home to retail, farmer’s markets, pop-up art galleries, and restaurants. The neighbourhood is a registered provincial historic area, populated with heritage buildings erected in the early part of the 20^th century.

On the horizon

Avenue Living is investing in a significant renovation of its Capital Tower building, a 12-storey, 179-unit complex in the city’s downtown core, acting as a gateway to Chinatown. This set of deep retrofits includes an 85-foot art installation by renowned Edmonton artist Lance Cardinal, and this mural will be constructed as a vertical solar array to reduce greenhouse gas emissions. The refurbishment of this building will contribute to the growing community in this district, which is on the upswing.

That sense of community is something we strive to foster in all our properties — and we see plenty of opportunities for growth across the city.

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at https://avenuelivingam.wpenginepowered.com/forward-looking-statements for additional information regarding forward-looking statements and certain risks associated with them.

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Avenue Living: Creating Defensibility and Stability for Alternative Investors

Alternative investments are experiencing a surge in interest from advisors and investors seeking ways to drive returns.

With a focus on hard assets, Avenue Living has consistently delivered stable returns over the past decade — a trajectory that we anticipate will continue due to strong market fundamentals including population growth and limited supply.

Hear from our SVP of Capital Markets, Gabriel Millard and Head of Sales, Alex Steele, about how our vertically integrated management platform and solid financial partnerships set us apart, making Avenue Living a defensible choice for alternative investors.

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Capital Tower: A Beacon of Sustainability and Community Revival in Edmonton

On the periphery of Edmonton’s downtown core sits a 12-storey, 179-unit building that Avenue Living is transforming into a modern, affordable, and sustainable multi-family residential and commercial building.

Built in 1970, Capital Tower is located at the gateway to the city’s Chinatown district. And as with so many buildings of its vintage, it’s due for a refresh. Upon completion, the building will provide warm, inviting homes to the vibrant surrounding community.

Art Meets Sustainability

Capital Tower’s revitalization focuses heavily on sustainability and reducing its environmental footprint — measures that will also provide an improved living experience for residents. Most notably, this project will include the largest vertical array of solar panels ever proposed in North America — one that also doubles as a stunning piece of art.

The north face of the building will be home to a 26-metre (85-foot) tall mural designed and illustrated by Edmonton Indigenous artist Lance Cardinal. The mural represents the unity, coexistence, and cultural similarities between First Nations and Chinese Cultures using imagery from the Cree seven sacred grandfather teachings and the Chinese zodiac. Thanks to technology from solar panel innovator Mitrex, the landmark artwork also harnesses the energy of the sun to help power the building.

Beneath the solar façade, new insulation on the building’s exterior walls — which will add an R-value of 12 — will improve the efficiency of the interior. Coupled with new triple-glazed windows, the measures will help keep residents comfortable year-round and allow the heating and cooling systems to run more efficiently.

But the upgrades don’t stop with the building’s exterior.

“We’re making improvements to almost every building system in order to reduce greenhouse gas emissions,” says Neal Shannon, Avenue Living’s Senior Vice President, Capital Projects.

A Broader Commitment to ESG

These improvements are part of our broader commitment to environmental, social, and governance (ESG) initiatives across our portfolio. This approximately $28 million project is made possible thanks to favourable financing terms with BMO. The arrangement allows us to access funds from both BMO and the Canada Infrastructure Bank (CIB) to complete the green retrofits, which meet CIB’s Environmental Consumption Measures (ECMs).

“This project is separate from Avenue Living’s partnership program with CIB,” notes Daniel Veniot, Associate Vice President, Capital Markets — Debt. “BMO has its own relationship with the CIB, allowing us to access advantageous lending terms through their programs. Together, these terms will allow us to offer residents upgraded suites at fair market prices, so we can continue to serve our target demographic.”

Meeting the CIB’s ECMs also allows us to take part in the Canada Mortgage and Housing Corporation’s (CMHC) multi-unit loan insurance project, MLI Select. MLI Select is a points system that offers insurance incentives based on affordability, energy efficiency, and accessibility. “This project qualifies for MLI Select based on the environmental upgrades alone,” says Veniot.

Building Comfort and Community

The renovations and retrofits are designed to improve the experience for those who call the building home. The property will have features and amenities that foster community, including a rooftop garden, library, games and movie room, fitness centre, storage area, and refurbished commercial space on the main floor.

The in-suite upgrades will provide increased comfort for residents while contributing to emissions reductions. Heat pumps in each suite — along with smart thermostats — will allow residents to accurately control the temperature of their environment through both heating and cooling. The addition of new makeup air units also helps improve air circulation throughout the building, eliminating cooking odours, improving air quality, and keeping temperatures more even throughout the space. These measures all contribute to improved health for occupants, according to the Canada Green Building Council.

Other improvements include LED light fixtures in both common areas and suites, modernized elevators, and updated bathrooms and kitchens. Taken together, the renovations all contribute to an elevated experience for future residents.

A Community on the Rise

The result will be a high-quality, safe, affordable and comfortable property that contributes to the revitalization of the surrounding community. In recent years, the area has seen renewed education, hospitality, and entertainment options. The building is within walking distance of the ICE District (Edmonton’s entertainment hub), Epcor Tower (one of the newest AA office buildings in the city), and Grant MacEwan University. It’s also close to transit lines which gives residents easy access to the University of Alberta and other business districts. Nearby, the Station Lands development is revitalizing an underused part of the downtown core, transforming it into a vibrant, walkable community.

The project, which is already underway, is set to be completed in late 2024. We’ll provide regular, more detailed updates here, so follow along for the full story as it unfolds.

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at https://staging.avenuelivingam.com/forward-looking-statements for additional information regarding forward-looking statements and certain risks associated with them.

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What Investors Need to Know About Borrowing Amid Rising Interest Rates

The past year has been punctuated with announcements of rising interest rates, as the Bank of Canada (BOC) redoubled their efforts to combat inflation with successive rate hikes. The latest, in July, brought the overnight rate up by 25 basis points to 5%, its highest since early 2001. Changes in interest-rate policy can have wide-ranging effects throughout the economy, and for real estate investors, it’s vital to interpret the different outcomes between long-term and short-term rates. Understanding the inversion of the yield curve — where long-term interest rates are lower than short-term rates — can help well-prepared property owners mitigate risk.

Understanding the Yield Curve

Figure 1

During the period of rising interest rates, there has been a notable difference between prime-based borrowing rates and bond-based borrowing rates in Canada. While the prime rate has experienced significant increases (from 2.7% in March of 2022 to 6.95% in June of 2023), the Canadian 10-year bond rate has remained relatively stable over the same period. Whereas retail borrowing is often based on prime, commercial borrowing is traditionally based on long-term government bonds. Therefore, well-managed commercial borrowers will generally be less impacted — as compared to retail borrowers — by the recent rise in interest rates. One of the many upsides to indirect real estate investment through entities such as REITs is that investors are able to benefit from the relationships and knowledge of a team of experts. By indirectly investing in real estate, everyday investors can take advantage of bond-based borrowing rates through a strategic asset manager, without becoming a commercial borrower themselves.

With the Canada Mortgage and Housing Corporation (CMHC) setting lending rates at a spread over the 10-year bond, those who have access to bond-based borrowing for long-term decisions have been in a more favourable position since the beginning of 2022. A visual representation of these trends can be observed in Figure 1.

Figure 2

As per Figure 2, during an inverted yield curve, where long-term interest rates are lower than short-term rates, long-term borrowing becomes cheaper than short-term borrowing. By securing financing at lower rates, long-term borrowers benefit from stability and predictability in their interest costs over an extended period. Conversely, short-term borrowers and those with variable rates may experience heightened volatility and financial strain as their borrowing costs increase in response to rising short-term interest rates. The inversion of the yield curve emphasizes how important it is for borrowers to consider duration and structure when interest rates are rising.

Rental property owners facing rising interest rates can take advantage of the differences in duration between short-term leases and long-term debt. Using long-term debt instruments, such as a 10-year mortgage, alongside shorter lease terms, allows property owners to adjust to changing market conditions in real-time, counterbalancing the impact of higher borrowing costs. However, property owners should also consider market conditions and the resident experience before implementing this strategy.

Interest Rates and Homeownership

Rising interest rates — and the resulting increased cost of short-term borrowing — can have a negative impact on development projects, lowering construction activity and limiting the supply of housing units. With fewer developments, the cost of housing increases, leading to higher rents and housing prices. Scarcity of supply and increased borrowing costs compel developers to set higher prices for their projects, ultimately affecting affordability.

A survey conducted by Chartered Professional Accountants Canada identified several barriers to homeownership among non-homeowners in the country. Rising interest rates were cited as the top obstacle by 89% of respondents, followed closely by the affordability of down payments (84%), necessary renovations (83%), and finding a home in a desired area (83%). Other challenges included taxes and mortgage payments (81% each) and income instability (69%).

Existing homeowners also faced hurdles, with renovation costs affecting three out of five individuals, ongoing difficulties in affording home maintenance (46%), and challenges with mortgage payments, property taxes, and utility payments for varying percentages of respondents. These findings shed light on the financial obstacles Canadians encounter in their quest for homeownership, as well as the ongoing strains faced by prospective and existing homeowners.

Navigating the Landscape

Canada’s rising interest rates present distinct challenges for many sectors of the economy — but they also give rise to opportunities. It’s essential for borrowers to understand the benefits and drawbacks of short- and long-term interest rates and formulate their debt strategy accordingly. For property owners, understanding the interest-rate landscape, managing duration, and responding to local market conditions can help minimize borrowing costs and optimize revenue.

Understanding how an asset manager uses different debt vehicles to mitigate risk and reduce borrowing costs allows investors to make informed decisions. Asset managers like Avenue Living, for example, can make strategic use of short- and long-term borrowing to potentially maximize returns and de-risk their portfolios. Considering an asset manager’s borrowing strategy — along with other factors — can help investors find the vehicle that’s right for them.

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Investing and Connecting with a Community: Wetaskiwin Mall’s New Mural

Inclusivity can take many forms — the people who make up an organization’s team, the causes they support, and the principles they operate under. But it can also take the form of representation in other ways like in the case of Wetaskiwin Mall, an exciting piece of original art, painted by a local, renowned Indigenous artist.

As property owners and operators, we know our investments have an impact on the people who live and work in the communities in which we operate. We invest in spaces — multi-family homes and commercial space — that people develop deep connections with. The mural at Wetaskiwin Mall aims to showcase the culture of the community and evoke the theme of “Healing Medicine.”

Collaborating with a Local Artist

Painted by distinguished Indigenous artist Lance Cardinal, the 50-foot mural in the north wing of the mall symbolizes many ways of healing: ceremonial, medicinal, cultural, and healing through dance — a fitting subject given its location right outside an Alberta Health Services office and the Care Gateway Clinic. Cardinal painted the mural over ten days, with the help of an assistant.

Cardinal, from Big Stone Cree First Nation, is an artist and entrepreneur on the rise. In 2022, he collaborated with the Edmonton Oilers to write and produce the team’s new land acknowledgement and design their Turtle Island logo, which helped raise funds for Edmonton charities, while being one of the most popular and beloved alternate designs in the team’s history. His shoe collection with Kunitz Shoes, an Edmonton-based company, is set to launch this year and is currently on display at the Royal Alberta Museum.

Wetaskiwin, Alberta, which is 70 km south of Edmonton, is a community of around 13,000. The city is located on Treaty Six territory, bordered by two of the four Maskwacis First Nations — the Ermineskin and Samson Cree Nations — and serving two others — the Louis Bull Tribe and Montana First Nation. Wetaskiwin has rich Indigenous history; its name (which means “the hills where peace was made”) is a direct reference to the outcome of a battle between the Cree and Blackfoot.

Bringing People Together

Our strategy with Wetaskiwin Mall has always been to create a “community hub,” a place that provides customers with the essential services they need all in one place. In addition to national retailers and locally-owned stores and services, the mall is also home to Alberta Health Services, a pharmacy, medical clinic, optometrist, and more. Avenue Living has invested in Wetaskiwin for over a decade, with a presence that includes 401 multi-family units and 158,000 square feet of commercial space. In keeping with a key tenet of our strategy as an active manager, we have developed a deep understanding of the market and its residents. Since acquiring the shopping center in 2017, Avenue Living has carefully curated a roster of retailers and services that reflect the needs and wants of area residents.

“You don’t usually see local art in a retail environment like this,” says Slava Fedossenko, Director, Commercial Asset Management for Avenue Living, “but we wanted to create something that reflects the culture of the community.”

Avenue Living is immensely proud of our partnership with Lance Cardinal and the finished mural. While it is one of the first projects of its kind for us, we have plans to ensure it is not the last, and we look forward to working with local artists in other communities to showcase the places our residents and customers call home.

Read more about Lance Cardinal and this exciting project in The Wetaskiwin Times.

Commercial Culture

This Year’s Most-Read: Our Top Content in 2022

We’ve gathered the blog posts, articles, and white papers that garnered the most interest from our readers last year. They cover a diverse range of topics, from our partnership with the Canada Infrastructure Bank to the complexities of the private rental housing market, but they all come back to one thing: understanding the real estate investment landscape. As investors seek opportunity in a changing market, it’s important to explore and analyze the fundamentals that impact our industry to refine our strategy and provide value for our residents, our investors, and the communities in which we operate.

PRESS RELEASE:

CIB COMMITS $120 MILLION TO AVENUE LIVING — THE FIRST REIT ADDRESSING MULTI-FAMILY RESIDENTIAL RETROFITS AT SCALE

This announcement is the next step in our commitment to ESG — one we officially started when we began a relationship with PRI (Principles for Responsible Investing). Our partnership with Canada Infrastructure Bank will allow us to undertake capital improvements that reduce our carbon footprint and provide comfortable homes for our residents, without compromising affordability.

WHITE PAPER:

RE-EXAMINING A HEDGE AGAINST INFLATION: Multi-family Residential Real Estate

This paper examines the effects inflation and rising interest rates have on affordability, and how investors may find opportunities in multi-family real estate.

PEER-REVIEWED WHITE PAPER:

PRIVATE RENTAL TARGET MARKETS: A COMPREHENSIVE SPECTRUM

Our founder and CEO, Anthony Giuffre, collaborated with the University of Regina’s Dr. Grant Wilson on this examination of the North American rental housing market, identifying the lifestyles, demographics, and value propositions that make up six major groups in the housing spectrum. The peer-reviewed paper was published in the International Real Estate Review in April 2022.

WHITE PAPER:

DIVERSIFICATION WITH AND WITHIN REAL ESTATE

This white paper explores how diversification in real estate portfolios — across asset types and markets — can enhance value for investors, helping them minimize risk and maximize the potential for returns.

BLOG:

WHY WE SEE OPPORTUNITY IN THE WORKFORCE HOUSING MARKET

We examined factors that make the workforce housing market an attractive investment opportunity and why it’s the focus of our multi-family strategy.

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Avenue Living’s 2022 Year in Review

In 2022, Avenue Living grew in more ways than one. In addition to expanding our footprint and operations with new offices in Toronto and Dallas, we improved our customer satisfaction through active management, invested in technology, and elevated our ESG efforts. We’re also entering our third year as signatories for PRI and since signing on, we have partnered with the CIB to sustainably retrofit nearly half of our multi-family portfolio. In 2023, we look forward to commencing phase one of the project and making a positive impact.

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How Avenue Living’s formidable 2022 provides solid base for 2023

With a cycle-tested business model and a steadfast commitment to the everyday, Avenue Living continued to make great strides.

In 2022, accelerating inflation and rising interest rates created a challenging investment environment, with negative returns flashing across the asset spectrum. Still, that didn’t stop Avenue Living’s 16-year growth streak.

After ending 2021 with just over $3.1 billion in total assets under management (AUM), the organization grew by 48% to reach $4.6 billion AUM. It achieved broadly diversified growth across its multi-family apartment, farmland, and self-storage real estate portfolios — all while staying true to its strategy of investing in the everyday.

“It speaks to the durability of Avenue Living’s business model across multiple market cycles,” says Gabriel Millard, SVP, Capital Markets – Equity & Research. “2008 (GFC) and 2014 (Commodity Crisis) were lost years for many other players, but they were periods of growth for Avenue Living as we leaned into the opportunities. 2022 was another very formative year for us.”

A win-win in the multi-family residential space

Avenue Living entered the apartment space as owner-operators in 2006 with a relentless focus on the resident experience. The company has continued to grow while offering an institutional level of service to those who call its buildings home. A pivotal strategic development was the establishment of the Avenue Living Real Estate Core Trust, which has grown into the first North American Workforce Housing Fund in just five years. Today, Avenue Living’s residential portfolio includes over 15,000 multi-family suites across 3 Canadian provinces and 5 U.S. states.

While headlines around real estate investments tend to revolve around high-growth markets — the likes of Toronto and Vancouver — Avenue Living leans into moderate growth markets, such as the Prairie provinces, where assets are valued at a relative discount. Its vertically integrated business model has also allowed it to control operational costs.

Those factors have enabled Avenue Living to responsibly raise rents in pace with higher inflation and interest rates, without hurting residential stakeholders. “We’re achieving our targeted returns while still maintaining affordability for our residents,” Millard says. “We’ve seen collections improve, occupancy continued to tick up, and we have wait lists at over 100 of our buildings.”

Growing opportunity in Canada’s breadbasket

Meanwhile, Avenue Living’s farmland holdings have expanded from 49,000 acres of Saskatchewan farmland at the end of 2021, to over 83,000 acres today.

In terms of global output, Canadian farmland represents a large portion of durum wheat, peas, and other important base crops. Saskatchewan is a big piece of the agricultural puzzle, as it accounts for approximately 40% of the cultivated acres in Canada.

“We’re witnessing a breakdown in the global food supply chain,” Millard says. “Canada has a real opportunity to be a world leader in ensuring food security.”

With a history of outperforming inflation over the past 30 years, farmland is also growing more attractive as a diversifying asset class. That’s bolstering Avenue Living’s bullish view on Saskatchewan farmland, which remains at a steep discount compared to neighbouring provinces.

Great strides in self-storage

The Mini Mall Storage Properties Trust has also cemented itself as a premier player in the secondary and tertiary markets of North America’s self-storage industry.
From just over 2 million square feet at the end of 2021, the trust has grown to nearly 6 million square feet of self-storage space. That expansion was partly driven by Avenue Living’s ability to introduce its proprietary technology stack and operating expertise into all the new locations it enters.

“A lot of innovation has happened in the primary downtown, new-development segment of self-storage over the past decade,” Millard says. “We’re taking that approach and applying it to older legacy-run assets that have traditionally operated as mom-and-pop, cash-and-paper businesses.”

Avenue Living is pushing for more growth through a new office in Dallas, where it has hired key industry leaders in the self-storage landscape.

“Our expansion into Texas has taken us from a smaller, scrappy Alberta-based company into a truly North American player,” Millard says. Mini Mall Storage is now a top 25 self-storage operator in North America.

More milestones

Above the 49^th parallel, Avenue Living has arrived on Bay Street with a new Toronto office. With that new foothold in Canada’s financial hub, the company is positioned to further reinforce and broaden its capital base in the years to come.

With about $160 million in expenditures made toward capital improvements in its residential properties, Avenue Living is also sharpening its focus on maintaining a superior resident experience and providing great customer service.

After becoming a PRI signatory in 2021, the company is doubling down on sustainability through a partnership with the Canada Infrastructure Bank, which includes a $150-million co-investment on deep energy retrofits on its older-style multi-family assets.

“Real estate – especially older stock properties – represents a significant portion of GHG emissions in Canada,” Millard says. “Our goal is to reduce GHG emissions by at least 49% through deep energy retrofits”.

Leveraging its unique perspective on workforce housing, Avenue Living has also published industry-leading papers and research. That includes a peer-reviewed paper on the residential housing spectrum, which unpacks the nuances of typical renter demographics, as well as their needs in terms of rental housing.

“We’ve published a number of white papers on the importance of affordability, and how a changing cost of capital affects real estate across different markets and asset classes,” Millard says. “We’re really solidifying ourselves as thought leaders within the industry, while continuing to advocate for our residents and provide value for our investors.”

The way forward

Avenue Living has built a strong capital stack. Coupled with a diversified equity base and the use of longer term, fixed-rate debt instruments, Avenue Living is focusing on innovation and investment to ensure strong same-door performance and operations in 2023. It also plans to continue focusing on active property management to deliver the best possible results for residents and investors alike.

“We’re heading into a world with a lot of dark clouds, but we’re seeing opportunities in the market. We’re in a defensible position, and we are aiming to take advantage of any disruptions that may come,” Millard says. “2023 is going to be an interesting year globally, and a very exciting year for Avenue Living.”

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at https://avenuelivingam.wpenginepowered.com/forward-looking-statements for additional information regarding forward-looking statements and certain risks associated with them.

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Avenue Living Wins Gold in 12th Annual Best in Biz Awards

The organization demonstrates a commitment to innovation, sustainability, and customer service excellence.

Calgary, Alberta – December 7, 2022 – Avenue Living Asset Management (“Avenue Living”) has been named a gold winner for Company of the Year – Canada by the Best in Biz Awards.

By investing in the everyday and adding value to its properties, expanding the organization’s footprint, and focusing on its workforce and brand advantage, Avenue Living has demonstrated the ability to be defensible, stable, and strategic in its daily operations and long-term vision to drive value for its customers and stakeholders.

The 12th annual Best in Biz Awards saw more than 700 entries from public and private companies of all sizes and represents diverse industries and regions in the U.S. and Canada, ranging from global brands to the most innovative start-ups and local companies. This year’s judges highlighted the winning companies’ visionary leadership, innovative strides in the use of new technologies, and the adoption of workplace best practices. Many winners also continued to invest in environmental and corporate social responsibility programs.

“We’re incredibly proud of the resilience our team and organization showed throughout 2022,” says Jason Jogia, chief investment officer of Avenue Living. “Being named a gold winner for Company of the Year by the Best in Biz Awards is a testament to our team’s commitment to excellence and sustainability in the multi-family industry.”

Since the program’s inception in 2011, winners of the Best in Biz Awards have been determined by independent judging panels assembled from some of the most respected national and local newspapers, TV and radio outlets, and business, consumer, technology, and trade publications in North America. The 2022 judging panel included, among others, writers from AdWeek, Computerworld, Forbes, The Globe & Mail, Inc., The Oregonian, and Portland Tribune.

“The depth and breadth of this year’s nominees in Best in Biz Awards – and especially the winners – demonstrate savvy business acumen among the leadership and represent the type of entrepreneurship powering today’s economy,” said Dustin Klein, Smart Business, judging his first Best in Biz Awards competition.

After reviewing hundreds of submissions, the judges were impressed with Avenue Living’s growth, both in terms of employee numbers and assets under management. They highlighted Avenue Living’s focus on serving all stakeholders, including offering new features such as integrated payments through its fin-tech platform, Zenbase. Its resident retention and Google reviews clearly showcase how this has resulted in high resident satisfaction. In addition, the panel emphasized Avenue Living’s commitment to sustainability and its involvement in the United Nations-supported organization, Principles of Responsible Investment, to spearhead environmental retrofits, implement smart solutions, and update aging assets.

For a full list of gold, silver and bronze winners in Best in Biz Awards 2022, visit: http://www.bestinbizawards.com/2022-winners.

About Avenue Living Asset Management

Founded on the principle of investing in the everyday, Avenue Living focuses on opportunities that are often overlooked by others, having grown to $4.25 billion CAD in aggregate assets under management across four private real estate investment mandates. The Avenue Living team includes over 900 professionals with expertise in real estate operations and transactions, property management, research, investment origination, and capital markets, as well as a suite of subject matter experts to support Avenue Living’s growing portfolio of multi-family residential, commercial, agricultural land, and self-storage assets. In addition to 15,000 multi-family units located in Canada and the United States, Avenue Living and its related entities own over 496,500 square feet of commercial space, 82,900+ acres of productive farmland, and more than 5 million square feet of self-storage space.  

About Best in Biz Awards

Since 2011, Best in Biz Awards has been the only independent business awards program judged by a who’s who of prominent reporters and editors from top-tier publications from North America and around the world. Over the years, judges in the prestigious awards program have ranged from Associated Press to the Wall Street Journal and winners have spanned the spectrum, from blue-chip companies that form the bedrock of the global economy to some of the world’s most innovative start-ups and nimble local companies. Each year, Best in Biz Awards honors are conferred in two separate programs: North America and International, and in 100 categories, including company, team, executive, product, and CSR, media, PR and other categories. For more information, visit: http://www.bestinbizawards.com.

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Breathing New Life into Canada’s Housing Supply

Amid a growing wave of responsible investing, strategic partnership between Avenue Living and CIB paves the way for a greener, more sustainable future for investors and residents.

As a responsible private real estate investment manager, Avenue Living has long placed ESG at the forefront of its decisions and operations. With its focus on operating and maintaining workforce housing, as well as oversight through its flagship investment vehicle, the Avenue Living Real Estate Core Trust, the organization is no stranger to the social and governance piece of the puzzle. But several years ago, the firm saw an opportunity to go farther in its commitment to responsible stewardship. Read more about the pioneering partnership.

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at www.alamstg.wpenginepowered.com for additional information regarding forward-looking statements and certain risks associated with them. 

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Rising Rates, A Boon for Moderate Growth Markets

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Avenue Living Surpasses $4.25 Billion in Assets Under Management

Calgary, Alberta, October 18, 2022 – Avenue Living announced today it has exceeded $4.25 billion in assets under management (AUM).

Following a series of key acquisitions in its multi-family residential, self-storage, and agricultural funds, Avenue Living reported this significant milestone, representing a 4X increase to its AUM since 2018. Headquartered in Calgary, Alberta and Dallas, Texas, the organization has grown to over 900 employees in seven provinces and 13 states, with additional plans for growth on both sides of the border.

“Our business philosophy of ‘investing in the everyday’ means that we see potential in properties and markets that others often overlook,” says Anthony Giuffre, founder and CEO of Avenue Living. “We have built a scalable, defensible model that continues to perform through varying market cycles, and we have effectively institutionalized low-density property management by developing an infrastructure that is sustainable and repeatable.”

Starting in 2006 with its first acquisition of a 24-unit property in Brooks, Alberta, the journey to becoming one of Canada’s largest property owners in both the multi-family rental residential and self-storage sectors has resulted from a clear, strategic focus on the North American Heartland. The organization has a well-researched understanding of the unique demographic profile, dubbed ‘workforce housing’, which it defines as a subset of the economy earning between $15 and $50 per hour.

Jason Jogia, chief investment officer at Avenue Living states, “The days of passive income through property ownership are ending. In the largely unconsolidated markets we enter, legacy owners are looking for succession plans for their properties and businesses.” Jogia asserts that, “We find and acquire properties that are underperforming, and invest in strategic operational, capital, and technological enhancements to bring these properties up to the Avenue Living standard. These improvements not only enrich the customer experience but improve the operating performance of the property. Our growth is measured, conservative, and deliberate across the geographies we target; and the assets we choose have proven to be defensible through times of volatility.”

Avenue Living is the second largest building operator in Canada by roofline and has 10 per cent of their residential multi-family portfolio in the United States. The organization’s self-storage fund, Mini Mall Storage Properties, has grown exponentially in just over two years with over 4.6 million square feet of storage space and 56 per cent of its facilities in the U.S.. In addition, Avenue Living Agricultural Land Trust steadily grew across the Canadian Prairies, with 82,900 acres under ownership and leased as active farmland.

The organization’s focus away from ‘shiny objects’ has historically insulated the portfolio from the high highs and the low lows seen in high-growth markets. “Our growth is intentional; it creates economies of scale and scope, which continuously enhances our operational excellence,” says Gabriel Millard, senior vice president of capital markets. “We focus on markets that have historically exhibited low to moderate growth, where we use our expertise to manufacture alpha. As we see a resurgence across the North American Heartland, we are well positioned to continue capturing the upside of this economic trend.”

ABOUT AVENUE LIVING  

All financial figures are in Canadian dollars.

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at www.alamstg.wpenginepowered.com for additional information regarding forward-looking statements and certain risks associated with them.  

Commercial Core Culture Farmland Mini Mall Opportunity

Manufacturing Alpha: Avenue Living’s Three-Factor Formula for Success

Our CIO, Jason Jogia, joined @Wealth Professional to discuss the strategy that sets Avenue Living apart, allowing us to thrive regardless of market conditions.

“We’ve always had to manufacture alpha by out-operating our peers,” says Jason. “By being able to operate effectively, we’ve been able to create a defensible multi-family portfolio.”

Our approach is built on three key drivers: strategic diversification, customer focus, and operational integration. Read more about these foundational elements and how they have allowed us to build a successful business model.

View Article

Commercial Core Farmland Mini Mall Opportunity

Interest Rates & Multi-Family Residential Real Estate

Authors

Grant Alexander Wilson, Ph.D., Assistant Professor, Faculty of Business Administration, University of Regina

Jason Jogia, MBA, M.Fin., Chief Investment Officer, Avenue Living

Author Bios

Dr. Wilson is an Assistant Professor at the Hill and Levene School of Business, University of Regina. His research focuses on marketing, strategy, and innovation. He has published over 20 peer-reviewed articles in top management journals including Journal of Small Business Management, Research-Technology Management, and Journal of Business Strategy. His research has been featured in the National Post and by the World Economic Forum. Dr. Wilson is also a research consultant and contributor to Avenue Living Asset Management.

Mr. Jogia is the Chief Investment Officer at Avenue Living and has over 15 years of experience in real estate capital markets, originating over $10 billion in real estate loans and $1 billion in equity. He has extensive experience in real estate investment analysis and capital structure across various real estate classes. In addition to holding 2 Masters’ degrees in Finance, Mr. Jogia is pursuing his Doctorate of Business Administration and currently serves as an instructor at the University of Calgary, specializing in real estate finance.

INTRODUCTION

The global pandemic caused the Government of Canada to have an “all hands on deck” approach to its intervention in the free market economy. Specifically, the Government of Canada enacted both expansionary fiscal and monetary policies. Fiscal policy “consists of changing government expenditure and/or taxes” (Lumsden, 2011). In contrast, monetary policy “consists of changing the money supply or interest rates” (Lumsden, 2011). The pandemic stimulus package (government expenditure) was the largest on record (Wilson, 2021), equating to 11.2% of Canada’s gross domestic product (GDP), 420% larger than the 2008 recession (McKinsey, 2020). Other fiscal policies to expand the economy included a number of new tax exemptions and deferrals for both individuals and businesses (Government of Canada, 2021). In the early weeks of the pandemic, interest rates were reduced (expansionary monetary policy) to record-breaking lows (e.g., 0.25%) (Bank of Canada, 2022a; Foran, 2020). According to the Bank of Canada (2022a), “lowering interest rates [was] the Bank’s best-known tool to encourage borrowing to stimulate the economy.” Simply, in times of low interest rates such as the pandemic, economic actors are more likely to borrow money and make large purchases, increasing the overall demand for money (Investopedia, 2021).

Figure 1 illustrates how the lowering of interest rate (I1 to I2) results in a movement along the money demand curve (MD). In order to establish equilibrium between the money demanded (MD) and supplied (MS), the money supply needs to increase (MS1 to MS2).

FIGURE 1 – INTEREST RA TE, MONEY DEMAND, & MONEY SUPPLY

An effect of increasing the money supply too quickly is inflation (Ross, 2021; Lumsden, 2011). While “the natural tendency of the state is inflation” (Rothbard, 1962), Canada is currently experiencing above-average inflation (> 2%) (Trading Economics, 2022; Wilson, 2021; Wilson, 2022). Specifically, in June of 2022, Canada’s annual inflation rate was 8.1%, the highest since 1983 and well above forecasted figures (CNBC, 2022; Trading Economics, 2022) (Figure 2).

FIGURE 2 – INFLATION IN CANADA

Trading Economics (2022)

In response, the Government of Canada has committed to a series of interest rate increases (contractionary monetary policy) to “forcefully” curb inflation (Bank of Canada, 2022b). This paper explores the macroeconomic implications of interest rate increases. Specifically, the relationships between interest rates and the stock market, home values, and residential rents are examined.

INTEREST RATES & THE STOCK MARKET

According to Hall (2022), changes to the interest rate “impacts both the economy and stock markets because borrowing becomes either more or less expensive for individuals and businesses.” Interest rate increases, such as those occurring now and in the foreseeable future, “negatively affect earnings and stock prices” (Hall, 2022). An examination of the TSX Composite Index (benchmark measure of the Canadian stock market) and historical variable mortgage interest rates (a measure of real-time consumer interest rate changes) exemplifies this inverse relationship (Figure 3).

FIGURE 3 – TSX & VARIABLE MORTGAGE INTEREST RATES

Stock Performance (2022) & Super Brokers (2022)

Given the inverse relationship between the stock market and interest rates, recent and committed rate hikes have investors concerned, anticipating a recession, and seeking alternative investments. Real estate positions have been characterized as alternative investments that possess inflation-hedging benefits (Hartzell et al., 1987; Hoesli, 1994; Lee & Lee, 2014; Nickerson, 2021; Rubens et al., 1989; Wilson, 2021; Wilson, 2022). However, not all real estate investments react similarly – as they do with inflation – to interest rate increases.

INTEREST RATES & HOME VALUES

Interest rates and home values are central to homeownership affordability. According to Nielsen (2022), “interest rates are important to the housing market for several reasons. They determine how much we will have to pay to borrow money to buy a property, and they influence the value of [homes].” Low interest rates increase the demand for homes and increase prices, whereas high interest rates decrease the demand for homes and lower prices. A comparison of Canada’s historical overnight rate and new house price index (a proxy for home values) from 1990 to 2022 illustrates this relationship. As interest rates decrease, the new home price index increases (Figure 4).

FIGURE 4 – INTEREST RATES & HOME VALUES

Bank of Canada (2022) & Statistics Canada (2022)

A regression analysis, using interest rate as the independent variable and the new house price index as the dependent variable, confirms that the two are negatively correlated (β =-.713, p < 0.001). This demonstrates that as Canadian interest rates decreased, home values increased. In contrast, as interest rates increase, home values are expected to decrease. Given their “strong” negative correlation (r > ±0.40) (Hair et al., 2000), future interest rate increases are likely to create lower demand for homeownership in Canada, resulting in a “flight to affordability” or renting.

INTEREST RATES & RESIDENTIAL RENTS

A demand curve is a graph that depicts the relationship between the price and quantity of a good or service (Lumsden, 2011). Moves along the demand curve show how the quantity demanded changes at every level of price (Lumsden, 2011). A shift of the demand curve occurs when a variable, not on the axes, changes (Lumsden, 2011). In real estate, increasing interest rates and lower demand for homeownership increases rental demand at all levels, shifting the entire demand curve up and to the right (DR1 to DR2) (Figure 5).

FIGURE 5 – RENTAL DEMAND

The shift is empirically validated. However, unlike the conceptual illustration, in reality, the shift is somewhat lagged. Comparing Canada’s variable mortgage interest rate with the inflation-adjusted rental price index (a proxy for multi–family residential rents) shows that as mortgage interest rates increase or decrease, residential rents experience lagged corresponding increases or decreases (Figure 6). Given that the rental price index is inflation-adjusted, it can be concluded that these changes are direct responses to rental demand fluctuations.

FIGURE 6 – RENTAL PRICES & VARIABLE MORTGAGE INTEREST RATES

Bank of Canada (2022c) & Statista (2022)

It is evident that multi-family residential properties have distinct advantages in an increasing interest rate environment. As interest rates increase, more individuals are contemplating renting. At the same time, new multi-family construction slows down due to the cost of borrowing. The increased demand, but stagnant supply, puts upward pressure on residential rents. For savvy investors seeking to preserve and grow wealth, it may be strategic to include or expand multi-family residential real estate positions. Currently, wealth preservation is top of mind, as big banks and economists are forecasting an impending recession (Tepper, 2022; Ray, 2022).

GROSS DOMESTIC PRODUCT (GDP) & RESIDENTIAL RENTS

Gross domestic product (GDP) is a comprehensive assessment of a country’s economic health, as it measures its total domestic production. Increasing GDP, over two periods, is known as economic growth or a boom. In contrast, declining GDP over two consecutive quarters is defined as a recession. Comparing the annual changes of Canada’s GDP (booms and recessions) with changes to inflation-adjusted residential rents shows an inverse relationship (Figure 7).

FIGURE 7 – RENTAL PRICES & GDP

Statista (2022) & World Bank (2022)

A regression analysis, using GDP as the independent variable and rental prices as the dependent variable, shows that the relationship is negative (β = -0.756) and statistically significant (p = 0.007). This suggests that in times of GDP decline, inflation-adjusted residential rents (real increases to rent) experience the largest growth, supporting multi-family residential real estate as a recession-proof investment.

WHERE TO NEXT?

The last two years have been anything but stable and predictable. As a result, individual and institutional investors have had – to say the least – a “bumpy ride.” Understanding that the Bank of Canada is increasing interest rates and will continue to engage in contractionary monetary policies to curb inflation, it is a precarious time for investors. Examining historical data that compares rising interest rates with the stock market and home values emphasizes the importance of alternative investments that perform well in times of rising interest rates, namely multi-family residential real estate. As the world economies face increasing interest rates and impending recessions, this real estate asset class offers significant advantages.

REFERENCES

Bank of Canada. (2022a). Our COVID-19 response: Policy actions. https://www.bankofcanada.ca/2020/05/our-policy-actions-in-the-time-of-covid-19/

Bank of Canada. (2022b). Economic progress report: Navigating a high inflation environment. https://www.bankofcanada.ca/2022/06/economic-progress-report-navigating-a-high-inflation-environment/

Bank of Canada. (2022c). Canadian interest rates and monetary policy variables: 10-year lookup. https://www.bankofcanada.ca/rates/interest-rates/canadian-interest-rates/

CNBC. (2022). Canada inflation rate gallops to near 40-year high, calls for supersized rate hike mount. https://www.cnbc.com/2022/06/22/canada-inflation-rises-to-near-40-year-high.html

Foran, P. (2020). COVID-19 pandemic pushes Canadian interest rates to near historic lows. https://toronto.ctvnews.ca/covid-19-pandemic-pushes-canadian-interest-rates-to-near-historic-lows-1.4982314

Government of Canada. (2021). Changes to taxes and benefits. https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update.html

Hair, J. F., Bush, R. P., & Ortinau, D. J. (2000). Marketing research: A practical approach for the new millennium. Irwin Professional Publishing.

Hall, M. (2022). How do interest rates affect the stock market? https://www.investopedia.com/investing/how-interest-rates-affect-stock-market/

Hartzell, D., Hekman, J. S., & Miles, M. E. (1987). Real estate returns and inflation. Real Estate Economics, 15(1), 617-637.

Hoesli, M. (1994). Real estate as a hedge against inflation: Learning from the Swiss case. Journal of Property Valuation and Investment, 12(3), 51-59.

Investopedia. (2021). Monetary policy. https://www.investopedia.com/terms/m/monetarypolicy.asp

Lee, C. L., & Lee, M. L. (2014). Do European real estate stocks hedge inflation? Evidence from developed and emerging markets. International Journal of Strategic Property Management, 18(2), 178-197.

Lumsden, K. G. (2011). Economics. Edinburgh Business School Heriot-Watt University.

McKinsey & Company. (2020). Total stimulus for the COVID-19 crisis already triple that for the entire 2008–09 recession. https://www.mckinsey.com/featured-insights/coronavirus-leading-through-the-crisis/charting-the-path-to-the-next-normal/total-stimulus-for-the-covid-19-crisis-already-triple-that-for-the-entire-2008-09-recession#

Nickerson, C. (2021). Multifamily withstands pandemic better than most property types. https://renx.ca/multifamily-withstands-pandemic-better-most-property-types/

Ray, S. (2022). Another major international bank forecasts recession in the U.S. Forbes. https://www.forbes.com/sites/siladityaray/2022/06/20/another-major-international-bank-forecasts-recession-in-the-us/?sh=686292ff2f44

Ross, S. (2021). How does money supply affect inflation? https://www.investopedia.com/ask/answers/042015/how-does-money-supply-affect-inflation.asp

Rothbard, M. N. (1962). The Case for a 100 Percent Gold Dollar. Libertarian Review Press. 94-136.

Rubens, J., Bond, M., & Webb, J. (1989). The inflation-hedging effectiveness of real estate. Journal of Real Estate Research, 4(2), 45-55.

Statista. (2022). Rental price index in Canada from 1st quarter 2001 to 3rd quarter 2021. https://www.statista.com/statistics/198862/consumer-price-index-of-rented-accommodation-in-canada-since-2001/

Statistics Canada. (2022). New house price index. https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1810020501

Stock Performance. (2022). S&P/TSX composite index (Canada) early returns. https://www.1stock1.com/1stock1_766.htm

Super Brokers. (2022). Mortgage rate history: History of average variable vs 5 year mortgage rates. https://www.superbrokers.ca/tools/mortgage-rate-history

Tepper, T. (2022). Is the U.S. headed for another recession? Forbes. https://www.forbes.com/advisor/investing/is-a-recession-coming/

Trading Economics. (2022). Canada inflation rate. https://tradingeconomics.com/canada/inflation-cpi

Wilson, G. A., Jogia, J (2021). Canadian real estate & farmland: A hedge against inflation. Avenue Living Asset Management. https://avenuelivingam.wpenginepowered.com/canadian-real-estate-farmland-a-hedge-against-inflation/

Wilson, G. A., Jogia, J (2022). Re-examining a hedge against inflation: Multi-family residential real estate. Avenue Living Asset Management. https://avenuelivingam.wpenginepowered.com/white-paper-re-examining-a-hedge-against-inflation-multi-family-residential-real-estate/

World Bank. (2022). GDP growth – Canada. https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=CA

Commercial Core Opportunity

Diversification With and Within Real Estate

Authors

Grant Alexander Wilson, Ph.D., Assistant Professor, Faculty of Business Administration, University of Regina

Jason Jogia, MBA, M.Fin., Chief Investment Officer, Avenue Living

Author Bios

INTRODUCTION

Diversification is synonymous with “not putting all your eggs in one basket.” If the basket drops, all of the eggs break. Therefore, placing eggs in multiple baskets – the act of diversifying – reduces such risk. The concept of diversification has a long history in finance and portfolio management (Markowitz, 1952). Diversification is a strategy that aims to reduce risk through the inclusion of multiple and differing investments. “The rationale behind this technique is that a portfolio constructed of different kinds of assets will, on average, yield higher long-term returns and lower the risk of any individual holding or security” (Segal, 2021). This paper first explores modern portfolio theory, the mechanics of how diversification reduces risk. Next, it examines the importance of diversifying portfolios with real estate investments and diversification within real estate portfolios for institutional investors. Last, the paper explores the limitations of diversification and advantages of specialization for small real estate owners/operators. It concludes by offering strategic directives for real estate investors.

MODERN PORTFOLIO THEORY

Developed 70 years ago by economist Harry Markowitz, modern portfolio theory can hardly be considered “modern.” Despite its age, modern portfolio theory’s relevance is timeless, as it offers a framework for designing portfolios that maximize return and minimize risk (McClure, 2021). According to Markowitz (1952), an investment’s risk comprises systematic and unsystematic risks. “A systematic risk is one that influences a large number of assets, each to a greater or lesser extent” (Ross et al., 2007). Systematic risks are also called market risks (e.g., recession) and cannot be eliminated by diversification (McClure, 2021). Conversely, “an unsystematic risk is one that affects a single asset or small group of assets” (Ross et al., 2007). Unsystematic risks are also known as asset-specific risks (e.g., supply shortage of a company’s input) and can be reduced through diversification. Markowitz (1952) argues that overall portfolio risk can be reduced to a certain point by diversification, as the inclusion of investments that do not move proportionally in the same direction at the same time eliminate unsystematic risk (Figure 1).

FIGURE 1 – MODERN PORTFOLIO THEORY

Sources: McClure (2021), & Ross et al. (2007)

Although modern portfolio theory was quickly and heavily embraced in the stock and bond markets, its application to real estate was much slower (Viezer, 2010). Only in the 1980s were diversification and modern portfolio theory applied to real estate. Today, savvy investors both diversify portfolios to include real estate and diversify within real estate investment portfolios.

DIVERSIFYING WITH REAL ESTATE

Miles and McCue (1984) were the first to show that real estate investments were significantly correlated with inflation, providing support for real estate as an investment hedge. Miles and McCure’s (1984) findings are highly relevant today, as recent examinations show that capital appreciation of real estate assets outpaces inflation (Wilson, 2021). Researchers have also shown that real estate investments have low correlations with stocks and bonds (Miles & McCue, 1982; Miles & McCue, 1984; Robichek et al., 1972; Viezer, 2010; Zerbst & Cambon, 1984), making them ideal for diversification (Markowitz, 1952; Ross et al., 2007).

The question of how much real estate to include in an investment portfolio has been widely debated (Firstenberg et al., 1988; Fogler, 1984; Giliberto, 1992; Hartzell, 1986; Irwin & Landa, 1987; Kallberg et al., 1996; Webb et al., 1988; Webb & Rubens, 1987; Viezer, 2010; Ziobrowski & Ziobrowski, 1997). Hartzel (1986) recommended smaller real estate investment allocations, such as 3% to 11%. Kallberg et al. (1996) and Giliberto (1992) offered similar recommendations of 10%. Firstenberg et al. (1988), Folger (1984), and Irwin and Landa (1987) argued that portfolios required 15% to 20% of real estate investments to achieve maximum diversification benefits. Ziobrowski & Ziobrowski (1997) concluded that 20% to 30% of an investment portfolio was necessary to realize the greatest return. Others have suggested that the majority of one’s portfolio should be comprise of real estate investments (Webb et al., 1988; Webb & Rubens, 1987). Despite the contrasting empirical evidence, research overwhelmingly supports the inclusion of real estate in portfolios to reduce risk and increase return (Viezer, 2010).

To illustrate, an examination of changes to home prices, land values, stocks, and bonds illustrates the benefits of Canadian real estate (Figure 2).

FIGURE 2 – ANNUAL CHANGES TO CANADIAN REAL ESTATE, STOCKS, & BONDS

Sources: Bank of Canada (2022), Farm Credit Canda (2021), Statistics Canada (2022), Yahoo Finance (2022)

The new house price index – a measure to assess changes to home prices in Canada – has shown consistency and strong year-over-year appreciations, particularly from 2019 to 2021 (Statistics Canada, 2022). Annual changes to Canadian farmland values have also been favorable and consistent, ranging from 4% to 8% in the period examined (Farm Credit Canada, 2021). In contrast, the S&P/TSX composite – the benchmark Canadian stockmarket index – has shown double-digit returns but also extreme volatility from 2016 to 2021 (Yahoo Finance, 2022). Over the last several years, Canada’s 10-year government bond has offered stability, but at the expense of nominal returns (Bank of Canada, 2022).

The risk and return benefits of real estate – demonstrated by past empirical examinations and in the above depiction – emphasize the need to include real estate in investment portfolios for diversification. According to Viezer (2010), “first decide the optimal allocation of real estate to a multiasset portfolio, and then decide how to diversify within the real estate portfolio.”

DIVERSIFYING WITHIN REAL ESTATE

Researchers have debated the most effective means to diversify real estate portfolios, as unsystematic risk can be reduced by property type, geographic, and financial diversification (Anderson et al., 2015; Benefield et al., 2009; Campbell et al., 2003; Cici et al., 2011; Cronqvist et al., 2001; Gobbi & Sette, 2014; Gyourko & Nelling, 1996; Hartzell et al., 2014; Ioannidou & Ongena, 2010; Ro & Ziobrowski, 2011; Santos & Winton, 2008).

According to Miles and McCue (1982), property type diversification offers the greatest return and the lowest risk. This has been replicated in studies of real estate investment trusts (REITs). Benefield et al. (2009) and Row and Ziobrowski (2011) show that diversified REITs outperform specialized REITs. Anderson et al. (2015) corroborate these findings, showing that diversified REITs have a “strong positive relationship” with return on assets, return on equity, and Q ratios (market value to asset replacement cost). Anderson et al. (2015) explain that “the diversification benefit comes from both the ability to select better-performing property types in ‘hot’ markets and the limited exposure to poorly performing property types in ‘cold’ markets” (p. 48). In addition to property type diversification, diversifying with private or public REITs has its advantages. According to Blackstone (2022) and Wang (2021), private REITs generally increase in times of rising interest rates and have less volatility, as compared to public REITs. As such, unsystematic risk can be reduced by REIT type (e.g., public/private) and property type (Gyourko & Nelling, 1996).

There is a significant body of research that shows the benefits of geographic diversification (Campbell et al., 2003; Cici et al., 2011, Cronqvist et al., 2001; Feng et al., 2021; Hartzell et al., 2014; Jud et al., 2021; Oertel et al., 2019). Hartzell et al. (1987) argued that diversification based on geography was strategic, given the performance benefits. As with property type diversification, geographically diverse REITs have been shown to outperform geographically concentrated REITs. According to Feng et al. (2021), “geographic diversification is associated with higher REIT values for firms that can be described as being more transparent” (p. 267). Recent work by Jud et al. (2021) and Oertel et al. (2019) adds to such geographic diversification research, showing international acquisitions offer enhanced portfolio returns.

Grissom et al. (1987) acknowledged the performance benefits of diversifying by both property type and geography. In fact, this research showed that diversification “across markets and property type reduced unsystematic risk more than across just markets or across just property types” (Viezer, 2010). Accordingly, Grissom et al.’s (1987) research supported the combination of property type and geographic diversification to reduce risk and increase returns. A lesser-explored area of research suggests that financial diversification may also reduce unsystematic risk among real estate investments.

There is an inherent risk in concentrated borrowing. According to Gobbi and Sette (2014), in times of crisis concentrated borrowing is detrimental to a firm’s access to credit. Moreover, Ioannidou and Ongena (2010) find that interest rates increase for clients over time and companies can negotiate better deals in new relationships with different banks. Therefore, it is strategic for real estate companies to diversify their borrowing to reduce unsystematic risk and negotiate better interest rates.

It is evident that diversification with and within real estate (e.g., property type, geography, and financial diversification) is necessary to maximize returns and minimize risk, but can endless diversification reintroduce risks?

OVER-DIVERSIFICATION & SPECIALIZATION

When strategically executed, diversification is a proven method to reduce risk and increase return (Allison, 2021). However, it is possible to over-diversify. Investments that are not strategically motivated are unadvisable (Olgun, 2005), as they add unnecessary risk to the portfolio without the added upside (Allyson, 2021). Lynch (1989) coined this phenomenon of worsening the risk and return tradeoff of an investment portfolio by over-diversifying as “diworsification.” This paper argues that the real estate diversification and performance relationship is curvilinear, similar to other strategies (Bhuian et al., 2005; Oswald & Brettel, 2017; Tsai et al., 2008). While diversification is necessary to reduce risk and increase return, beyond a certain level it can become detrimental to portfolio performance (Figure 3).

FIGURE 3 – DIVERSIFICATION & PERFORMANCE RELATIONSHIP

Diversification is also not advisable for new or small owners/operators. According to Kenton (2022), a specialization strategy focuses on limited scope and expertise for greater efficiency and performance. Specialization has been shown to create economies of scale, improve market positions, and enhance the bottom line of small businesses (Intihar & Pollack, 2012; Williams et al., 2018; Wilson et al., 2020). New or small real estate owners/operators are more likely to benefit from a specialization versus diversification strategy, as eliminating unsystematic risk is unlikely due to the small number of properties, geographic concentration, and individual property management. As these new and small owners/operators mature and expand, a diversification strategy becomes more advantageous and reduces their accumulated unsystematic risk.

STRATEGIC DIRECTIVES

So how much real estate diversification is enough, and how much is too much? Diversification with and within real estate is necessary for investors. However, Olgun (2005), aptly states that non-strategic real estate investments are problematic and often produce “negative abnormal returns.” Instead, when real estate investments are strategically included in multi-asset portfolios they increase return and reduce unsystematic risk (Miles & McCue, 1982; Miles & McCue, 1984; Robichek et al., 1972; Viezer, 2010; Zerbst & Cambon, 1984). Diversification within real estate is also required to eliminate unsystematic risk and realize the greatest level of return (Grissom et al., 1987; Hartzell et al., 1987; Jud et al., 2021; Miles & McCue, 1982; Oertel et al., 2019, Viezer, 2010). As Grissom et al. (1987) suggest, the best results come from combined diversification methods (e.g., property type and geography). It is further argued that financial diversification can also help reduce unsystematic risk and lower borrowing costs. In the context of Canada, investment portfolios that include residential real estate and farmland as core assets appear to both enhance value and offer stability. Diversification within these real estate investment categories, such as the types of residential real estate and various Canadian sub-markets, are also likely to enhance the overall portfolio of investors. As Peter Bernstein, one of the most prominent American economists wrote, “diversification of risk matters not just defensively, but because it maximizes returns as well, because we expose ourselves to all of the opportunities that there may be out there.”

REFERENCES

Allison, D. (2021). Signs of overdiversification. Investopedia. https://www.investopedia.com/articles/financial-theory/11/signs-of-over-diversification.asp

Anderson, R. I., Benefield, J. D., & Hurst, M. E. (2015). Property-type diversification and REIT performance: an analysis of operating performance and abnormal returns. Journal of Economics and Finance, 39(1), 48-74.

Bank of Canada. (2022). Selected bond yields. https://www.bankofcanada.ca/rates/interest-rates/canadian-bonds/

Benefield, J. D., Anderson, R. I., & Zumpano, L. V. (2009). Performance differences in property‐type diversified versus specialized real estate investment trusts (REITs). Review of Financial Economics, 18(2), 70-79.

Bhuian, S. N., Menguc, B., & Bell, S. J. (2005). Just entrepreneurial enough: the moderating effect of entrepreneurship on the relationship between market orientation and performance. Journal of Business Research, 58(1), 9-17.

Blackstone. (2022). Why private real estate. https://www.breit.com/literature/

Campbell, R. D., Petrova, M., & Sirmans, C. F. (2003). Wealth effects of diversification and financial deal structuring: Evidence from REIT property portfolio acquisitions. Real Estate Economics, 31(3), 347–366.

Candelon, B., Fuerst, F., & Hasse, J. B. (2021). Diversification potential in real estate portfolios. International Economics, 166, 126-139.

Chakrabarti, A. K. (1990). Organizational factors in post-acquisition performance. IEEE Transactions on Engineering Management, 37(4), 259-268.

Chakrabarti, A. K., & Souder, W. E. (1987). Technology, innovation and performance in corporate mergers: A managerial evaluation. Technovation, 6(2), 103-114.

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This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at www.alamstg.wpenginepowered.com for additional information regarding forward-looking statements and certain risks associated with them.

Commercial Core Farmland Mini Mall Opportunity

Hedge against inflation with alternative real estate investments

Multi-family real estate has long been recognized as one of the best ways to hedge against inflation. Property classes reflect an A, B, or C grade based on a combination of factors such as amenities, management styles, location, and tenant income levels. However, the best bets aren’t always shiny new Class A properties in hot housing markets with high rents. Avenue Living Asset Management holds B and C multi-family real estate assets and has a tried-and-true track record of providing A-class institutional quality management through customer-centric operations and services, capital improvements and a vertical integration model.

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Commercial Core Farmland Mini Mall Opportunity

Why We See Opportunity in the Workforce Housing Market

With climbing inflation and rising interest rates dominating headlines, the housing market has become top-of-mind for Canadians from coast to coast. Ensuring adequate affordable supply is a complex problem with no easy solution, and tackling it requires input and action from all areas of the housing industry, as well as various levels of government. From our inception, Avenue Living has focused on providing safe, well-managed housing at affordable prices — a focus that has allowed us to weather several economic challenges, and one that we know is a key part of the housing spectrum, now and in the future.

For investors, there is potential opportunity in existing supply, especially in assets that serve the workforce housing demographic — the focus of our Core Trust. This group, which makes up approximately 40 per cent of the private rental market, is anticipated to seek more affordable solutions as inflation and rising interest rates delay or disincentivize homeownership. Several external factors continue to bolster the strength of the workforce housing market, from population growth to the geopolitical and economic environment. Here, we explore those factors and their impact on our model.

Inflation

The conversation around housing supply often raises the need for new builds. But with inflation at 6.8 per cent in April, and supply chain challenges making project plans unpredictable, construction of new buildings is not an immediate answer to the housing affordability problem. Avenue Living is in a unique position, as we acquire and refurbish existing housing stock to create safe, comfortable, and affordable homes for renters. As the cost of new builds continues to rise — and take rents with them — renovating existing property becomes a quicker, more efficient way to inject appealing inventory into the market at a reasonable price point. Renovations require an investment of approximately 10 to 15 per cent of the asset value, mitigating the risk of rising costs and allowing us to continue to provide safe, comfortable homes at an affordable rent, on a shorter timeline — and to potentially generate more immediate returns for our investors.

Affordability

Housing affordability is top-of-mind for residents, as the cost of home ownership has risen out of reach for many. The Canadian Mortgage and Housing Commission (CMHC) dictates that for housing to be considered “affordable,” a household must “spend less than 30 per cent of pre-tax income on adequate shelter.” Avenue Living residents, on average, earn $56,000 per year and spend roughly 23 per cent of their income on rent — which is significantly lower than the affordability construct from CMHC.

Immigration

The government of Canada has an ongoing plan to increase immigration levels, as a way to increase our workforce and help the country recover from the economic challenges of the pandemic. This plan aims to attract over 400,000 people to Canada a year through 2024. In 2021, we welcomed a record number of newcomers — 401,000 people made Canada their home, the largest influx ever. Alberta is consistently one of their top destinations with Calgary and Edmonton as the fourth and fifth most popular cities among newcomers to Canada. Many newcomers rent when they arrive in Canada and fit into our target demographic, with the median pay for those arriving in Canada in 2018 sitting at $31,800.

Changing Resident Preferences

The pandemic changed how individuals view their homes, but beyond that, people are making space a priority, a trend that is becoming increasingly evident in rental patterns. We have seen more interest in suburban locations with larger floor plans — especially townhomes — across our portfolio, as inflation and rising interest rates cause people to put off home ownership and opt for more spacious rentals. Our experience as active property managers also tells us residents are seeking institutional-quality service, something rarely paired with affordability, but that we are committed to delivering.

Labour Market Shortages

The construction industry has been struggling with labour shortages for several years, and in the past year, those shortages have become more extreme. The 2021 BuildForce Canada report suggests the construction industry could be short as many as 81,000 workers by 2030 as it tries to keep up with retirements and increased demand — especially for housing. Avenue Living’s strategy of purchasing built assets and making capital improvements shields us from much of the risk that comes with that labour shortage.

Opportunity in the Workforce Housing Market

Our focus on multi-family residential, and particularly the workforce housing demographic, has historically shown opportunity for investors interested in real estate; a trend we believe will continue. As inflation and interest rates compel people to consider renting long-term, Avenue Living continues to set itself apart through strategic acquisitions, value-add capital improvements, and an unparalleled focus on the resident experience.

Commercial Core Opportunity

Re-Examining a Hedge Against Inflation: Multi-Family Residential Real Estate

Authors

Grant Alexander Wilson, Ph.D., Assistant Professor, Faculty of Business Administration, University of Regina

Jason Jogia, MBA, M.Fin., Chief Investment Officer, Avenue Living

Author Bios

INTRODUCTION

The inflation example of milk increasing from $0.40 to $4.00 per gallon over a 100-year period (Wilson, 2021a) requires an update, as milk prices are expected to increase by a record-breaking 10% in 2022 (Canadian Broadcast Company, 2021; Heslop, 2021). Inflation is the increase of prices (e.g., milk), resulting in decreased purchasing power of consumers (e.g., milk buyers) (Lumsden, 2011). The primary explanations of inflation are demand-pull and cost-push (Lumsden, 2011). Prices of goods and services appreciate as a result of increased aggregate demand (demand-pull) or the rising production costs (cost-push) of such items. According to Pride et al. (2020), a stable rate of inflation is 2% per annum.

The most common measure of inflation is the change to the Consumer Price Index (CPI) (Statistics Canada, 2021a). The CPI “measures price change by comparing, through time, the cost of a fixed basket of goods and services” (Statistics Canada, 2021a). Prior to COVID-19, annual changes to the Canadian CPI averaged just below 2.0% (Figure 1). Canada’s pandemic-induced economic contraction and unemployment increase, resulted in unprecedentedly low inflation in 2020. With the rollout of vaccines in 2021 and the full reopening of the economy, Canada is now experiencing above-average inflation. This trend is likely to continue, with high inflation forecasted into 2022 and beyond (Trading Economics, 2021a) (Figure 1).

FIGURE 1 – 12-MONTH CPI CHANGE & FORECAST

Statistics Canada (2021b) & Trading Economics (2021a)

Although inflation is a country’s natural economic tendency (Rothbard, 1962), if prices increases too quickly and without corresponding wage changes, purchasing power is diminished (Pride et al., 2020). Over the last five decades, industrialized nations’ monetary policies have placed great emphasis on the prevention and reduction of inflation (Lumsden, 2011). However, such policies are imprecise, much less guaranteed. Accordingly, savvy investors have explored ways to hedge against inflation. Specifically, multi-family residential real estate investments are increasingly appealing for investors (Nickerson, 2021). The next sections describe how forecasted interest rates, home values, and energy prices support the investment in multi-family properties.

INTEREST RATES & AFFORDABILITY

According to the Bank of Canada (2021a), it “carries out monetary policy by influencing short-term interest rates. It does this by adjusting the target for the overnight rate.” In an attempt to stabilize the economic contraction from the pandemic, the Bank of Canada (2021b) decreased the overnight rate from 1.75% to 0.25% in early 2020. As Canada’s economy expands and high inflation looms, the Bank of Canada is expected to increase the overnight rate by 1.25% to 1.50% by March 2023 (Trading Economics, 2021b) (Figure 2).

FIGURE 2 – CANADIAN OVERNIGHT RATE & FORECAST

Bank of Canada (2021b) & Trading Economics (2021b)

According to the Bank of Canada (2021c) the overnight rate is the starting point for “interest rates in the economy that matter for Canadians.” Changes to the overnight rate result in corresponding changes to commercial lending rates (Kenton, 2021). Based on the forecasted overnight rate and resulting commercial lending rate changes, mortgage interest rates are likely to increase by 1.25%. Table 1 illustrates the homeownership affordability effects of a 1.25% interest rate increase across various home values ($350,000 to $1,000,000), assuming a 5% down payment, 4% Canadian Mortgage and Housing Corporation (CMHC) insurance premium, 25-year amortization period, and 12 payments per year.

TABLE 1 – MORTGAGE PAYMENTS & INTEREST RATE CHANGES

*2.25% IR = 2.25% interest rate, **3.5% IR = 3.50% interest rate

The change of 1.25% in mortgage interest rates elicits an increase of 14.8% in monthly payments. Given over 25% of Canadian homeowners currently spend more than what is considered “affordable” on mortgage payments (Canadian Mortgage and Housing Corporation, 2018; Statistics Canada, 2019), the planned interest rate increases will create further affordability issues. Specifically, there will be heightened barriers to entry for new home buyers and greater risk exposure for variable-rate mortgage holders. As a result, the rental market is increasingly appealing to middle-income earners (Wilson, 2020). The growing rental demand is also appealing for real estate investors, as more renters mean lower vacancy rates and stronger cash flows. Individuals and property investors with fixed interest rates will be advantaged over those with variable rates. Individuals will be better able to manage their household budget and property investors can increase residential rents – in accordance with the tenancy agreements – in response to interest rate changes.

HOME VALUES & AFFORDABILITY

As with interest rate increases, the appreciation of home values in Canada has created affordability issues for housing market participants. Since the onset of the pandemic, Canadian home prices have appreciated significantly (Figure 3). Home prices increased by nearly 20% from October 2020 to October 2021. The new housing price index – a proxy for residential property appreciation – is expected to continue to increase in 2022 and plateau well above pre-pandemic values.

Statistics Canada (2021c) & Trading Economics (2022)

The appreciating nature of residential real estate, including single and multi-family dwellings, is both promising for investors and challenging for new home buyers. According to Wilson (2021a; 2021b), capital appreciation from property investments has historically outpaced inflation, proving to be an effective hedge. In contrast, the wages of low and medium-income earners lag market price changes (Shahid, 2021), making homeownership increasingly difficult. Aside from the rising home prices and impending interest rate increases, the energy market outlook poses new affordability concerns.

ENERGY MARKET & AFFORDABILITY

After 18 months of natural gas supply shortages caused by the pandemic and its increased demand due to the reopening of the global economy, prices have surged to new heights (Figure 4). Average natural gas prices are expected to track above $5.00 per Metric Million British Thermal Unit (MMBtu) for the foreseeable future. These increases “will fuel inflation and hit low-income Canadians the hardest” (Alini, 2021).

FIGURE 4 – NATURAL GAS PRICES & PROJECTIONS

Investing (2021) & Trading Economics (2021d)

As natural gas is the main source of energy that heats homes and businesses (Canadian Gas Association, 2020), Canadians will be impacted both directly and indirectly by price increases. Natural gas prices will directly impact most Canadians’ utility bills, making homeownership less, and renting more, desirable. The indirect effects of natural gas price increases are realized by consumers via cost-push inflation. For example, higher energy costs make it more expensive to produce, transport, and store goods, resulting in higher-priced goods and services. The energy market outlook makes renting an affordable or in some cases a necessary, alternative to homeownership. From a real estate investor perspective, the natural gas market outlook and its inflationary pressures are poised to create strong demand for residential real estate, further supporting low vacancy rates that translate into consistent cash flows.

INSIGHT FOR INDIVIDUALS & INVESTORS

The multi-family residential real estate market is ideal for individuals and investors amid high inflation, increasing interest rates, soaring home values, and energy price forecasts. For middle-income individuals and families, these market uncertainties support renting in the short term. For investors, the capital appreciation from increasing property values and consistent cash flow from the high rental demand support investment positions in multi-family residential real estate.

STRATEGIC INVESTMENT IN MULTI-FAMILY REAL ESTATE

It is well documented that real estate has historically outpaced inflation (Wilson, 2021a; 2021b). Accordingly, investments in real estate have been regarded as a strategic hedge against inflation. However, based on the current market outlook, residential real estate has advantages over commercial real estate investments. As discussed, rising inflation, interest rates, and natural gas prices are making homeownership increasingly difficult for many Canadians. Strong demand for rental housing is imminent, affording residential real estate investors strong cash flows due to low vacancy rates. Commercial renters – producing goods and services – are not immune to inflationary pressures, as operation costs are continually increasing. In many cases, these costs are passed down to the consumer, but not always. The pandemic and its lagged effects created some of the highest commercial vacancy rates on record (The Canadian Press, 2021). Despite the recent declining trend in commercial vacancy rates across Canada – due to the reopening of the economy – changes are less immediate and rates are far greater than in the residential market (The Canadian Press, 2021). Lastly, residential, as compared to commercial, leases allow for more flexibility. Residential leases are short-term, ranging from month-to-month to 12-month contracts. Conversely, commercial leases are conventionally five-year terms. The flexibility of such short-term contracts permits greater responsiveness to inflation and interest rate changes, advantaging residential real estate investors.

CONCLUSION

Rising inflation, increasing interest rates, and soaring natural gas prices are working against the proverbial homeownership dream in Canada. The re-examination of real estate’s effectiveness as an inflation hedge is upheld and supports previous work (Wilson, 2021a; Wilson, 2021b). However, current market dynamics advantage residential versus commercial estate in the short and medium term. Consequently, investments in multi-family properties are likely to be both strategic and profitable.

REFERENCES

Alini, E. (2021). Natural gas price hikes will fuel inflation and hit low-income Canadians the hardest. https://globalnews.ca/news/8245318/natural-gas-prices-canada-inflation/

Bank of Canada. (2021a). Policy interest rate. https://www.bankofcanada.ca/core-functions/monetary-policy/key-interest-rate/

Bank of Canada. (2021b). Canadian interest rates and monetary policy variables: 10-year lookup. https://www.bankofcanada.ca/rates/interest-rates/canadian-interest-rates/

Bank of Canada. (2021c). Understanding our policy interest rate. https://www.bankofcanada.ca/2021/04/understanding-policy-interest-rate/

Canadian Broadcast Company. (2021). Milk, cheese prices could soon jump 10 to 15 per cent. https://www.cbc.ca/news/canada/new-brunswick/milk-prices-increase-new-brunswick-1.6237730

Canadian Gas Association. (2020). Natural gas facts. https://www.cga.ca/natural-gas-statistics/natural-gas-facts/

Canadian Mortgage and Housing Corporation. (2018). About affordable housing in Canada. https://www.cmhc-schl.gc.ca/en/developing-and-renovating/develop-new-affordable-housing/programs-and-information/about-affordable-housing-in-canada

Deschamps, T. (2021). Home prices were up 18% annually in Canada last month. https://globalnews.ca/news/8374771/home-prices-canada-crea-october/

Evans, P. (2021). This is the busiest year ever for the housing market, with prices up 18%. https://www.cbc.ca/news/business/crea-housing-october-1.6249145

Gibillini, N. & Gaviola, A. (2021). Food prices rose nearly 4% in September. These products saw biggest jump. https://globalnews.ca/news/8283469/food-prices-inflation-september-2021/

Heslop, B. (2021). Cost of milk expected to jump in Canada in 2022. https://www.iheartradio.ca/610cktb/news/cost-of-milk-expected-to-jump-in-canada-in-2022-1.16411210

Investing. (2021). Natural gas futures. https://ca.investing.com/commodities/natural-gas-historical-data

Kenton, W. (2021). Bank rate. https://www.investopedia.com/terms/b/bankrate.asp

Lumsden, K. G. (2011). Economics. Heriot-Watt University.

Nickerson, C. (2021). Multifamily withstands pandemic better than most property types. https://renx.ca/multifamily-withstands-pandemic-better-most-property-types/

Pride, W. H., Hughes, R. J., Kapoor, J. R., Althouse, N. R., and Allan, L. A. (2020). Business. Nelson.

Rothbard, M. N. (1962). The case for a 100 percent gold dollar. Libertarian Review Press, 94-136.

Shahid, S. (2021). Low-income Canadian households will suffer the most from soaring inflation. https://www.theglobeandmail.com/opinion/article-low-income-canadian-households-will-suffer-the-most-from-soaring/

Statistics Canada. (2019). Homeownership and shelter costs in Canada. https://www12.statcan.gc.ca/nhs-enm/2011/as-sa/99-014-x/99-014-x2011002-eng.cfm

Statistics Canada. (2021a). Consumer price index portal. https://www.statcan.gc.ca/en/subjects-start/prices_and_price_indexes/consumer_price_indexes

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The Canadian Press. (2021). Canadian commercial real estate pointing to post-pandemic economic upswing: CBRE. https://www.theglobeandmail.com/business/article-canadian-commercial-real-estate-pointing-to-post-pandemic-economic/

Trading Economics. (2021a). Canada inflation rate. https://tradingeconomics.com/canada/inflation-cpi

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Western Investor. (2019). Cap rates for multi-family rentals are lowest of all CRE sectors. https://www.westerninvestor.com/news/multi-family/cap-rates-for-multi-family-rentals-are-lowest-of-all-cre-sectors-1.23925194

Wilson, G. A., & Jogia, J. (2020). Essential workers, workforce housing, & property investing. https://avenuelivingam.wpenginepowered.com/essential-workers-workforce-housing-property-investing/

Wilson, G. A., & Jogia, J. (2021a). Canadian real estate & farmland: A hedge against inflation. https://avenuelivingam.wpenginepowered.com/canadian-real-estate-farmland-a-hedge-against-inflation/

Wilson, G. A. (2021b). As inflation looms, here’s how real estate and farmland have protected investors. https://theconversation.com/as-inflation-looms-heres-how-real-estate-and-farmland-have-protected-investors-155854

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at https://avenuelivingam.wpenginepowered.com/forward-looking-statements for additional information regarding forward-looking statements and certain risks associated with them.

Commercial Core Farmland Mini Mall Opportunity

Designed For Defence

Avenue Living CIO Jason Jogia tells WP why the company’s real estate strategy is the ideal hedge against inflation.

View Article

Commercial Core Farmland Mini Mall Opportunity

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Interest Rates & Multi-Family Residential Real Estate

Diversification With and Within Real Estate

Hedge against inflation with alternative real estate investments

Why We See Opportunity in the Workforce Housing Market

Re-Examining a Hedge Against Inflation: Multi-Family Residential Real Estate

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