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

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 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

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

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.

New Housing Price Index to June 2022 and Forecast. January 2020 to

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

Natural Gas Prices and Projection 2019 to 2022

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

Statistics Canada. (2021b). 12-month change in the Consumer Price Index (CPI) and CPI excluding gasoline. https://www150.statcan.gc.ca/n1/daily-quotidien/211020/cg-a001-eng.htm

Statistics Canada. (2021c). New housing price index. https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1810020501

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

Trading Economics. (2021b). Canada interest rate. https://tradingeconomics.com/canada/interest-rate

Trading Economics. (2022). Canada new house price index. https://tradingeconomics.com/canada/housing-index

Trading Economics. (2021d). Natural gas. https://tradingeconomics.com/commodity/natural-gas

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.

Avenue Living Asset Management Announces Successful Equity Raise and Milestone $3.55 Billion in Assets Under Management

Calgary-based Avenue Living Asset Management, announced today its Avenue Living Real Estate Core Trust has raised $103 million in equity since December 2021. Beginning with an original expansion target offering of $60 million, the allocation of this close to a series of accretive purchases, brings the Canadian alternative asset manager from $3.25 billion to over $3.5 billion in assets under management in only two months.

According to Jason Jogia, Chief Investment Officer at Avenue Living, “this strong investor interest demonstrates confidence in Avenue Living’s uniquely designed, vertically integrated investment platform.”

“We are very excited about the timing of this accretive capital raise, and what it does for the execution of our continued growth and diversification activities. It builds on a carefully defined consolidation strategy focused on multi-family, low-to-medium density workforce housing apartment assets across the North American Heartland,” says Jogia. “These funds continue to support and accelerate further acquisitions, many of which are already in action in key regions across Canada and the United States.”

The Core Trust focuses on multi-family assets and delivers institutional-level servicing to North America’s most essential workers. The fund provides investors with an opportunity to own real assets that are not correlated to the public markets and delivers a valuable hedge against inflation.

“Right now, investors are shying away from market volatility,” says Anthony Giuffre, Avenue Living’s Founder and Chief Executive Officer. “An offering like the Core Trust is an ideal way for them to invest in real estate without actively managing the assets themselves. We are thrilled about the response to this capital raise as it will help us actualize our growing pipeline of North American acquisitions, allow us to gain significant market share, and provide investors with geographic diversification at a time when housing affordability is in high demand.”

ABOUT AVENUE LIVING
Founded on the principle of investing in the everyday, Avenue Living focuses on opportunities that are often overlooked by others, having grown to over $3.5 billion in aggregate assets under management across four private real estate investment mandates. The Avenue Living team includes over 750 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 over 14,000 multi-family units located in Canada and the United States, Avenue Living and its related entities own over 450,000 square feet of commercial space, 48,000 acres of productive farmland, and more than 2,700,000 square feet of self-storage space.

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 communication 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.

2021: A Year of Growth for Avenue Living Asset Management

Avenue Living’s strategic approach and milestones from the past year continue to support our business expansion across North America. 

Avenue Living Asset Management reached a number of significant milestones in 2021. Despite the ongoing pandemic and challenges facing the world today, our robust investments in workforce housing, self-storage, and agricultural properties — on both sides of the border — grew our total assets under management to over $3.1 billion, more than doubling in value in under 1.5 years.

Throughout the year, Avenue Living focused strategically on two key areas of our business to drive greater customer satisfaction — our platform and our service model. “Like healthy soil, when you start with a solid foundation, anything you plant in it will grow,” says Anthony Giuffre, CEO of Avenue Living. “This is why we focus on investing in our people while optimizing and refining our end-to-end customer service model. For us, it was vital to have these two important elements in place before expanding our assets under management.”

“During the last two years we’ve had to navigate numerous waves of COVID-19 and changing public health restrictions — and through that process, we’ve constantly adapted,” says Anthony. “When housing 30,000 people and serving a diverse set of customers, it’s essential to understand their specific needs. To cater to these unique needs, we had to make our operations as fluid and functional as possible to ensure a high level of customer satisfaction. I would say our team did that exceptionally well in 2021.”

With the addition of more than 2,800 multi-family apartment units, 6,600 acres of farmland, and 1,750,000 square feet of storage units last year alone, Avenue Living continued to fortify our position as a leading multi-family owner/operator in Canada, along with a growing presence in the self-storage, agriculture, and U.S. multi-family spaces.

Avenue Living’s portfolio now includes over 13,000 multi-residential units, over 2 million square feet of self-storage property space and 48,000 acres of agricultural real estate — and we anticipate significant growth in 2022 with our Core Trust’s acquisition of our U.S. Real Estate Trust, moving us towards a more holistic North American investment focus with a large pipeline of potential assets.

“We’ve now created a more institutionalized and robust platform for our business,” says Anthony. “Our well-defined processes, technological advancement, and clear objectives differentiate us. In addition to having a laser-focused acquisition strategy for workforce housing assets, we have prioritized our overall customer experience, which is key to our continued success.”

Below are some of our most important milestones and achievements from last year, all of which set us up for a strong start to 2022.

The Avenue Living Team Passes 750 Employees Strong

Our team welcomed a record number of new colleagues last year; now totaling 750 employees within the company and across North America. These experts are the backbone of our platform and one of the main reasons we have been able to achieve such sustained growth.

Assets Under Management Grow to $3.1 Billion

Avenue Living reached a major benchmark earlier this year as the company surpassed more than $3.1 billion in assets under management. This is a significant achievement and shows incredible growth as the total amount of AUM doubled from $1.5 billion to $3.1 billion in less than 1.5 years.

Avenue Living Joins Principles for Responsible Investment

We were honoured and proud to announce that Avenue Living became a signatory of the Principles for Responsible Investment (PRI), the world’s leading proponent of responsible investment. The PRI framework encourages investors to use responsible investment to enhance returns and better manage risks and is supported by the United Nations. We are pleased to be among the 218 global organizations that became new signatories in 2021. The PRI now has 4,375 signatories, representing US$121 trillion of AUM. As PRI signatories, we ensure that as we grow, we do so responsibly.

MMSP Trust Establishes U.S. Footprint

Mini Mall Storage Properties Trust acquired its first storage property south of the border in December 2021. Located in Arkansas, this property is the beginning of an expansion into the American Heartland, where we will continue to move into attractive secondary markets under the leadership of our new President of U.S. Operations.

Avenue Living Creates First North American Workforce Housing Fund

Our U.S.-focused Trust, which was established in February 2020 and exclusively held multi-family properties in the United States, reached the $100 million AUM mark in 2021. The Trust’s success demonstrates the defensibility of our investment strategy and the value our U.S. expansion brought to the Avenue Living portfolio. On the strength of this growth, Avenue Living Core Trust acquired 100 per cent ownership of the U.S. Real Estate Trust, and its U.S. assets. This alignment created the first North American Workforce Housing Fund, offering further diversification to investors by operating across a broader geographic platform while continuing to specialize in what we do best.

Poised for Continued Growth in 2022

With a clear focus on Avenue Living’s pillars of success and key investment strategies, we have achieved many pivotal milestones in 2021. These foundational elements have become the framework for us to continue our expansion and growth into 2022.

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.

Avenue Living Asset Management of Calgary has doubled its AUM during the pandemic

We are thrilled to announce we have raised our AUM above $3 billion and solidified ourselves as one of Canada’s leading workforce housing providers. In the last 1.5 years, we have doubled our portfolio and increased our AUM by $1.5 billion.

Our talented team, sound investment strategy, and robust, agile platform — as well as the ongoing support we’ve received from our investors and capital partners — has allowed us to be proactive and expand our operations, despite a global pandemic.

Our Founder and CEO, Anthony Giuffre, spoke with Wealth Professional on Avenue Living’s success, how we got here, and our vision moving forward.

Read more here: How asset manager doubled its AUM to $3 billion during pandemic | Wealth Professional

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.

Housing affordability should be at the forefront of many discussions: Avenue Living CEO

Avenue Living Founder and CEO Anthony Giuffre joined Greg Bonnell at BNN Bloomberg to discuss our outlook on the real estate market and navigating through the pandemic.

“We stick with the fundamentals. We’re seeing a massive transition of wealth — or a ‘changing of the guard,’ with the old guard looking for liquidity, and platforms like ourselves have the ability to continue to provide value-add in that space.”

To see the full interview, click here: Housing affordability should be at the forefront of many discussions: Avenue Living CEO – Video – BNN (bnnbloomberg.ca)

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.

Avenue Living Increases AUM by $1.5 Billion in 18 Months, Raising Total AUM to More Than $3 Billion

CALGARY, AB, Sept. 28, 2021 /CNW/ – Avenue Living Asset Management (Avenue Living) is pleased to announce it has surpassed $3 billion in assets under management (AUM), adding to its historic year of milestones through a series of strategic acquisitions.

In the past year and a half, Avenue Living has added $1.5 billion in assets, more than doubling its portfolio during the global pandemic. Avenue Living has proven the resilience of its business model and vertically integrated platform of shared services, which supports the organization’s multi-family residential, commercial, agricultural, and self-storage interests.

“Recent multi-family acquisitions throughout Western Canada, coupled with our ongoing U.S. acquisitions on the multi-family side and the growth of our self-storage business have contributed to this significant $3 billion milestone,” said Anthony Giuffre, Founder, Chief Executive Officer and Executive Chairman, Avenue Living Group of Companies. “We carefully choose opportunities and build infrastructure that supports everything we do – we’re champions of the everyday. The strength of our platform lies in having sound mind and management — working with the right people, both in our own offices and other areas to help us serve our investors and communities, and to continue to deliver to the Avenue Living gold standard.”

Today’s renters expect property owners and managers to provide them with a responsive customer experience and to invest in maintenance and improvements, especially in aging buildings. Many smaller operators are not able to invest the capital required to maintain operations that meet those expectations. For Avenue Living, these properties present an opportunity to consolidate fragmented industries and, through active management as well as strategic capital expenditures, provide a best-in-class experience for tenants and drive value for investors.

Avenue Living’s flagship trust, the Avenue Living Real Estate Core Trust — which acquires quality multi-family assets — is in a good place to meet the growing demand for housing affordability. Since its inception in 2006, the company has stayed true to its unique selling proposition of offering safe, quality, comfortable, and affordable rental spaces, with intentional emphasis placed on creating a positive resident experience.

“The greatest indicator of success is customer retention, and at Avenue Living, we ensure this through maintaining high customer service standards,” said Giuffre. “Historically, there’s been a certain predictability to the asset classes we invest in, and that’s what investors are looking for.”

Avenue Living takes a holistic, customer-centric approach when it comes to all aspects of its operations — from collections to leases, renewals, maintenance, capital expenditures, and expense management. The company starts with its customers’ needs and maps out the entire customer journey, from brand awareness through to advocacy. The organization has also leaned on property technology, or “prop-tech,” such as electronic leasing, to simplify basic processes for its residents and tenants, which has further enabled the efficient delivery of its value proposition.

In doing this, Avenue Living offers value to its customers — whether these customers are residents of their multi-family properties or tenants of their commercial, agricultural land or self-storage offerings.

“The pandemic truly tested the resilience of our investment thesis. Our choice of investing in ‘the everyday’ coupled with the tenacity of our customer and employee base has allowed us to achieve this milestone,” said Giuffre. “As we look ahead at the remainder of 2021 and beyond, we see a significant opportunity for the Avenue Living Group of Companies to continue to fire on all cylinders.”

About Avenue Living Asset Management:

Avenue Living Asset Management is a leading Canadian alternative asset manager with over $3 billion in assets under management and five alternative investment products. Avenue Living has amassed over 12,000 doors in Canada, making it one of Canada’s largest multi-family residential providers by serving more than 25,000 Canadians across 17 markets. Its U.S. multi-family fund exceeds $100 million in AUM and its self-storage fund has more than $300 million in AUM. Avenue Living’s agriculture fund has expanded its acres under management to more than 48,000, raising its AUM to more than $90 million.

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.

Investing In the Everyday — Business In Calgary Magazine

Avenue Living Founder and CEO, Anthony Giuffre is on the September cover of Business in Calgary Magazine. He is featured in the story ‘Investing in the Everyday’, where he talks about Avenue Living’s continued success, and how our strategic investment platform has enabled us to become one of Western Canada’s largest private real estate owner/operators.

Investing in the Everyday

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.

Avenue Living’s Mid-Year Review And Recap

In what has been an exciting start to 2021, the Avenue Living Group has strategically grown our portfolio to over $2.8 billion in assets under management (AUM).

Some of our notable Q1 and Q2 highlights:

Core Trust Acquired $275 million in assets within one week in Edmonton, which included 1,566 doors. The Edmonton market now accounts for 25 per cent of our multi-family portfolio.

The portfolio acquisition of 874 apartments and townhomes in the Hermitage community in Edmonton further solidifies Avenue Living’s place as one of Canada’s leading Real Estate Investment Trusts.

The Uplands Manor acquisition, which helped us surpass 1,000 units in Calgary, further strengthens our presence in the market.

Mini Mall Storage Properties experienced impressive growth and surpassed $300 million in AUM in the first half of this year.

Our Agricultural Land Trust added 2,914 acres to its growing portfolio, bringing the fund to over 48,000 acres under management.

Avenue Living’s investment strategy and platform is shining bright at the halfway point in 2021.

“I’m very proud of our year to date. We’re two quarters in and we have grown exponentially,” says Jason Jogia, Chief Investment Officer, Avenue Living. “Our growth enables us to continue to invest in our platform and our assets.

“We are seeing an influx of acquisition opportunities across all of our mandates,” he adds.

The industry is experiencing what we call “the changing of the guard” — many smaller owner-operators are reaching retirement age and would consider passing their properties on to their children, however those children are not always inclined to operate a residential property. This generational wealth transfer plays into the future of our organization.

“Avenue Living is taking advantage of this unique moment in time. We believe there is opportunity to consolidate the unconsolidated,” says Jason.

With passive landlords not keeping up with the demands of today’s residents through lack of capital and operational investment, we are seeing significant opportunities arise. Assets such as real estate and storage properties continue to offer attractive alternative investments. Our investment strategy is the way it is because we are an owner-operator.

“We’ve really honed our operating platforms to service our customers and have created sustainability in how we work every day. Residents today require more from landlords than just a roof over their heads. Our investments in technology, real estate and our people have sustainably differentiated us in the market. The results show in the success of our operational and financial KPIs which we monitor continuously. We are rooted in our disciplined approach, financial performance, and proper KPIs to assure success. We will continue to invest in real estate, capex, technology, and our people — training and making them better — while creating better processes and becoming more efficient.

That’s the goal for the balance of the year,” Jason says.

Our four pillars are: investment in buying assets, investment in capex at the asset level, investment in operations to build a better operating platform, and investment in technology. Leaning on these will help ensure continued success as we navigate the latter half of the year.

Avenue Living has spent the better part of 16 years building our vertically integrated platform to allow our funds to grow at scale. With robust asset management and active property management, which includes incorporating market research models, each decision and investment is meticulously calculated.

“Our growth speaks to the resiliency, tenacity, and skill of our people. We’ve tested our system, and COVID-19 tested us in terms of our operating platform, technology and infrastructure, and the capacity of our people. We realized we were able to grow astronomically, even in unprecedented times.”

“Buying roughly $400 million in real estate between storage and multi-family acquisitions in Q2 really confirmed our ability to execute major transactions without missing a beat. Over the course of the quarter, we saw value appreciation in our assets through better performance and market fundamentals,” Jason says, “Every cylinder is firing as it should.”

There is much to look forward to for Avenue Living as we navigate the third and fourth quarters of 2021 with an eye to our long-term future and outlook.

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.