Investment funds managed by private equity firms are one of the best options for investors looking for an alternative way into the market. These private equity firms acquire strategic real estate investments and developments across Canada and place them into private investment funds that are financially accessible for Canadians.
FINDING THE RIGHT PROPERTY
The numbers show Canadians are ready for this type of investment. Right now, they are holding a record $75 billion in cash amid fears about investing in public markets. What they are looking for is steady passive cash flow, equity appreciation and safety of principal without having to endure public market volatility. For these reasons, this past March, Equiton Partners launched the Equiton Residential Income Fund Trust, which invests in Canadian apartments and student housing.
In addition to the growth in the value of the assets and the further projected increases over time, the fund is already making 5% annual distributions paid quarterly. People are excited about a fund backed by hard assets that has already produced positive returns in less than a year.
Part of the fund’s immediate success is a result of well-made acquisitions using Equiton’s own proprietary database. This database, which tracks thousands of properties, allows Equiton Partners to quickly find excellent investment opportunities, approach owners directly and acquire assets – often below market value.
“With today’s hot real estate market, we can’t wait for properties to come to us or spend time in bidding wars,” says Eddy Boudiwan, Equiton’s head of acquisitions.
“We actively pound the pavement in communities that fit our investment criteria and pursue the best opportunities.”
A recent 104-suite purchase in Brantford, Ontario, shows that Equiton’s unique approach to acquisitions is paying off.
“Because the property was off-market, we purchased the building below its intrinsic and appraised value, generating an instant one-day return on invested equity of 9% on closing,” Boudiwan says.
Equiton Partners is currently focusing on Canadian apartments and student housing – a savvy strategy, according to the latest data and trends. In light of today’s soaring real estate prices and affordability concerns, more Canadians are choosing to rent. This demand is being driven by millennials who can’t afford a new home, seniors looking to downsize and take advantage of the equity in their existing homes, and population growth – more than 320,000 newcomers arrived in Canada in the past year.
These trends have led to an increase in the percentage of the population who rent – from nearly 30% in 2011 to more than 40% today. Supply, however, has not kept pace, and in most markets, the cost to build new rental stock is prohibitive.
These reasons, combined with the profits generated by a wise investment, will continue to attract investors to the multi-unit sector. Apartments remain a place to protect and preserve capital while providing increasing and reliable distributions. Rent revenue has consistently outpaced inflation for the last 25 years by an average of 29%.
PARTNERS IN PROFIT
Equiton Partners’ experience in strategically operating assets is paying off. Apartments purchased this year are projected to provide revenue increases approaching 14% when suites turn over.
“These are double-digit increases that we are able to achieve safely with no crazy financial engineering – just managing the properties better so we can get more rent,” Boudiwan says. “This is our operational expertise in action, improving both cash flow and asset value.”
Equiton Partners sets itself apart because its team of senior managers has decades of experience at every level of real estate. They have managed more than $1 billion in income-producing properties and have developed over 100 million square feet of real estate. Investors can be confident knowing that Equiton’s leadership has the strategic skill set to know what needs to be done and to execute on both short- and longterm directions. These efforts have allowed the Equiton Residential Income Fund Trust to achieve positive results and make distributions to investors from the start.
Equiton Partners makes its investments available through its sister company, Equiton Capital. Equiton Capital takes the same approach for success – qualified leaders leveraging a thorough understanding of the investment industry and private capital markets. These are highly talented experts, educated about the product and dedicated to client success.
The Equiton Residential Income Fund Trust is available for investors across Canada. For more information, please visit www.equitoncapital.com.
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Whether you hear about it from a neighbour, read it in the newspaper or see it on TV, real estate investing is something everyone is talking about. While financially accessible for a lucky few, private real estate investing on a meaningful scale remains elusive to most – but it doesn’t need to be. There are opportunities for Canadian investors to get involved in the real estate market that don’t involve taking out a mortgage and putting down 35% in order to eke out some semblance of positive cash flow.