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A Primer on the Canadian Apartment Market

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Buildings less than 200 Units in size - about 55,000 in Canada

  • Typically "mom & pop" owned and managed
  • Generally years of deferred maintenance
  • Rents are low because quality and service are poor to average
  • Tenant quality can be poor because of the above (who wants bad service except those with no choice?)
  • Rare that energy efficiency opportunities have been explored
  • Because of the work involved, these assets will often be discounted
  • Conclusion - Less competition from buyers, less sophisticated owners, opportunity to move up rents and cut costs, very large market

Buildings larger than 200 Units in size (traditional "investment grade") - about 735 buildings in Canada

  • Generally institutionally owned and managed
  • Because of deeper pockets, deferred maintenance not as bad on average
  • Service will on average be better
  • Tenant quality will generally be better
  • Because of size, will be highly sought after and market pricing of the asset will be very competitive
  • Energy efficiency opportunities more likely to have been exploited
  • Conclusion - More competition from buyers, sophisticated owners, less opportunity to move rents, fewer opportunities to cut costs that remain unexploited, very few buildings to buy.

Centurion Apartment REIT will tend to focus on the first category of properties although it may, for the right opportunity, invest in the second category of properties.

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