Calgary-based Avenue Living Asset Management will this week close the real estate company’s biggest-ever deal, bringing its portfolio to more than 8,000 residential units in Alberta, Saskatchewan and Manitoba.
Jason Jogia, chief investment officer of Avenue Living Asset Management, told Calgary’s Business the company is purchasing Delton Townhomes in north central Edmonton, with 280 homes on 17 acres of land.
“That’s our largest purchase in the history of our organization. It’s a $43.5-million purchase,” said Jogia.
Jogia said the company is setting its sights on adding another 3,000 residential units in 2019 to its portfolio.
“We have identified and will buy 3,000 units in 2019,” he said. “These identified have been identified primarily in Calgary, Edmonton, Red Deer and we will also be in Regina. That’s where we’re seeing these particular opportunities. We’re seeing a big opportunity to increase our exposure in the primary markets. We coin primary markets as Calgary, Edmonton, Saskatoon, Regina and Winnipeg. Thirty-five per cent of our portfolio sits in those markets right now.
“So with adding these 3,000 units we think that we’ll be able to get that primary market portfolio to exceed 50 per cent.”
Its current residential portfolio includes about 4,300 units in Alberta, 3,600 in Saskatchewan and 256 in Winnipeg.
Avenue Living also has more than 400,000 square feet of commercial real estate space and just under 30,000 acres of agricultural land. It has about $1.2 billion in assets under management.
“We have always focused on, the term we coin here, workforce housing – the average Canadian, every day housing for that individual who would be not necessarily choosing to rent but may be required to rent based on their affordability levels and their ability to purchase their first home,” said Jogia.
“A lot of tenants are basically lifelong renters. … What we have found is that the current climate in Alberta is actually benefiting our asset type. When we chose our markets years back to build our footprint around the Prairies, we were always choosing markets that were trading hubs, they were markets that would always be there regardless of what happened with oil. They weren’t going to fizzle out or die. We were always looking for markets that had steady flows of migration and good employment basics and good diversification of their economic base.”
Avenue Living Asset Management began in 2006 with the purchase of 24 rental units in Brooks for $3 million.
Jogia said as the company weathered the great recession in 2008, it found that the markets it was in continued to stay resilient and its assets continued to stay full.
The same dynamic took place more recently following the recession of 2015 and 2016, which came about due to the collapse in oil prices beginning in the latter half of 2014.
“We are seeing our tenants continuing to be sticky, continuing to want to stay and hold their position in our product and what we have been doing this year because costs are up – the minimum wage has gone up, interest costs have gone up – we have slowly been lock-stepping our rents upward with our peers, our competitors,” said Jogia.
“We’re not only holding tenancies, we’re actually gaining tenants. It’s really interesting that with all the headwind risks that Alberta faces right now with the oil differential and the failed pipeline projects and so on, our market holds strong and if anything we have more customers today than we did a few years ago. That’s why over the course of 2018 we have continued to grow our portfolio.
“From 2017 to 2018, we’ve grown by just about 2,000 units. That’s a 25 to 30 per cent increase on our portfolio side. We see it on the frontline every day. We have a call centre here. Our calling volume is greater than it ever has been. People are looking for a good rental option in both the primary markets and the secondary markets and the tertiary markets in the Prairies.”
Jogia said vacancy for the company’s entire portfolio is about seven per cent.
Avenue Living has invested over $25 million in building improvements this year and its average rents have increased by 9.9 per cent.
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