{"id":13636,"date":"2019-09-13T10:10:26","date_gmt":"2019-09-13T17:10:26","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=13636"},"modified":"2019-09-10T13:20:13","modified_gmt":"2019-09-10T20:20:13","slug":"residential-reits-have-posted-an-average-18-6-return-in-the-past-year","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2019\/09\/residential-reits-have-posted-an-average-18-6-return-in-the-past-year\/","title":{"rendered":"Residential REITs Have Posted an Average 18.6% Return in the Past Year"},"content":{"rendered":"<p style=\"text-align: justify;\">Residential real estate investment trusts (REITs) are leading the REIT sector this year and apparently see opportunity in the Metro Vancouver market that has spooked most residential investors and developers.<\/p>\n<p style=\"text-align: justify;\">The strategy of investing in income-producing residential real estate is apparently paying off. A Bloomberg surveyreleased August 15 showed that the average year-to-date return for REITs involved in the residential sector was 18.6%, blowing past projections of 6% year-over-year yields for the entire REIT sector.<\/p>\n<p style=\"text-align: justify;\">One of the big movers was Vancouver-based Pure Multi-Family REIT, which specializes in high-end rental apartment properties in the US Sunbelt. Formed a decade ago, Pure Multi-Family REIT was sold in July for $1.5 billion in an all-cash deal to US-based Cortland Partners, a deal still awaiting regulatory approval. Cortland plans to take Pure private.<\/p>\n<p style=\"text-align: justify;\">The residential REITs to watch now are those stocking up on multi-family rentals in the West.<\/p>\n<p style=\"text-align: justify;\">A major player is Canadian Apartment Properties Real Estate Investment Trust (CAPREIT), which has been rapidly acquiring new purpose-built apartment buildings in Metro Vancouver. CAPREIT owns interests in 53,334 residential units, composed of 45,637 apartments and 45 manufactured-home communities comprising 7,697 land lease sites located in and near major urban centres across Canada. CAPREIT is currently trading at $51.81 per share, up 16.9% so far this year.<\/p>\n<p style=\"text-align: justify;\">In April, CAPREIT paid $69.6 million to buy a 191-unit apartment building in Langley, and in the past three months it bought the Point, a new 98-suite rental building in Langley for $39 million and paid a similar amount for another new rental project, the Meridian, across the street.<\/p>\n<p style=\"text-align: justify;\">Lance Coulson, executive vice president of CBRE\u2019s national apartment investment properties group team in Vancouver, whose team brokered both deals, said CAPREIT has been a major player in Vancouver since he sold it a 19-building portfolio of rental properties totalling 919 units three years ago for $170 million, one of the biggest multi-family deals in Metro Vancouver history.<\/p>\n<p style=\"text-align: justify;\">Coulson said CAPREIT approached him about buying the Point when the rental building was still half-built.<\/p>\n<p style=\"text-align: justify;\">Big institutional players like CAPREIT are not spooked by per-door prices in Metro Vancouver that can top $400,000 for new rental projects, or by Canada\u2019s skinniest capitalization rates that are often below 3%, he said.<\/p>\n<p style=\"text-align: justify;\">\u201cThe capex [capital expenditures] is low or zero on a new building,\u201d Coulson explained, adding that, in comparison with Lower Mainland condo apartments that have a benchmark price of $649,000, rental apartments are seen as inexpensive.<\/p>\n<p style=\"text-align: justify;\">As well, he noted, new rental buildings can generate monthly rents of from $2.15 to $2.25 per square foot.<\/p>\n<p style=\"text-align: justify;\">There are two other big advantages right now for long-horizon institutional buyers in Metro Vancouver : smaller rental investors are running scared and lending rates are falling to very low levels.<\/p>\n<p style=\"text-align: justify;\">Sales of existing Metro apartment properties have nearly ground to a halt since last fall, Coulson said.<\/p>\n<p style=\"text-align: justify;\">\u201cSellers are taking property off the market,\u201d he said, despite the region having the highest rents and lowest vacancies in the country.<\/p>\n<p style=\"text-align: justify;\">Coulson and other multi-family agents say a series of perceived anti-landlord policies, from the provincial government and local municipalities, is largely to blame for the sales slump.<\/p>\n<p style=\"text-align: justify;\">But, Coulson noted, apartment deals can be financed today with Canada Mortgage and Housing Corp.-insured mortgage rates of 2% for 5-year terms and 2.3% for 10-year terms, the lowest rates available in the commercial or residential sector. Such low rates ease the pain of low cap rates, he explained.<\/p>\n<p style=\"text-align: justify;\">\u201cWe will continue to see strong demand for quality multi-family assets,\u201d he said.<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/biv.com\/article\/2019\/09\/residential-reits-hungry-active-and-leading-pack\" target=\"_blank\" rel=\"noopener noreferrer\">Residential REITs : Hungry, Active and Leading The Pack<\/a> by Frank O&#8217;Brien | Western Investor | Business in Vancouver<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Residential real estate investment trusts (REITs) are leading the REIT sector this year and apparently see opportunity in the Metro Vancouver market that has spooked most residential investors and developers. &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2019\/09\/residential-reits-have-posted-an-average-18-6-return-in-the-past-year\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-13636","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Residential REITs Have Posted an Average 18.6% Return in the Past Year &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2019\/09\/residential-reits-have-posted-an-average-18-6-return-in-the-past-year\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Residential REITs Have Posted an Average 18.6% Return in the Past Year &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"Residential real estate investment trusts (REITs) are leading the REIT sector this year and apparently see opportunity in the Metro Vancouver market that has spooked most residential investors and developers. &hellip; [read more]\" \/>\n<meta name=\"twitter:creator\" content=\"@RoryClipsham\" \/>\n<meta name=\"twitter:site\" content=\"@RoryClipsham\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Rory Clipsham\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2019\\\/09\\\/residential-reits-have-posted-an-average-18-6-return-in-the-past-year\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2019\\\/09\\\/residential-reits-have-posted-an-average-18-6-return-in-the-past-year\\\/\"},\"author\":{\"name\":\"Rory Clipsham\",\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/#\\\/schema\\\/person\\\/0672b9777e67473b9bd9247df49499c7\"},\"headline\":\"Residential REITs Have Posted an Average 18.6% Return in the Past Year\",\"datePublished\":\"2019-09-13T17:10:26+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2019\\\/09\\\/residential-reits-have-posted-an-average-18-6-return-in-the-past-year\\\/\"},\"wordCount\":594,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/#\\\/schema\\\/person\\\/0672b9777e67473b9bd9247df49499c7\"},\"articleSection\":[\"Market Updates\"],\"inLanguage\":\"en-CA\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2019\\\/09\\\/residential-reits-have-posted-an-average-18-6-return-in-the-past-year\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2019\\\/09\\\/residential-reits-have-posted-an-average-18-6-return-in-the-past-year\\\/\",\"url\":\"https:\\\/\\\/www.roryc.ca\\\/blog\\\/2019\\\/09\\\/residential-reits-have-posted-an-average-18-6-return-in-the-past-year\\\/\",\"name\":\"Residential REITs Have Posted an Average 18.6% Return in the Past Year &#8226; 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