Almega Co. has unique origins, a charitable business plan and ambitions to be the top real estate, asset and property management company in the world.
“I know that sounds crazy now, but I’m young and ambitious and driven,” Almega president and chief executive officer Basem Hanna told RENX.
“Crazy” perhaps, but Hanna has steadily grown both Almega and other companies he’s been involved with. Almega is about to take its next major step, developing a $125-million apartment building along Sheppard Ave. W. in Toronto.
Hanna’s early real estate and investment knowledge after graduating from Western University’s Ivey Business School was acquired through spending two years each at First Capital Realty and The Rose Corporation before he founded Toronto-based Almega in 2011 – at the age of 26.
It was initially set up so a handful of professionals in the small Coptic Christian community of Egyptian immigrants Hanna is part of could aggregate capital and establish a footprint in real estate.
The investor pool has since expanded, but Hanna’s focus is still on attracting small investors as opposed to institutional financing.
“It’s a different approach and I hope that it works,” he said. “I’m not saying that I would never take institutional money, but my goal is to go the other way. It takes longer, but I think the juice is worth the squeeze.”
Almega is dedicated to acquiring and operating stabilized, income-producing commercial and residential properties in Canada and the United States.
The goal is to create a profitable and well-managed portfolio for both aspirational and well-seasoned investors.
Almega Property Management
Almega Property Management was formed early on to manage the company’s own investments as well as those of its investors.
“Our property management portfolio is a series of one-off units, including individual condo units, rental homes and anything a passive real estate investor would own,” said Hanna.
“We find that’s a completely underserved area of the market, in the sense that most of these people will buy a pre-construction condo or home with the intention of using it as a rental property (and then realize they don’t want to manage it).”
Almega’s services include: rent collections and owner payments; moving facilitation and inspections; maintenance requests; resident screening and selection; owner representation; unit insurance; and resolving tenant disputes.
Almega didn’t initially offer property management services to third parties, but has seen this segment of its business grow substantially since it started actively promoting it in January.
Hanna said Almega has more than 200 units under active management in Toronto and is taking on 30 to 50 new ones a month, while leasing 20 to 30 units per month.
Almega’s first four funds
Almega’s first fund purchased three multifamily residential buildings and one industrial property.
The second fund acquired an assembly of three properties on Queen Street East in Toronto’s Beaches neighbourhood that were converted into a large daycare facility which was needed in the area.
Almega’s third fund bought a mixed-use retail and residential building at College Street and Ossington Avenue in Toronto.
It’s being converted to house a daycare facility on the second and third floors and a gym on the main floor. A medical services office tenant is targeted for the basement.
The fourth and most recent fund is dedicated to a new mandate Almega launched late last year to develop apartment buildings in Toronto and buy and reposition underperforming assets in the United States.
Almega’s American strategy
“We think that the U.S. is a great place to earn income,” said Hanna, who was involved with buying American properties for 15 cents on the dollar during the financial crisis of 2008 when he was with The Rose Corporation.
Hanna is now seeking opportunities in garden-style apartment buildings in Arizona and Florida, which have recently experienced major spikes in people contracting COVID-19, and thus could potentially offer some bargains.
“I think the U.S. is headed for a correction and I want to be ready to take advantage of it if it happens. If it doesn’t happen, it’s no big deal. There are limited expenses associated with doing due diligence and kicking tires on deals.”
New Toronto apartment and future prospects
An equity raise was completed in December for the Toronto apartment project that’s now going through the zoning process. Hanna is proposing a 270-unit apartment building with shared office space and a daycare facility at 824 Sheppard Ave. W., between Allen Road and Bathurst Street.
“We probably have, between our under-development assets and the properties that we manage, between $300 million and $400 million of real estate in our portfolio that we look after,” said Hanna. “The whole purpose of our asset management business is to produce yield.
“It’s not about earning multiples and selling out. I believe in holding assets for the long term and producing incremental cash yields for our investors, of which I’m one of the biggest.”
Almega is looking to acquire what Hanna calls “a trophy piece of land in downtown Toronto” that can yield between 600,000 and 800,000 square feet of future development. He puts the probability of success of acquiring the property at 60 per cent.
The company is also looking at a 220,000-square-foot development site in midtown Toronto which Hanna envisions becoming a similar project to 824 Sheppard.
Hanna’s other ventures
If you’re wondering where Hanna got the money to ramp up the size of Almega’s investments, let’s go back to that industrial property the company acquired with its first fund in 2013.
The original plan was to convert the 70,000-square-foot building into a self-storage facility, but Hanna became interested in the burgeoning legal cannabis market and instead used it to grow marijuana.
Hanna put his real estate career on hold from 2014 to 2017 to launch a company called TerrAscend, which has received licences to grow medical and recreational cannabis. It quickly grew to more than 100 employees. Hanna was president and CEO before the business and the building was sold for a very healthy premium.
“TerrAscend is probably one of the top-10 cannabis companies in the world right now and it’s something that I’m very proud of,” said Hanna, who remains a shareholder.
While Almega is once again Hanna’s primary focus, he started another company called TREC Brands which curates cannabis products. He chairs the company’s board.
“I’m still very intimately involved with the cannabis space, just because of the knowledge I have and the connections,” said Hanna. “People want to lean on me for my expertise and opinions.”
A friend of Hanna’s created a Toronto-based company called Ledn Inc. that offers Bitcoin-backed loans and Bitcoin savings accounts. Hanna has been an advisor since October 2018 and says Ledn has been growing month-over-month.
Almega has 14 employees and a few people on contract, and Hanna said it’s hiring one or two people a month.
“Our values are trust, respect, equality and compassion. We live those day-to-day. Every single employee of our business is an owner.”
In addition, both Almega and TREC Brands are donating 10 per cent of their profits to charities.
Almega employees choose where its money goes, while TREC Brands charities are chosen by its consumers via social media and emails. Money has thus far gone to homeless and women’s shelters, Black Lives Matter and other organizations.
Almega has also been putting property management fees into a COVID-19 relief fund since April to help struggling tenants in its units pay their rent.
“My life motto is to give more than you take,” said Hanna. “I’ve been broke for way more years than I’ve had money and I still know what that hustle is like. I haven’t forgotten it.”
Vancouver real estate: early September numbers show steep drop in sales from August highs – The Georgia Straight
Home sales in the city of Vancouver are dropping big time.
This is based on tracking by real-estate site fisherly.com as of late morning Friday (September 25).
Compared to record highs in August, early numbers for September show a steep decline in transactions.
In August, a total of 490 condo units sold in Vancouver.
As of this posting September 25, fisherly.com recorded 202 condo sales so far this month.
Last month, 212 detached homes changed owners.
September sales so far show 114 freestanding houses sold in the city.
As for townhouses, 99 sold in August.
As of September 25, only 49 townhouses have been purchased.
Vancouver home sales peaked in August, following a steady recovery that started in May.
Transactions crashed in April during the height of the COVID-19 lockdowns.
RBC Economics previously issued a report noting that pent-up demand for homes drove real estate sales in the country this summer.
However, according to the bank’s report, this demand is largely spent, and that the market’s momentum is expected to decelerate in the fall.
The Canadian Real Estate Association has forecast that after its highs and lows, 2020 may likely end up as a “fairly middling year overall”.
It remains to be seen whether the Vancouver market will stage a late September rally to boost numbers.
Real Estate Roundup 9.25.20 – Real Estate Daily Beat
Real Estate Roundup
- SL Green and Jacob Chetrit have resolved their dispute over the broken contract for the Daily News Building. (TRD)
- Global pricing and demand for office space will take almost five years to recover from the damage wrought by the pandemic, according to a report by Cushman. Vacancies worldwide are expected to peak at 15.6% in 2022, with about 95.8 million SF of space emptying over the next two years. That’s more than during the 2008 financial crisis, when tenants abandoned 85 million square feet of offices. (Bloomberg)
- Barclays is set to ramp up staff numbers in New York next month, asking a fresh contingent of employees to be “primarily office-based”, as the UK lender prepares to U-turn on its plans to bring more people to its Canary Wharf headquarters. (FinancialNews)
- Mizuho Financial Group plans to trim office space in New York and London in anticipation that some staff will keep working from home even when the coronavirus pandemic is over. (Bloomberg)
- When Everybody’s Working At Home And The Magic Is Gone. (NPR)
- Brookfield Properties and Namdar Realty are separately requesting they be allowed to give up their J.C. Penney-anchored malls to special servicers to avoid loan foreclosure. The action is known as a “deed-in-lieu.” Mall owners most likely to default are those with CMBS debt. Such loans are difficult to restructure because of covenants bondholders have with servicers. (TRD)
- Spring Education Group has signed a 20-year lease for 34,500 SF at Albanese Development’s 556 West 22nd Street. The group’s BASIS Independent Schools will occupy the entire three-story building to serve students in grades 6 through 12. (TRD)
- Although Zillow has long denied it wants to become a real estate brokerage, the changes to its iBuying program mean it is doing just that. Previously, Zillow worked with local real estate agents to complete both ends of the transaction, but now it will instead use its own employees who are licensed real estate agents. (MotleyFool)
- Co-living firm Common has raised $50 million in new venture capital this month. Earlier this summer, competitor Juno Residential launched with $11 million in venture funding. (WSJ)
- New York Community Bank and Signature were among the top five most-active lenders in New York in the first half of the year, and almost all of their portfolios are tied to the area. With retail and apartment vacancies rising and rents falling, and with the prospect of employers cutting their office space looming, the question is whether the hundreds of millions of dollars the banks have set aside for commercial-property loan losses will be enough. (Bloomberg)
- Blackstone’s China Real Estate Head Tim Wang leaves after 10 years. (Bloomberg)
- Blackstone Group closed on the largest real-estate debt fund ever. The private equity firm began raising money for the fund in the spring of 2019, and ultimately took in $8 billion. Fundraising got a boost after Covid-19, partly because interest rates fell, increasing the appeal of relatively high-yielding real estate debt. (WSJ)
National Real Estate Deal Roundup 9.25.20 – Real Estate Daily Beat
National Acquisitions Roundup
- Amazon has acquired 550 Army Navy Drive in Pentagon City, Virginia from the Blackstone Group for $148.5 million. The tech giant plans to demolish the existing Marriott hotel and utilize the 1.5 acres of land as part of its second headquarters. With the deal, Amazon now owns the entire 11.6-acre PenPlace. The site was always part of the company’s HQ2 plans, but the hotel remained the last holdout, and it appeared the company would just build around it. (CO)
- A consortium of South Korea’s Hana Alternative Asset Management has signed a contract to acquire a 38-story office tower in downtown Seattle for around $686 million. Skanska USA’s newly-constructed Qualtrics Tower spans 701,000 SF. Tenants include Qualtrics, Indeed, Dropbox, and co-working firm Spaces. (KI)
- Invictus Real Estate Partners has purchased the remaining 90 percent stake in The Waypointe at 515 West Avenue in Norwalk, Connecticut from Carmel Partners. The two-building complex, which includes 56,000 SF of ground floor retail and restaurant space, opened in 2015. Its apartments are currently 93 percent occupied, while the retail space is 74 percent leased. The deal valued the asset at $157 million. (TRD)
- As part of its ongoing industrial real estate expansion, PGIM Real Estate has acquired a 40 percent interest in a 5.4 million-square-foot, 12-complex industrial portfolio valued at $700.5 million. PGIM acquired the stake in the portfolio through a recapitalization of the interest in a JV with partner IAC Properties and a subsidiary of Perlmutter Investment Company. At that valuation, the deal works out to a 4.7 percent cap rate. The portfolio includes 30 industrial properties spread throughout the 12 complexes, which altogether are 97 percent leased. (CO)
- July Residential and Firm Capital Apartment REIT have acquired North Pointe at 5735 29th Avenue in Hyattsville, Maryland from FCP for $37.5 million. The 19-building apartment community contains 234 units. (CO)
National Leasing Roundup
- Netflix has signed a 171,000-square-foot office lease in Burbank near major competitors like Warner Brothers and Walt Disney. Netflix’s new space is at 2300 West Empire Avenue near the 5 Freeway in Los Angeles County. Earlier this month, CEO Reed Hastings told WSJ that he expects employees back in the office once a coronavirus vaccine is available. (CO)
- Logistics and storage firm Mega Lion has signed a 132,423-square-foot lease at 13021 Leffingwell Road in the Mid-Cities submarket of Los Angeles County. Golden Springs Development owns the property. Asking rent on the five year lease was reportedly $0.90 per SF, triple net. (CO)
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