The Equiton Residential Income Fund has made its first acquisition of what founder and CEO Jason Roque expects to be a busy 2021. The fund has expanded into Hamilton with the purchase of two linked apartment buildings, totalling 360 units, for $54.3 million.
Located in the Beasley neighbourhood of East Hamilton, the buildings are at 125 Wellington St. N. (18 storeys) and 50 Cathcart St. (six storeys). They contain a mix of bachelor, one-, two-, and three-bedroom apartments, and occupy nearly an entire city block.
“We had been looking at Hamilton,” Equiton founder and CEO Jason Roque told RENX in an interview. “I’m from Hamilton, so I know the market really well but we hadn’t come across anything that worked for us. This opportunity came up and we thought it was a good deal so we figured we’d better jump on it.”
The off-market deal was facilitated through a mutual acquaintance in the banking industry who connected Equiton with the vendor, Roque said.
The properties were constructed during the 1970s. Roque said the units were both well-maintained and well-operated by the vendor, a private company. Building systems do require some upgrades, however.
“Good deal” for concrete building
“There are some major capital works that are needed on the building, so we are going to start those right away, but I would say what attracted us was that the previous owner had done a good job of managing it,” Roque said.
He noted that while there is some upside opportunity in rents, there is no dramatic gap between in-place and market.
“We just see that from our perspective it was a good deal for a concrete building of this size and this efficiency in that market. Plus the area there in Hamilton is really gentrifying. I think there’s medium- and long-term opportunity because of everything that’s happening in the area.
“I’ve lived in Hamilton my entire life for the most part and you’d always hear about things being built downtown but nothing ever got built, but that’s changing. There are construction cranes nearby, so we know it’s up and coming, so we figured this would be a good long-term buy for us.”
Known as Wellington Place, the buildings are just minutes from downtown Hamilton and a short commute to McMaster University. Nearby are several public parks, public transit, GO Transit, Hamilton General Hospital and St. Joseph’s Healthcare.
Equiton will take over management of the buildings.
Equiton focused on multires acquisitions
The purchase is one of the fund’s largest to date, increasing its portfolio by about 35 per cent to just under 1,400 units and the value to about $325 million in AUM.
While Equiton is also interested in commercial and retail properties, the immediate focus is on multiresidential.
“The majority of our purchases this year, 80 to 90 per cent of our purchases, will be multires,” he said.
For a couple of reasons.
First, Equiton’s fund has been highly successful. Second, there is significant capital available to invest in the sector, which has been a strong performer throughout the pandemic.
“Our fund has been around. It will be our five-year anniversary in May,” Roque said. “The fund has had positive returns every month since inception (59 consecutive months), so we are starting to see the capital flow in much more quickly.
“I would say from my perspective it’s really because of time and tenure. We’ve been around for a long time now so we are starting to see increasing capital inflows.”
Equiton’s purchases in late 2020
Equiton had a busy second half of 2020 in Southern Ontario, making a series of acquisitions and entering into a joint venture in Guelph to build a mixed-use development with RRH Rental Properties. It also internalized its property management functions.
The Guelph development involves the demolition and redevelopment of a 3.5-acre property which has been home to a The Beer Store outlet, which will be moved into a new building in the first phase. The JV will then develop 96 townhomes.
It also acquired two 38-unit apartment buildings at 650 Woodbine and 787 Vaughan Roads in Toronto in November.
In July, it expanded the Equiton Residential Income Fund portfolio in Guelph, purchasing two apartment buildings comprising 112 units. They are located near the Stone Road Mall and an adjacent commercial and services corridor.
“We’re growing,” Roque concluded. “I think over the next few years you are going to see more rapid growth.”
Founded in 2015, Equiton is a private equity firm based in Burlington specializing in private market real estate investments. It purchases and manages residential and commercial income properties, and invests in real estate development projects.
Its leadership team has more than 100 years of combined real estate, investing and management experience.
Collectively they have overseen the acquisition and management of over $10 billion in real estate, developed over 100 million square feet of real estate projects and overseen a combined portfolio of more than 10,000 apartments in Canada and the United States.
Credit 'Zombies' on the Rise as Real Estate Firms Lead Charge – BNN
(Bloomberg) — The walking dead of the corporate world are multiplying — and the property industry sustains the most.
A new study on companies that have dodged default for years, even though they don’t have enough money to pay interest, comes just as markets from Hong Kong to New York are roiled by real-estate giant China Evergrande Group’s showdown with its creditors.
Consultancy firm Kearney found their numbers have expanded by 9% globally in the past decade, in part because loose monetary policy has allowed them to keep rolling over debts.
While “zombies” have been on the rise since the last financial crisis, the pandemic looks likely to bolster their ranks, with more companies seeking waivers after taking on unsustainable piles of debt when economies were shuttered.
The OECD defines zombie companies as those that have been trading for more than 10 years and have been unable to cover their interest burden from their operating revenues for three consecutive years.
Kearney studied records of 67,000 listed companies from 152 countries. It found:
- 7.4% of real-estate firms were zombies
- 5.9% of healthcare
- 5.5% of telecommunications and media
- 5.1% of travel and tourism
Within retail, online retail had a slightly bigger share of zombies than brick-and-mortar counterparts, potentially due to the low profitability of online players, according to the report.
At least 5 issuers are offering debt on European markets on Thursday, with new issuance volumes of at least EU2.25 billion-equivalent.
- Bank of England voted to keep bond-buying target and interest rate benchmark unchanged at a record-low 0.1%
- Ashmore Group Plc’s Jan Dehn is set to leave the firm, ending a 16-year stint at the emerging market-focused money manager
- SMCP’s majority shareholder, European TopSoho’s, failed to redeem at maturity EU250 million 4.0% bonds exchangeable into SMCP shares
Financial regulators in Beijing issued a broad set of instructions to China Evergrande Group, telling the embattled developer to focus on completing unfinished properties and repaying individual investors while avoiding a near-term default on dollar bonds.
- Global investors will focus on China Evergrande Group’s $83.5 million interest payment due Thursday on a five-year dollar note
- The People’s Bank of China pumped in 110 billion yuan ($17 billion) of cash with seven- and 14-day reverse repurchase agreements.
- Four Chinese firms were offering dollar bonds Thursday, ending a three-day lull in the Asian credit market amid holidays and concern about contagion from the distressed property giant Evergrande
Federal Reserve Chair Jerome Powell said there is little direct U.S. exposure to debt of the Chinese company Evergrande but said it could impact global financial conditions
- Powell said the Fed could begin scaling back asset purchases as soon as November and complete the process by mid-2022
- The takeover of medical supply company Medline Industries Inc. is being funded by the largest leveraged buyout loan in three years
- A gauge of volatility in the $4 trillion market for state and local-government debt has tumbled to just shy of a record low set in early January
©2021 Bloomberg L.P.
Record-breaking real estate: North Saanich property sells for nearly $23M – CHEK
The sale of a multi-million dollar listing in North Saanich is shattering any previous record for highest house price on Vancouver Island.
For $22.75 million, the Lawrence Road property includes a 13,000-square-foot home with eight bathrooms, six bedrooms, a two-storey study, a detached yoga studio, an infinity pool, tennis court, gym — even an underground wine cellar.
The president of the Victoria Real Estate Board, David Langlois, said the property is unique.
“You are looking at a very high-end, very interesting property that is going to offer features that you simply can’t find anywhere else,” he said.
It also comes with its own detached two-bedroom guest cottage.
“It’s significant in that it’s certainly the largest recorded sale that we’ve seen in our marketplace,” Langlois said.
“We do have a lot of really valuable real estate throughout the Greater Victoria area. We’ve got lots of private islands, and lots of estate-like settings. It’s not surprising.”
In June, a property in Metchosin sold for $12 million. It sits on 67 acres and a stream runs under parts of the 10,000-square-foot home.
At the time, it was the highest price ever paid through the Victoria Real Estate Board listings.
Tina Ireland, a regional assessor with BC Assessment, said there are fewer homes in the luxury market available right now.
“The luxury home market is more unique though of course, because the properties are more unique.”
With demand up for properties worth $4 million and more, so are prices.
“Last year’s assessment, we had seen a 10 per cent increase,” Ireland said. “This year I think we’ll see at least that in our assessed values.”
There have been 245 sales of homes in the $2 million category so far in 2021, compared with just 94 in the same period in 2020.
Dubai real-estate firm DAMAC approved to take firm private – 95.7 News
DUBAI, United Arab Emirates (AP) — A Dubai real-estate company known for its deals with former President Donald Trump said Thursday it had received regulator approval for an effort to take the firm private.
DAMAC Properties still plans to offer $595 million for outstanding shares of the company, the firm said in a filing on Dubai Financial Market stock exchange.
It said it would offer an update on the plan in the coming weeks. It earlier announced plans in June for the offer to take the company private, then withdrew them as regulators examined the plan.
The buyout would be through Maple Invest Co. Ltd., a holding company of DAMAC’s billionaire founder Hussain Sajwani. Sajwani owns nearly four-fifths of the company through various investment firms.
DAMAC stock traded up Thursday over 3% on the news. The firm has a market capitalization of over $2 billion.
DAMAC is known in Dubai for a development that features a Trump-branded golf club surrounded by villas and apartments, making it the only one of its kind in the Middle East that bears the Trump logo.
The company’s partnership with the Trump Organization to manage and run the golf course was struck before Trump’s election as U.S. president.
The Associated Press
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