2024 Mid-Year Check-In
As 2023 concluded with elevated interest rates and prices for consumer goods, economic forecasts for early 2024 were cautiously optimistic. Reflecting on the first half of this year, we saw strong evidence that this optimism was not unfounded as inflation showed signs of stabilizing. Additionally, The Bank of Canada cut interest rates twice this year, presenting opportunities for many businesses, including those in the real estate industry.
Meanwhile, Canada’s real estate sector continues to navigate a surging population amidst housing supply challenges. This underscores the timeliness and necessity of real estate owner-operators prioritizing investments in maintaining and enhancing the longevity, efficiency, and comfort of existing multi-family properties.
Avenue Living’s unique and defensible approach as a vertically integrated owner-operator allows us to remain agile and responsive to the market. We are in a strong position to undertake capital improvement projects to optimize the existing housing supply and continue our focus on responsible asset and property management that meets the needs of our customers while driving positive growth for our investors.
Multi-Family Update
Year-to-date, the Avenue Living Real Estate Core Trust has experienced a period of strong performance and is well-positioned to benefit from favourable market conditions for acquisitions.
Gabriel Millard, Managing Partner – Equity Capital Markets, explains that the focus for the first half of the year has been to “double down on the fundamentals of our business and looking at same-door performance to ensure that we are running our assets as optimally as possible. In addition, we are strategically acquiring properties on an opportunistic basis and seamlessly integrating them into our overall portfolio.”
The emphasis on delivering exceptional resident service standards has led to strong results. As Millard notes, “it’s an interesting time in multi-family, there’s a very high amount of demand for housing right now at a time when there is a very limited amount of supply.” Asset optimization and exceptional resident experiences continue to be critical, regardless of the market environment.
Millard explains that recent changes to tax regulations created new opportunities for timely acquisitions. “There were a number of deals we were able to acquire from vendors looking to exit quickly and this change contributed to an already steady cadence of acquisition opportunities in 2024. This resulted in Avenue Living acquiring over 600 units by the end of June.”
The second half of the year is expected to yield further positive results as we focus on “maximizing the potential of our buildings, elevating the residence experience, investing capital into our properties to ensure they’re run as optimally as possible, and continuing on our sustainability initiatives,” says Millard. Sustainability initiatives are an important part of Avenue Living’s overall strategy, as evidenced by ongoing retrofits across various properties and the upcoming launch of the SunRise project. According to Millard, “it’s all been extremely favourable, we’re eagerly anticipating the completion and launch of some innovative initiatives." Retrofits will continue to be an exciting avenue of exploration for us, and they have the potential to make a significant and lasting impact within the community and the marketplace.
Self-Storage Update
The performance of the Mini Mall Storage Properties Trust has been very positive. Chief Executive Officer, Adam Villard, shares that “Mini Mall had a strong first half of the year, seeing growth in both total and same door revenue per available square foot."
According to Villard, these positive indicators are driven by the performance of same-store assets in the portfolio and within its regional operations. As he explains, “Mini Mall is focused on its core fundamentals—remaining competitive from a street rate perspective to drive occupancy into our facilities. By adjusting rates for existing customers and ensuring we continue to provide high-quality services, we can maintain the growth needed to support our facilities.” Mini Mall Storage is prioritizing building a best-in-class operational team by focusing on the simple things that ensure smooth day-to-day operations and happy customers to drive business success.
Performance is expected to continue along this positive trend as Mini Mall acquires assets that lend to the portfolio's efficiency and growth in key geographic regions. We're also implementing new strategies to minimize the effects of seasonal shifts in demand. This includes targeted local marketing campaigns and a robust digital marketing program to generate consistent leads throughout the year. Mini Mall’s strategies continue to evolve as the business does, but the keys to our long-term success remain the same—focusing on acquisitions in strategic locations while delivering a best-in-class experience through facility maintenance and capital projects to improve sites. We have also enhanced our dynamic revenue management system, which has allowed us to lead performance through competitive market conditions, all while providing exceptional customer service.
Farmland Update
Tract Farmland Partners LP remains focused on expanding its portfolio within Saskatchewan. In the first half of 2024, “we reached approximately $30 million in Assets Under Management (AUM),” says Leif Snethun, Chief Executive Officer of Tract Farmland Partners. Looking ahead, the remainder of the year will be dedicated to optimizing operations and completing further acquisitions.
For farmers, the agriculture outlook is positive given favourable weather conditions across Saskatchewan. As Snethun explains, “so far, the weather is cooperating, with adequate rainfall across the province. Last year it was very dry on the west side of the province; this year, it’s the opposite.”
Saskatchewan's fertile ground fosters the growth of crucial commodities, and Avenue Living is dedicated to responsible farmland management. We carefully select reliable tenants and closely monitor their practices. As Snethun shares, “there is no other form of real estate where tenant and owner are more aligned.” This alignment of interests ensures that the land is well-maintained, which directly benefits crop yields and supports long-term portfolio sustainability.
Our Path Forward
Our dedication to sustainability, growth, and operational excellence remains strong as we build on the momentum gained in the first half of the year. By pursuing new opportunities and leaning on our vertically integrated approach to maintain our competitive edge, we are well-positioned for ongoing success.
Looking ahead, we will continue to prioritize value-add opportunities, investing in property improvements, and maintaining high standards of overall customer satisfaction. For our investors, we remain focused on strategic acquisitions, optimizing our asset performance, and exploring innovative initiatives that are designed to promote long-term benefits.
As we navigate the rest of 2024, our strategic vision will allow us to remain nimble and quickly adapt to market changes, seize opportunities, and deliver exceptional value to all our stakeholders.
This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at https://www.avenuelivingam.com/forward-looking-statements for additional information regarding forward-looking statements and certain risks associated with them.
