Stability, Growth, and Sustainability: Avenue Living’s Themes for 2023

Themes for 2023

2023 was a challenging year for Canadians and the broader markets. While inflation has slowed and interest rates appear to have stabilized, the overall economic picture continues to fluctuate. 

“It’s been only one year, but we’ve seen changes that you don’t normally see within five,” says Gabriel Millard, Senior Vice President, Capital Markets – Equity and Research. “We’re still in the midst of digesting one of the fastest rate-hiking cycles in history, with a lot of variables in the macro environment.” 

In light of this, investors have expressed increased interest in alternative investments for stability and returns that are non-correlated to public markets. Against that backdrop, we’ve continued to invest in the everyday, striking a balance between defensibility, growth, and sustainability across our strategies. 

Multi-family and self-storage: from pause to growth 

“During the first nine months of 2023, we took a deliberate pause on acquisitions within both our multi-family and self-storage strategies,” Millard says. “Over that time, we saw material net operating income (NOI) improvements from rent adjustments enabled by heightened service standards and introducing new operational cost-efficiency measures.” 

Avenue Living shifted gears in the back half of the year, adding over 1,600 units to our multi-family residential footprint. In November, we finalized a deal with a large institutional investor for a 700-unit portfolio across five towers and a number of townhomes.  

“We’re seeing opportunities to acquire higher-value properties from institutional players, including pension funds, which weren’t available even two years ago,” Millard says.  

As borrowing costs accelerated, the importance of vertical integration, active property management, and managing rising costs in the real estate space became acutely clear. Across both the multi-family and self-storage markets, pure capital allocators struggled to sustain their investment returns, creating more acquisition opportunities. 

“We’re exiting 2023 at just over 17,000 multi-family units,” Millard says. “The Mini Mall Storage Properties fund also grew quite rapidly to almost 8 million square feet — including the largest acquisition in its history of almost 900,000 square feet across 19 properties — making Mini Mall the top 21st largest self-storage operator in North America by rentable square footage.”  

The multi-family Prairie markets are seeing growth from record net immigration, driven by households seeking affordability. A sizeable portion of these newcomers are coming from higher-growth markets like Vancouver, Toronto, and Montreal where rent payments can take up 40% to 50% of households’ income.  

Historically, self-storage has proven to be a resilient asset class and remained stable even in times like the 2008 North American real estate crash. Robust consumer-driven demand continues to propel the investment class, painting a constructive picture.   

Strong tailwinds for Canadian farming 

Avenue Living’s two Saskatchewan-focused agricultural strategies, the Avenue Living Agricultural Trust and Tract Farmland Partners LP (Tract), have also managed well amid persistent demand for farmland investment from across Canada.  

In its mid-2023 report on farmland values, Farm Credit Canada saw Saskatchewan lead the nation with an average gain of 11.4%. Most locations in the province, the report said, saw increases between 7% and 11%. 

On the ground, Tract identified acquisition targets from word-of-mouth referrals within the farming community, a testament to its reputation as a trusted partner. Coupled with the ability to service increasing rents owing to strong commodity prices, the organization saw a steadily bullish case for its agricultural strategy. 

“It’s a consolidation play that’s still just in its early stages. An estimated 98% of transactions within the province remain outside of investment funds, and we’re continuing to acquire assets,” Millard says. “By the time we close a deal, we’re already seeing impressive appreciation.” 

ESG efforts coming to fruition 

Roughly two years after striking its partnership with the Canada Infrastructure Bank (CIB), Avenue Living is moving forward on a number of energy retrofit projects across its multi-family residential portfolio, including work on large solar arrays, exterior renovations, and mechanical upgrades. 

“A large portion of the acquisitions in our self-storage fund are within the Sun Belt region of the United States. Our portfolio is made up of assets that are wide, not high,” Millard says. “That offers an abundance of roofline where we’re able to implement solar projects.” 

Avenue Living’s agricultural strategy also lends itself well to ESG, given Canada’s outsized role in producing staple grain products. 

“The opportunity to help improve food security for Canadians and other nations is something we’re very proud to be a part of,” he says. 

Avenue Living released its first full ESG report in 2023, with a second one set to come out this year. Beyond that, we’ve bolstered our commitment to responsible investing. In 2021, we became a signatory to the United Nations-supported Principles for Responsible Investment (PRI) and over the last year we furthered our commitment and became members of the Responsible Investment Association (RIA). 

Avenue Living continued its annual Avenue Giving campaign, bringing together donations from residents and staff to support local food banks. We also launched an Employer-Supported Volunteerism program in the last quarter of 2023. In three months, employees volunteered for over 160 hours with 10 organizations including local food banks, Canadian Blood Services, veteran and seniors’ resource centres, community kitchens, and drop-in centres across the Prairies.  

For 2024, a continued stewardship focus 

From the beginning, Avenue Living’s growth has been inextricably tied to its commitment to the customer. Millard says that focus will continue in 2024, along with a focus on ensuring defensibility across the organization.  

“Since 2020, it’s been a volatile period, and 2024 doesn’t appear to be any different,” he says. “As a responsible asset manager, we’re maintaining a leverage profile in the low 50%, and keeping over 10% of our NAV in liquidity to ensure defensibility.” 

Last year, Avenue Living acquired over half a billion dollars in multi-family assets. With a large pipeline of acquisitions, it’s pressing its growth advantage in 2024, allowing improvement of margins by spreading fixed head-office costs over a larger number of units. 

“We don’t grow for the sake of growth, but to improve our overall operations through accretive transactions,” Millard says. “Through technology and operational improvements, our focus is to continually level up our operations for the benefit of our residents, customers, and investors.”  

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://madison4.wpenginepowered.com/forward-looking-statements for additional information regarding forward-looking statements and certain risks associated with them.  

2023 Year in Review

2023 Year in Review

Over the last year, we’ve stayed the course and once again proved we’re equipped to navigate any environment.  
 
We saw a number of formative milestones in 2023, including our largest acquisitions to date in both our multi-family and self-storage funds as well as achieving over $5 billion in assets under management. 
 
Moving forward, our focus is on bringing our proprietary management model to more Canadians and expanding our investment offerings.

Avenue Living’s Most-Read Content for 2023

Most-Read Content for 2023

Examining the economy and markets heading into 2024, we see a landscape dotted with opportunities. We believe our strategy of measured growth, sustainability, and defensibility has put us in a strong position for the next leg of our journey. 

As we reflect on the year, we’re looking back on the blogs and white papers that resonated most with our readers in 2023.  

The topics run the gamut from our partnership-oriented agricultural investment strategy to academic research on key stakeholder segments for our business, to our efforts in leading the charge on sustainable workforce housing. 

At the heart of it all is our commitment to providing value for our residents, investors, and the communities where we’ve put down roots.  

BLOG: 

Harvesting Alpha in Canada’s Agricultural Heartland 

We unpack how the Avenue Living Agricultural Land Trust and its successor strategy, Tract Farmland Partners LP, are set to benefit from long-term tailwinds while prioritizing an active approach and partnership with the community.  

WHITE PAPER: 

An International Examination of Market Orientation and Performance in Residential Property Management 

In this peer-reviewed study, our leaders in the Capital Markets team, Gabriel Millard and Cameron Hills, collaborated with the University of Regina’s Dr. Grant Wilson to examine how a commitment to understanding and serving residents translates into tangible benefits — including loyalty, trust, pride in accommodations, and timely rent payments — for residential property managers. 

BLOG: 

Multi-Family Retrofits: The Case for Going Green 

Following on from our 2022 partnership with the Canada Infrastructure Bank (CIB), this blog outlines the energy-conservation measures (ECMs) we’re planning across our Canadian portfolio of multi-family rental properties. It also uncovers our framework for ensuring the viability and impact of deep energy retrofit projects. 

WHITE PAPER: 

Examining Personal Financial Advisors’ Knowledge, Client Recommendations, and Personal Investments in Private Real Estate and Real Estate Investment Trusts (REITs) 

In another collaborative study published in the Journal of Financial Services Marketing (JFSM), our Chief Investment Officer, Jason Jogia, worked with Dr. Grant Wilson to investigate the under-researched subject of financial advisors’ REIT knowledge and engagement with REITs, including how their personal perceptions influence client recommendations. JFSM is a leading journal in finance and marketing, ranked B on the ABDC list, and recognized by all management and real estate journal quality lists. 

BLOG: 

Revitalizing Canada’s Housing Landscape: The Crucial Role of Retrofits 

As the country manages two major challenges — housing affordability and environmental impact — it’s becoming clear that retrofits to existing buildings are a key part of the solution. This blog looks at how strategic retrofits can help solve Canada’s increasingly critical housing supply challenge. 

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://madison4.wpenginepowered.com/forward-looking-statements for additional information regarding forward-looking statements and certain risks associated with them. 

Investing in Alberta Real Estate | Edmonton

Invest in Edmonton Real Estate

Avenue Living has always believed that the Prairies is a region filled with promise. We were founded here and have strategically invested in Alberta since 2006, and today we own and operate approximately 3,500 multi-family units in Edmonton alone. While others may have looked eastward, or to the coasts, we have kept our eyes firmly on western Canada.

“We’re focused on continuing to build our multi-family residential portfolio in the Prairies,” says Gabe Millard, SVP Capital Markets — Equity & Research. “There’s plenty of opportunity to deliver safe, affordable, comfortable housing to our target demographic, workforce housing residents.” Amid rising interest rates and inflation, Alberta attracts people from other provinces as well as new arrivals to Canada due to its affordable cost of living and strong employment prospects. 

Promising Market Demographics 

Alberta has experienced population growth in the past year, especially inter-provincial migration — in 2023, it led the country, with a rate significantly higher than other provinces. Edmonton’s population is expected to grow from 1.25 million to 1.86 million by 2033, and the city is expected to surpass the two-million mark by 2041. In 2023 alone, the province grew by 3.5%

Many industry experts anticipate the demand for multi-family residential rentals to increase as the population ages, a trend that holds true in many municipalities. The demand for apartment-style housing tends to be high among younger populations just forming households, then rises again as people grow older and seek alternatives to single-family homes. 

Alberta is known for its affordability, and Edmonton has a reputation as an affordable “big city.” In 2022, a benchmarking study ranked Edmonton among the most affordable in the country.

Industry and Employment 

In addition to being an affordable city, Edmonton boasts a high median renter income, 42% higher than the national median thanks to strong employment opportunities. While the province is renowned for its energy sector, an industry that has driven employment for decades, Edmontonians also work in a variety of other industries. The city has a strong technology sector, fueled by its reputation as a leading research and education centre — the University of Alberta is home to the National Institute for Nanotechnology and the Alberta Machine Intelligence Institute. The city is also home to several regional offices of major banks. 

Edmonton’s largest employer is Alberta Health Services (AHS); the government of Alberta is second. The University of Alberta is also a top employer, and one of the country’s leading research institutions. In total, there are six post-secondary institutions in the city, which provide services to 180,000 full and part-time students each year. Other leading employers include manufacturers, engineering firms, and retail — the West Edmonton Mall is the largest shopping centre in North America, and the city is also home to the continent’s largest open-air retail development. 

Edmonton’s location is also a draw for the distribution and logistics sector, it’s home to a major intermodal freight facility, and CN Rail has announced intentions to consolidate operations in Edmonton. 

Culture and Recreation 

Edmonton has a thriving cultural scene. Known for its arts festivals (including the Edmonton Fringe), you’ll find 25 local theatre companies, contemporary dance troupes, and more. The city is also filled with museums and art galleries, including the Royal Alberta Museum and the Alberta Art Gallery.   

The ICE District — the area surrounding the Rogers Place Arena — is home to restaurants, entertainment, retail, hotels, and office space, all in the downtown core. The revitalized, mixed-use district attracts tourists and Edmontonians alike.  

Nearby, the Edmonton River Valley Park attracts visitors on foot or on bike. The park is the largest urban park in North America, and boasts more than 160 km of maintained pathways that connect 20 major parks. People flock to the park year-round to boat or canoe, for picnics, to run, walk, bike, or cross-country ski and skate in the winter months.  

South of the valley is Old Strathcona, a historic district home to retail, farmer’s markets, pop-up art galleries, and restaurants. The neighbourhood is a registered provincial historic area, populated with heritage buildings erected in the early part of the 20th century.  

On the horizon 

Avenue Living is investing in a significant renovation of its Capital Tower building, a 12-storey, 179-unit complex in the city’s downtown core, acting as a gateway to Chinatown. This set of deep retrofits includes an 85-foot art installation by renowned Edmonton artist Lance Cardinal, and this mural will be constructed as a vertical solar array to reduce greenhouse gas emissions. The refurbishment of this building will contribute to the growing community in this district, which is on the upswing.  

That sense of community is something we strive to foster in all our properties — and we see plenty of opportunities for growth across the city. 

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://madison4.wpenginepowered.com/forward-looking-statements for additional information regarding forward-looking statements and certain risks associated with them. 

Avenue Living Buys Calgary’s The Pinnacle Apartments for $58M

The Pinnacle Calgary

Avenue Living’s acquisition of The Pinnacle apartments represents the largest single suburban apartment transaction in Calgary in 2023. This deal was one in a series of strategic acquisitions in Alberta to expand our multi-family portfolio, now totalling over 16,000 units.

We have long recognized the Alberta advantage and positive economic factors including positive net migration, job creation, and an increasingly diverse economy.

Read More

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://madison4.wpenginepowered.com/forward-looking-statements for additional information regarding forward-looking statements and certain risks associated with them. 

Avenue Living: Creating Defensibility and Stability for Alternative Investors

Alternative Investments

Alternative investments are experiencing a surge in interest from advisors and investors seeking ways to drive returns.

With a focus on hard assets, Avenue Living has consistently delivered stable returns over the past decade — a trajectory that we anticipate will continue due to strong market fundamentals including population growth and limited supply.

Hear from our SVP of Capital Markets, Gabriel Millard and Head of Sales, Alex Steele, about how our vertically integrated management platform and solid financial partnerships set us apart, making Avenue Living a defensible choice for alternative investors.

Read More

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://madison4.wpenginepowered.com/forward-looking-statements for additional information regarding forward-looking statements and certain risks associated with them.