Altyn Equities 2022 February Update

February 7, 2022

Greeting investors, and thank you for your patience as I realize it has been 15 months since I last sent out an update. A lot has happened in the past year and I am very pleased to say our patience in Prairie Multifamily Investment has turned a corner and things are moving up fast.

This week we have renovated and rented 5 units for almost $150 more than anticipated in the dead of winter in our newest acquisition in Leduc Alberta.  We are targeting more buildings this year as in migration to Alberta and Saskatchewan begin to pick up steam.  Investors in Ontario have already begun to enter the prairie markets as they get priced out of deals that make sense there, and are seeking better opportunities and yield in the west, and much better business environment with no rental controls. COVID was ugly, but it appears the worst is over with Saskatchewan being the first province to announce the removal of all restrictions on February 28th 2022.

The stock market and domestic housing market remain at record high levels, and although bond yields have risen making fixed rate mortgages more expensive, the bank of Canada has kept rates at the emergency low level of 0.25%.  This combined with very low listings across Canada, housing prices have skyrocketed more than 30% year over year in some markets.  There is much discussion on what will happen to housing in 2022 and beyond.

The Saskatoon rental market has less than 2% vacancy in the portfolio managed by the PM company I use.  This is a dramatic shift from the 20% vacancy we experienced in 2017, and explains why rents are rising quickly.  Edmonton is behind, with 10% vacancy city wide but that gap is starting to close as well.  Satellite areas like Leduc are experiencing very high demand for rentals and low vacancy as well.  I fully expect jobs to pick up as well as in migration from other provinces and new immigration that will make rental housing even tighter.

In the past year we have sold one building and bought another.  Adam apartments in Leduc was purchased in November of 2021 for $86,000 a unit.  This is a value-add project that we expect to yield a value of $125,000 a unit or better in the spring of 2022 when we go to refinance.

Our success is based on a proven methodology of smart acquisitions, value add improvements, stellar management, and eventual selling of our product into a stable and growing market.  I have used this method quite successfully for over two decades, however had not been faced with an economic downturn that lasted in excess of 8 years.  We survived and are coming out stronger than ever and look forward to picking up more assets in the coming years.

The next few pages are a more detailed update and analysis of individual projects. Thank you for following our struggles and successes and wish everyone successful investing in 2022 and beyond!

Adam Apartments – 4520 47th Street Leduc

Purchased Nov 2021              $1,462,000

Cash invested                          $550,000

Rent Roll Purchase                  $10,925

Rent Roll Feb 2022      $16,735 (+53%)

CMHC Lending Value (Spring 2022)  $2,200,000 – Possibly refinance 5-year term (2027).

Key Highlights

  • Very solid value add project in Leduc, Alberta (1.7% City Vacancy CMHC).
  • Building was 25% vacant at purchase. Fully leased in less than 60 days!
  • Targeted rents $1050 for a 2 Bedroom, actually getting $1175.
  • The plan is to place a CMHC and repatriate ALL of our equity (550K).
  • The building is newer for apartment standards, and all units are above grade. We have modified the 2-bedroom units to make them larger, cut out the kitchen wall, and add dishwashers and this has enabled us to get the higher rents.
  • Complete renovations to the common areas as well. Shows very nice.

 

Mansard Terrace Apartments – 710 8th Street East, Saskatoon SK (14 suites)

Purchased 2017                      $1,470,000

Cash invested                          $630,000

Rent Roll Oct 2020                  $13,750

Rent Roll Feb 2022                 $14,100 (+2.5%)

CMHC Lending Value (Feb 2022)      $1,750,000

Key Highlights since Fall 2020

  • Rent increases handed out December 2021 – 3rd time in 2 years.
  • Estimated Value February 2022 based on rents $1,750,000.
  • Mostly likely will sell for targeted ROI in October of 2024. (Will be a vote). 7-year hold.

Marsin Apartments – 2440 Louise Street, Saskatoon SK (12 suites) – SOLD

Purchased 2016                      $1,200,000

Cash invested                          $420,000

Rent Roll October 2020          $11,920

Rent Roll at Sale                     $12,125

Sold for            $1,476,000 – November 1st 2021

Key Highlights of venture

  • Exact 5-year hold. For the building, sold for 23% higher than purchase price.
  • The building was very easy to manage, even through higher vacancy periods (2017).
  • STILL able to deliver substantial ROI – even in down years (2016 to 2021).

Chaben Place – 3609 Chaben Place , Saskatoon, SK (24 suites)

Purchased 2016                      $2,710,000

Cash invested                          $840,000

Rent Roll October 2020          $22,770

Rent Roll February 2022        $23,685 (+4%)

Refinanced with CMHC March 2021 – Approx. Value $3,000,000

Key Highlights since Fall 2019

  • Rent increases handed out December 2021 – 3rd time in 2 years.
  • Estimated Value February 2022 based on rents $3,00,000.
  • Completed major landscaping in 2021 – Shows very well, completely turned around.

 

Beaumont Place – 4902 50th Ave, Beaumont AB – 3 story concrete mixed res/commercial

Purchased 2014                      $2,900,000

Cash invested                          $900,000

Rent Roll October 2020           $26,229

Rent Roll February 2022         $30,807 (17.5%)

Anticipated Value                    $5,000,000

Key Highlights since Fall 2019

  • Major recovery to 0% vacancy from 32% commercial vacancy back in fall of 2021.
  • Due to rapidly rising rents in Leduc, we have started to hand out rent increases (Feb).
  • Mortgage is due in December of 2022 – Will decide soon on sale vs. renewal of mortgage.

Final Thoughts

2021 was a recovery year.  As we head into 2022 it appears that the pandemic is subsiding, and things are slowly returning to normal.  I anticipate a surge in rental demand once the provinces open up to immigration, which I expect accelerate in the summer and fall.  It is our goal to pick up as many assets in Alberta and Saskatchewan as we possibly can.

Things are turning around fast, and battle worn investors who have survived the past 7 years are well suited to recover rents and values lost.  New investors are in an ideal situation to take advantage of a market on the cusp of another major boom.

We are living in truly exciting times and there has never been a better time to be alive!

Cory Sperle, February 7th 2022