Altyn Equities – Summer 2022 Update – Inflation rocks!
August 3rd, 2022
Greetings Investors, with all of the media about the housing market (good and bad) I wanted to provide a short update on how the current environment is affecting out existing holdings, and our prospects for more deals. In a few words, things have never been better on the holding and acquisition fronts! Here is a brief update on our projects.
New Business – Latest Acquisition July 2022 Fort Saskatchewan
With inflation dominating the headlines, why not buy another apartment building? Borrowing rates for CMHC have jumped from about 2% in January to over 4% in about 6 months. This has had a dramatic effect on building owners (and potential owners). If you are buying or refinancing, chances are there is a ceiling being placed on your loan and you won’t be getting terms nearly as juicy as they were only a short while ago. Nonetheless, I have snagged a legacy asset in this 18 suite apartment building in Fort Saskatchewan in premium condition. The upside is off the charts and I anticipate a full equity takeout in less than a year, even with rates where they currently are. I will be seeking partners for this deal so if you are interested please let me know.
Leduc – 17 Suiter
We successfully completed the BRRRR (value add) on Leduc and brought the rent roll from about $10,000 per month to almost $18,000. We bought the asset for $1,462,000 ($86,000/unit) in November of 2021 and we appraised for $2,160,000 last month. Although we did not get our 18th bachelor suite addition approved (yet), we were still able to repatriate all of our equity from this deal in only 8 months! The rental market is VERY strong, and we were able to achieve much higher than forecasted rents, and will likely raise rents again in 2023. I’m hoping to do the same with the Fort Saskatchewan deal above. For more info on this project you can check the video on Instagram HERE.
Beaumont Place – Beaumont Alberta
Back in May I also toured my 6 Pillars of Multifamily Students through Leduc and Beaumont Place, our flagship building which is a 3 stories and concrete, with 14 townhouse style apartments and 8 commercial units. After some very difficult years in Alberta for landlords (2015 to 2021), the worst appears to be over and we have once again begun implementing rent increases, and also reduced our incentives. The mortgage on this project is up in December of this year, and I am still undecided on whether to sell, or renew and hang on for another couple of years.
By far the best news of all is the performance of our projects in Saskatoon. We sold Marsin Apartments, our 12 suiter in southeast Saskatoon in November of 2021 for $123,000/unit, providing a very decent yield to our investors in 5 years. I also believe that we are at the beginning of a massive bull run on rents (and values) for multifamily on the prairies due to a large influx of in migration especially from the resumption of immigration and we are now experiencing 0% vacancy in our portfolio and have raised rents substantially in 2022. I predict that rents and values will be significantly higher than today in the next few years as more people are choosing to rent due to the increased cost of getting into housing. There was a very large flood in Saskatoon back in June, but luckily our buildings were not affected.
I strongly feel that today is the best time I have ever seen in 22 years to buy a multifamily building. Prices are still decent on the prairies, rents are rising quickly and are anticipated to rise faster than inflation in the coming years. Saskatchewan has many projects on the books, new projects including the new Jansen potash mine outside of Saskatoon, which will be the single largest economic investment in Saskatchewan history. Red leaf pulp (Regina), Cargill, Viterra, Ceres, Covenant Energy, NexGen Energy, as well as the Prince Albert pulp mill which will re-open in the fall of 2023, are a signal that Saskatchewan is open for business and we have a busy few years ahead of us.
In Alberta things are looking good as well, especially for the energy sector and areas in close proximity to Edmonton like Fort Saskatchewan. I will be providing some economic updates on Saskatchewan and Alberta in the coming months. I love feedback, and I hope to hear from you soon!