2023 Mid-Year Review: Laying the Foundation for Stability and Growth 

2023 Avenue Living Review

As our leadership team reflects on the first half of 2023, the theme is one of sustainability and continued growth for Avenue Living. As we progress throughout the year, we’re poised to reach new milestones given the strong foundation we have spent the last few years cultivating. Each of our funds has access to a robust vertically integrated platform with talented experts in finance, legal, marketing, technology, accounting, HR, and customer service to support their operations. As we grow, that platform scales with our different businesses, allowing us to maximize efficiency across the organization.  

Multi-Family 

This year, our Core Trust has sustained its steady growth trajectory, as the groundwork from previous years allowed us to find upside in constrained markets. Our approach as an active property manager, and the platform we have built to support our operations, has helped us deliver superior resident experiences and manage our assets while mitigating rising costs.  

“We remain focused on our defensibility and advancing our business for the rest of 2023,” says Avenue Living Founder and CEO, Anthony Giuffre. “We continue to be bullish on the Prairies given its population growth and affordability when compared to other markets.” Our multi-family acquisition pipeline includes over 3,000 units in the region which have the potential to close in the latter half of 2023 or early 2024, which could bring our portfolio to over 18,000 units.

“Our investments in people and technology have created the basis for us to support new acquisitions across our asset base without increasing management costs,” says Jason Jogia, CIO of Avenue Living. “This ability to scale, coupled with our ability to borrow strategically while taking advantage of the inverted yield curve, allows us to minimize our costs while investing in our assets and delivering a superior resident experience.”  

Sustainability remains a key cornerstone of our business, as we invest in capital improvements and strategically plan our projects to reduce greenhouse gas emissions across our portfolio. These projects — many of which will launch in the second half of 2023 and progress over the next four years as part of our landmark partnership with the Canada Infrastructure Bank — will improve the energy consumption of approximately 240 buildings and enhance comfort for around 10,000 Avenue Living Communities residents.  

Self-Storage 

Mini Mall’s focus on operational efficiency at the beginning of 2023 has been key to its growth. This approach has allowed the front-line customer service team to deliver a consistent experience at every location, bringing new acquisitions to the MMSP standard.  

“With over 100 stores coming online last year, we wanted to stabilize our operations and quickly produce consistent performance and results on these assets,” says MMSP CEO, Adam Villard. Mini Mall delivered on that by adding operational expertise to the executive team and focusing on efficiency, resulting in close rates increasing by 48% and delinquencies decreasing by 84% between January to June.  

“We’ve really been focused on ‘the three C’s’,” says Villard, “closing, cleaning, and collecting.” By putting strategic practices in place to help close leads, bringing facilities up to the Mini Mall standard for aesthetics and cleanliness, and lowering delinquencies, site managers and staff can concentrate on creating a seamless customer experience across the organization.  

Mini Mall also implemented new marketing and customer service strategies to refine its lead generation process, which doubled results between the end of March to the end of June. “Those efforts are really what’s driving our business right now,” says Villard. 

Going forward, Villard sees Mini Mall maintaining strong occupancy throughout the winter to balance the seasonal fluctuations the industry is known for, and continuing to drive targeted programs to build on revenue and occupancy numbers.  

Farmland 

2023 has been a notable year for our farmland investments as we developed and launched Tract Farmland Partners – building on the success of our Avenue Living Agricultural Land Trust. Interest in farmland as an investment gained traction during the pandemic and it shows no signs of slowing. In its first six months, Tract now holds 3,560 acres of arable land.  

CEO of Tract Farmland Partners and Agricultural Land Trust, Leif Snethun, credits the recent world events for the uptick in people’s interest in food supply, noting that the launch of the Agricultural Land Trust in 2017 was slower to get underway than Tract has been. There has always been interest in farmland, but since 2020 it has become more widespread among investors.  

“The farmland industry has always been a wonderful space to be in,” says Snethun. He sees Tract adding more assets to its portfolio for the remainder of 2023. “I’m eager to see the momentum build as people remain interested in the agricultural sector and want to know where their food comes from.” 

Our Path Forward  

The first half of 2023 has been significant for our investment vehicles, as we fostered our ground-breaking partnerships, launched new projects, and saw growing investor interest in our asset classes. Our active management model and platform of services — coupled with careful planning and analysis — will allow us to capitalize on a breadth of opportunities. We’re excited to continue driving our business forward and deliver a competitive advantage in these unique economic times.  

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

What Investors Need to Know About Borrowing Amid Rising Interest Rates  

Borrowing Amid Rising Interest Rates

The past year has been punctuated with announcements of rising interest rates, as the Bank of Canada (BOC) redoubled their efforts to combat inflation with successive rate hikes. The latest, in July, brought the overnight rate up by 25 basis points to 5%, its highest since early 2001. Changes in interest-rate policy can have wide-ranging effects throughout the economy, and for real estate investors, it’s vital to interpret the different outcomes between long-term and short-term rates. Understanding the inversion of the yield curve — where long-term interest rates are lower than short-term rates — can help well-prepared property owners mitigate risk. 

Understanding the Yield Curve 

Figure 1 

During the period of rising interest rates, there has been a notable difference between prime-based borrowing rates and bond-based borrowing rates in Canada. While the prime rate has experienced significant increases (from 2.7% in March of 2022 to 6.95% in June of 2023), the Canadian 10-year bond rate has remained relatively stable over the same period. Whereas retail borrowing is often based on prime, commercial borrowing is traditionally based on long-term government bonds. Therefore, well-managed commercial borrowers will generally be less impacted — as compared to retail borrowers — by the recent rise in interest rates. One of the many upsides to indirect real estate investment through entities such as REITs is that investors are able to benefit from the relationships and knowledge of a team of experts. By indirectly investing in real estate, everyday investors can take advantage of bond-based borrowing rates through a strategic asset manager, without becoming a commercial borrower themselves. 

With the Canada Mortgage and Housing Corporation (CMHC) setting lending rates at a spread over the 10-year bond, those who have access to bond-based borrowing for long-term decisions have been in a more favourable position since the beginning of 2022. A visual representation of these trends can be observed in Figure 1. 

Figure 2 

As per Figure 2, during an inverted yield curve, where long-term interest rates are lower than short-term rates, long-term borrowing becomes cheaper than short-term borrowing. By securing financing at lower rates, long-term borrowers benefit from stability and predictability in their interest costs over an extended period. Conversely, short-term borrowers and those with variable rates may experience heightened volatility and financial strain as their borrowing costs increase in response to rising short-term interest rates. The inversion of the yield curve emphasizes how important it is for borrowers to consider duration and structure when interest rates are rising. 

Rental property owners facing rising interest rates can take advantage of the differences in duration between short-term leases and long-term debt. Using long-term debt instruments, such as a 10-year mortgage, alongside shorter lease terms, allows property owners to adjust to changing market conditions in real-time, counterbalancing the impact of higher borrowing costs. However, property owners should also consider market conditions and the resident experience before implementing this strategy. 

Interest Rates and Homeownership 

Rising interest rates — and the resulting increased cost of short-term borrowing — can have a negative impact on development projects, lowering construction activity and limiting the supply of housing units. With fewer developments, the cost of housing increases, leading to higher rents and housing prices. Scarcity of supply and increased borrowing costs compel developers to set higher prices for their projects, ultimately affecting affordability. 

A survey conducted by Chartered Professional Accountants Canada identified several barriers to homeownership among non-homeowners in the country. Rising interest rates were cited as the top obstacle by 89% of respondents, followed closely by the affordability of down payments (84%), necessary renovations (83%), and finding a home in a desired area (83%). Other challenges included taxes and mortgage payments (81% each) and income instability (69%).  

Existing homeowners also faced hurdles, with renovation costs affecting three out of five individuals, ongoing difficulties in affording home maintenance (46%), and challenges with mortgage payments, property taxes, and utility payments for varying percentages of respondents. These findings shed light on the financial obstacles Canadians encounter in their quest for homeownership, as well as the ongoing strains faced by prospective and existing homeowners. 

Navigating the Landscape 

Canada’s rising interest rates present distinct challenges for many sectors of the economy — but they also give rise to opportunities. It’s essential for borrowers to understand the benefits and drawbacks of short- and long-term interest rates and formulate their debt strategy accordingly. For property owners, understanding the interest-rate landscape, managing duration, and responding to local market conditions can help minimize borrowing costs and optimize revenue.  

Understanding how an asset manager uses different debt vehicles to mitigate risk and reduce borrowing costs allows investors to make informed decisions. Asset managers like Avenue Living, for example, can make strategic use of short- and long-term borrowing to potentially maximize returns and de-risk their portfolios. Considering an asset manager’s borrowing strategy — along with other factors — can help investors find the vehicle that’s right for them. 

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

High-Tech Meets High-Touch: How training shapes the customer experience 

Self-Storage Management

When Mini Mall Storage Trust was established in February 2020, creating a unique customer experience was top of mind. The self-storage industry is fragmented, and with that fragmentation often comes varying levels of service. Mini Mall knew they could set a new standard for the industry and worked to define a consistent customer experience online, over the phone, and in person. 

Over the last three years, Mini Mall has seen significant growth with operations throughout seven provinces, 15 states, and over six million square feet of storage space. With each new facility or market, the company has recreated its seamless experience by taking an omnichannel approach with comprehensive training and technology. 

Hubs and Spokes 

Mini Mall operates on a hub-and-spoke model, which means that in every market, its facilities are no farther than a half-hour drive from a management centre. Even with self-serve, unmanned facilities, customers who want an in-person interaction can request someone to be on-site quickly.  

This mix of in-person and digital operations is possible thanks to state-of-the-art technology that enhances security and automates administrative tasks, allowing customers to find the right unit, get a quote, sign a lease, and move in through the website or call centre. Facility staff are there to offer support if there are questions or challenges — or if the customer just prefers to interact face-to-face. And in those situations, staff have easy access to information and guidelines about a range of scenarios.   

“Our goal is for any one of our Mini Mall representatives to be able to access the information they need within three clicks,” says Tadek Sampson, Director, Operational Training. “We want to make things easier for our staff because when we have a happy team, they’re able to make sure we have happy customers.” 

People Skills are Key 

For Mini Mall, adopting innovative technology is only part of the story. While customer relationship management software, security systems, and interactive apps have transformed the self-storage landscape in recent years, people skills are still a vital piece of the customer experience. Onsite managers must be both tech- and people-savvy to ensure they can develop customer relationships and effectively solve problems. The automated, online experience must match seamlessly with the in-store, in-person experience — and that requires training. 

Onsite managers have traditionally been responsible for bringing new staff up to speed, but with such significant growth the company saw the need for a standardized program to help managers and their staff quickly understand policies and procedures. The MMSP training program is designed to support customer service employees across both in-person interactions and technical software. It also takes into consideration frequently asked questions and most-often-encountered scenarios.   

“We learned pretty quickly that our best resources were the people working on the front lines, with our customers,” says Tadek. “In some cases, these people have worked at a location for years — decades, even — and they truly know their customers.” 

Tracking Outcomes 

There are many factors at play when measuring the effects of training. Mini Mall reviews how employees are performing in training modules so they can optimize the program to best fit the team’s needs while simultaneously bolstering customer satisfaction levels. The training team assesses staff during their first 30 days, and again during ongoing refresher training. The goal for 2022 was to bring the average score of 76% during onboarding to an average of 85% in refresher training. Today, the current scores exceed that goal, tracking well above 90% for staff in service and sales refresher training. 

As the company has progressed, the team has also found ways for employees to share their experience and insights. Top performers are invited to join the panel in a bimonthly webinar, where they can share stories of their successes, their learnings, and their best practices. “We’ve found that by giving employees a platform to lead their peers, we get better adoption from the field than if managers or trainers share that information,” says Tadek.  

Continuing to Evolve 

As technology advances and customer demands continue to change, the self-storage industry will continue to evolve, and Mini Mall will adapt to meet those needs. Innovations in technology may mean some of the heavy lifting becomes automated, but there is always a need for personal interactions, in every demographic. Mini Mall plans to continue to support managers and its team of storage concierge specialists with training programs, tools, and knowledge sharing to ensure everyone has the skills to navigate a high-tech environment and provide an industry-leading high-touch experience.  

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

Mini Mall Storage Welcomes Two Leadership Team Members

Dallas, TX and Calgary, AB, February 2, 2023 

In the midst of significant and strategic growth across North America, Mini Mall Storage Properties (MMSP) is focused on delivering operational efficiency and superior customer experience at every location. With that in mind, the company is announcing the addition of two new members this week: Joe Colavecchia is joining as SVP, Operations, and Lee-Ann Emment as SVP, Business Operations. Both leaders bring a wealth of experience working for major brands in their respective functions, and their contributions will help guide the strategic growth as MMSP embarks on a promising 2023.  

Joe Colavecchia has decades of experience in operations and leadership, having built roadmaps to drive efficiency for major automotive rental and mattress companies. He actively invests in people through training and mentorship to deliver superior customer service — which is already a tenet within the Mini Mall strategy. Colavecchia is looking forward to helping MMSP develop operational plans, training, and procedures to support field teams and create a consistent customer experience. “Mini Mall’s solid foundation and aggressive expansion excites me,” says Colavecchia. “The hub-and-spoke model and state-of-the-art technology set Mini Mall apart, and I’m looking forward to being part of building the company’s future growth.” 

Lee-Ann Emment brings 30 years of experience in business operations and has held various leadership roles for major companies in retail and financial services. Emment’s background in project management, operations, and corporate strategy will be instrumental in helping Mini Mall improve its in-house processes and ensure smooth operation across different business functions. “The consumer goods and services industry is constantly evolving and businesses are affected by different economic situations and external drivers,” says Emment. “As a company, you need to adapt to meet customer needs and I’m eager to enhance the tools and insights at Mini Mall.”  

“We continue to refine our operations and focus on our customers as we gear up for another exciting year,” says Adam Villard, Chief Executive Officer of Mini Mall Storage Properties. “We’re fortunate to have Joe and Lee-Ann join us to evolve our teams and advance our business practices. I’m confident their leadership skills and multifaceted experience will add tremendous value as we work to deliver industry-leading self-storage to secondary and tertiary markets across North America.” 

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

This Year’s Most-Read: Our Top Content in 2022

We’ve gathered the blog posts, articles, and white papers that garnered the most interest from our readers last year. They cover a diverse range of topics, from our partnership with the Canada Infrastructure Bank to the complexities of the private rental housing market, but they all come back to one thing: understanding the real estate investment landscape. As investors seek opportunity in a changing market, it’s important to explore and analyze the fundamentals that impact our industry to refine our strategy and provide value for our residents, our investors, and the communities in which we operate.

PRESS RELEASE:  

CIB COMMITS $120 MILLION TO AVENUE LIVING — THE FIRST REIT ADDRESSING MULTI-FAMILY RESIDENTIAL RETROFITS AT SCALE

This announcement is the next step in our commitment to ESG — one we officially started when we began a relationship with PRI (Principles for Responsible Investing). Our partnership with Canada Infrastructure Bank will allow us to undertake capital improvements that reduce our carbon footprint and provide comfortable homes for our residents, without compromising affordability.

WHITE PAPER:  

RE-EXAMINING A HEDGE AGAINST INFLATION: Multi-family Residential Real Estate 

This paper examines the effects inflation and rising interest rates have on affordability, and how investors may find opportunities in multi-family real estate. 

PEER-REVIEWED WHITE PAPER: 

PRIVATE RENTAL TARGET MARKETS: A COMPREHENSIVE SPECTRUM 

Our founder and CEO, Anthony Giuffre, collaborated with the University of Regina’s Dr. Grant Wilson on this examination of the North American rental housing market, identifying the lifestyles, demographics, and value propositions that make up six major groups in the housing spectrum. The peer-reviewed paper was published in the International Real Estate Review in April 2022. 

WHITE PAPER: 

DIVERSIFICATION WITH AND WITHIN REAL ESTATE  

This white paper explores how diversification in real estate portfolios — across asset types and markets — can enhance value for investors, helping them minimize risk and maximize the potential for returns. 

BLOG:  

WHY WE SEE OPPORTUNITY IN THE WORKFORCE HOUSING MARKET 

We examined factors that make the workforce housing market an attractive investment opportunity and  why it’s the focus of our multi-family strategy.  

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

Avenue Living’s 2022 Year in Review

In 2022, Avenue Living grew in more ways than one. In addition to expanding our footprint and operations with new offices in Toronto and Dallas, we improved our customer satisfaction through active management, invested in technology, and elevated our ESG efforts. We’re also entering our third year as signatories for PRI and since signing on, we have partnered with the CIB to sustainably retrofit nearly half of our multi-family portfolio. In 2023, we look forward to commencing phase one of the project and making a positive impact.