Multi-Family Real Estate Investing in Tumultuous Times
With unprecedented market uncertainty due to coronavirus disease (COVID-19) and the drop in oil prices, many investors are seeking stability.
Avenue Living Asset Management, owner and operator of nearly 10,000 multi-family suites across the Prairies, has weathered two financial downturns since the company was founded in 2006: the 2008 financial crisis and the regionalized recession in Alberta and Saskatchewan that began in 2015.
“Having spent half of our business in tough economic conditions, we have learned a few things about the multi-family industry during a crisis,” says Jason Jogia, Chief Investment Officer, Avenue Living Asset Management.
“B and C class multi-family assets tend to perform well during tough economic conditions,” says Jogia. “Uncertainty keeps individuals in the rental market longer, rather than making a large capital decision like purchasing a home. There is an increase in buying opportunities. Individual ownership of real estate assets can be a difficult business and many people prefer to have the safety of cash during tough economic conditions. Avenue Living provides a strategic disposition strategy for these individuals seeking safety.”
Jogia claims that while he does not want to downplay the challenging times ahead, he wants to stress the importance of a long-term outlook.
“During tumultuous times, it is more important than ever to take a step back and assess the situation through a wide lens,” says Jogia.
Because Avenue Living is not publicly traded, volatility in public markets does not correlate to adjustments to the company’s Net Asset Value (NAV). Avenue Living was founded on the guiding principle of long-term capital accumulation by providing institutional quality management to a large base of residents.
“These principles remain true during both boom and bust cycles, ensuring we stay the course for consistent, sustainable growth,” says Jogia.
Recently the Canadian Government has stepped in to announce that they will providing aid those most likely to be affected by COVID-19.
“The recent fiscal stimulus package announced this week by the Federal and Provincial government provides support for essential workers in our communities, which are the cornerstone of our resident population,” says Jogia. “We are adjusting our operations to respond to any long-term economic effects of the crisis, which will not only help the immediate situation, but is expected to provide accretive results in the long run.”
During these volatile times, Avenue Living has been extremely proactive communicating each day with its residents, ensuring they feel secure and are looked after. The company has been at the forefront of technology, offering electronic leasing for over a year. In light of the current social distancing guidelines, it has recently expanded this service to include an electronic renewal processes and have increased electronic rent payment options as well as the ability to pay rent weekly matching Government aid.
The below are some additional steps the company has proactively put into motion in order to help alleviate pain points its current residents may be facing, in addition to an update on how Avenue Living is working to navigate this unprecedented time of market uncertainty:
Retention: The organization’s retention rate is at an all-time high, with numbers of daily renewals doubling and, in some cases, tripling during this current uncertainty. It is on track to hit a record-breaking renewal rate for April 1 and May 1, having renewed just about 100 leases between Monday and Wednesday, just this week.
New leases: Avenue Living’s leasing activity is strong. The company signed 40 new leases between Monday and Wednesday, just this week, with expected immediate move-in dates. Today, Thursday March 19th, the company had over 50 showings.
Newly renovated suites: The firm is pushing 500 newly renovated units into the market at a discount to help those affected. This represents around 5 per cent of the company’s portfolio which is believed to be enough to make a difference in the community without having an adverse effect on the company’s revenue goals as an organization.
Virtual viewings: Avenue Living has accommodated residents by making online renewals available, in addition to offering prospects the ability to complete facetime viewings for available apartments for rent and virtual tours on the Avenue Living Communities website.
Flexible payment options: The company has implemented flexible payment options through electronic fund transfer, email transfer, credit cards by phone, mail in cheques and online bank payments. Residents with upcoming renewals have received text messages to renew expiring leases, in addition to the continued communications from Leasing Specialists.
Weekly payment plans: The organization is now offering all residents the ability to determine flexibility with regards to paying rent, offering weekly options to match their current financial situation.
Various payment methods: Avenue Living is working on new additional options for non-contact payment methods, including a new app to take credit card details over the phone and an online portal for credit card payments.
ALC Community Task Force: Avenue Living has established a community task force to help those in need, including assistance with grocery shopping and dog walking.
Prairie Relief Team: a dedicated resource at this time of uncertainty to monitor residents’ current situation. Residents can email (Prairieemail@example.com) or call the help line (1-855-247-1492 ext 5).
The company continues to monitor this rapidly evolving situation and will adapt its processes in accordance with the latest health guidelines. In an effort to remain open lines of communication, Avenue Living has also set up an investor relations inbox at IR-COVIDfirstname.lastname@example.org, should anyone have any questions or concerns.