Watch: Investing in Canada’s Multi-Residential Real Estate
Transcript
[00:00:06] Ray Punn:
I’d like to welcome everyone that’s joined today. I’m Ray Punn, Vice President of Skyline Wealth Management. Joining me today is Matt Organ. He’s the President of the Skyline Apartment Fund. Matt, thanks for joining me today.
[00:00:17] Matthew Organ:
Good afternoon, Ray, and good afternoon to everyone joining.
[00:00:20] Ray Punn:
Matt, let’s talk housing and supply. There’s a systemic issue that gets talked about as much as Canadians talk about the weather. There’s various reports and studies that shed light on the growing gap with housing supply and affordability.
Canada’s forecasted to lead G7 countries over the next five years across major economic indicators: GDP, employment, and population growth. So, the influx of population coupled with the supply issues has created a generation of problems for Canadians and immigrants that grapple with saving up for a down payment for a home.
Further, having to qualify for a mortgage at stress test rates that are north of 9%, and then finally entering the real estate market where the value of the real estate is multiples over employment earnings, has added to the stress of general home ownership.
So, there’s various factors that we look at. Many look at all three levels of government, with immigration policy, monetary policy, housing and land development pitfalls, and the red tape that comes with that. In short, enough change isn’t taking place quick enough.
Matt, let’s talk about the value of purpose-built rentals and how they’re helping address and support the supply of housing in Canada. What’s your take on this?
[00:01:45] Matthew Organ:
Yeah, I think you hit the nail on the head, Ray. You know, it’s really come down to an affordability issue at this point.
During the pandemic, obviously, housing starts were high. Housing starts peaked in about 2021. And a lot of supply at that point was single-family homes.
So, when you look back, according to the CMHC [Canada Mortgage & Housing Corporation] stats right now, the single-family home starts have decreased back to 2019 levels. Where in fact, you know, apartments, on the other hand, they’ve continued to steadily rise.
So, we’re still getting apartment starts, but obviously in that single-family home market, which is the most expensive segment of the market. So, it’s not surprising, obviously, given where interest rates are, and coming out of the pandemic, obviously, the Bank of Canada raising interest rates to curb inflation, but it’s really stifled that single-family home market. And obviously, you know, same thing with semi-detached and different classifications of that segment.
But the apartments have continued on, and with strength, obviously. We’re not gaining a lot of starts, but we haven’t lost any at the same time. And it makes sense. They’re simply the most affordable form of housing right now. And, you know, things are still under construction, but it’s a delicate balance. It’s, you know – the starts likely could have increased further beyond where they are right now.
The government has done a couple of things with the elimination of the HST right now, to try to spur multi-res [multi-residential] development, which that took place last September. So, again, a fairly new initiative. It was basically designed for construction starts; I believe September 14th was the date. So, you know, obviously developing multi-residential real estate, I mean, it’s generally, you know, 12, 24, 36, 48 months sometimes, depending on the municipality and the planning stages. So, you know, even with HST removal and a few changes to Bill 23, it’s going to take a long time for those things to really grow roots and start getting that expansion happening.
[00:03:56] Ray Punn:
So, Matt, let’s talk a little bit about the topic of value creation, specifically in the multi-res asset class, and Skyline Apartment REIT [Real Estate Investment Trust], which you’re the head of, is dominant in secondary and, we say sometimes, tertiary markets. Can you provide some insight on why this direction was taken for the Fund?
[00:04:18] Matthew Organ:
Yeah, I can. I mean, the Founders were all small-town guys, so I think that’s really how it started, right? It started with their student rental days back in Guelph, and then looking to branch into the apartment market, and again, sort of looking in through the communities at which they were familiar with, starting with Guelph and then branching out in some of the smaller towns and cities.
So, we’ve continued that path. I’ve been with the company since 2006, since the inception of the REIT. And, you know, we’ve always had a focus on secondary and tertiary markets, and, you know, for the most part, it’s proven very, very well.
I’ll give you a small example of that. I mean, through COVID times, you know, people that were, you know, Toronto-centric, Vancouver-centric, etc., they were paying high rents. And a lot of them, when they didn’t need to be there anymore, a lot of those people then either let their – if they were month-to-month, they let the rental go. They moved out of the city. And a lot of people migrated to some of the smaller centres.
And I say smaller centres; it could be Guelph, Kitchener-Waterloo, London. You’re still in, you know, centres 150,000 to 400,000 or 500,000 people. But, you know, they’re not considered the primary markets. You know, and for us, it’s been very good, obviously, from a corporate perspective, when you’re buying in those markets, you’re going to get a higher return.
It’s just simply not as competitive. You’re not competing with every pension funds and different things. [They] aren’t necessarily looking at all the markets that we’re in. But they’re very stable markets, right? They’re generally markets with, you know, again, go back to the sort of “junior hockey team” approach, etc. A lot of them have hospitals there.
You know, again, and that would be some of the smaller markets I’m talking about that were in sort of the Port Elgin and Owen Sounds of the world, etc. But they’re also growing markets, right? These are desirable areas for a lot of retirees. So, you know, continuing forward on the path that we’re at, where in the last five years, we’ve branched out into a lot of developments in those smaller markets.
The speed of development happens a lot quicker. Obviously, time is money. And you talk to developers that are Vancouver-centric, Toronto-centric, and when they’re talking about acquiring a piece of land and taking 4 or 5 years, sometimes to get a shovel in the ground because of the municipal red tape, you’ve got a lot of money tied up for a long period of time. So, again, to try to, you know, produce a good return for our investors, the faster we can get a shovel in the ground, the faster we can get something built.
You know, it becomes a cash flowing asset. So, a lot of these smaller centers are very good for that. And they move at a very high rate because they’ve got, you know, smaller councils to deal with, etc. And a lot of them want the development. And these smaller centers are also very attractive to a lot of the retirees. So, again, for us, if that’s part of our target market strategy in those smaller centers, it’s just something that we’ve stuck to and it’s something that’s worked well to this point.
[00:07:25] Ray Punn:
So, Matt, let’s go deeper on Skyline Apartment REIT. You know, we speak to this quite often. The REIT is the staple fund of Skyline Group of Companies, and it’s been around, as you just mentioned, for over 20 years. Matt, in the multi-res space, there’s a lot of people doing what we do, more so in the public space, and a little bit less in the private space.
Skyline remains a privately held company and has continued to make, you know, what we say, the institutional-quality real estate, available to Canadians. So, Skyline Apartment REIT is widely held by high-net-worth investors. It’s held by investment firms, endowments. And that’s more so specifically through the series F offering.
So, from a real estate allocation standpoint, many look at this asset class for its historical performance, but also the economic fundamentals and the size of forward opportunity to solve for a larger supply and affordability for Canadians. It’s been well documented that the shortfalls in construction will intensify the undersupply of housing in Canada and with some of the barriers posing challenges to increase supply. Matt, there’s a lot of intel and colour out there on multi-res REITs. Can you provide some more insights on, more specifically, the overarching strategy for Skyline Apartment REIT?
[00:08:55] Matthew Organ:
Yeah, Ray, it kind of plays into what we talked about before. You know, again, I think everyone’s aware of the interest rate environment we’re in right now. So, I think as much as you always have to be strategic in these Funds, it’s more strategic right now as to sort of what you build and where you buy – and where you build and what you buy.
So it’s, you know, when we’re purchasing an asset or developing an asset or partnering with a developer on a forward sale asset, it’s really about knowing your target market, understanding what that tenant base is that’s going to go into those buildings ahead of time. Because affordability remains an issue, and it remains an issue even on the apartment level.
And I say that not to scare anybody, because obviously, you know, the apartment rentals are still the most affordable form of housing, and they always will be. So as you know, you mentioned earlier the stress test that it takes to qualify for a mortgage nowadays. The price of homes, period. The amount of down payment that’s required to get into these things, you know. It just really drives home the value of purpose-built rental.
And this is also why you see the government initiatives trying to spur it, right? They know that this is sort of the future of real growth in that form of shelter in this country, right? we need more purpose-built rentals. So, you know, we’ll continue to do what we do. We look at this stuff right across the country. You know, from our strategy, obviously, we like to shift more towards new-build right now, but we still acquire what we call value-add assets, right?
There’s assets out there obviously, that are, you know, under-rented. They’ve got good turnover rates, etc., and they might require a little bit of work. But, you know, we’re happy to inject the capital required into those buildings and capture good value growth going forward.
[00:10:59] Ray Punn:
So, you talk about value growth. And from an investor perspective, Skyline Apartment REIT falls under the fixed income and equity sleeve of a portfolio, specifically in real estate. But really, you know, when you look at the end investor, whether it’s high net worth, ultra high net worth, whether it’s a portfolio manager at a firm. . .at the end of the day, what they’re looking for is a level of stability and growth for their portfolios. So, what’s your strategy in play for potential growth for Skyline Apartment REIT?
[00:11:35] Matthew Organ:
So, I guess we can we can break down growth into a couple of categories. You know, obviously there’s a growth in the sense of acquiring, which, you know, we’re not acquiring a ton of new real estate right at this point in time, because we do also have a lot under development. So, we’re at the point of sort of pruning some of our existing assets.
We’re looking at opportunities to divest some of the old stuff, while renewing and adding essentially new-build product to the portfolio. But in terms of value growth, we’re in an excellent position. We don’t have to sell anything. We don’t have to buy anything. We can just continue to turn over the suites.
And, you know, our biggest driver of value growth right now for the investor, which has really come on extremely strong in the last five years but has always been there since inception, is what we call mark to market rent. You know, we currently have a mark to market gap of $430 per suite across the portfolio. And, as you know, we have about a 20% turnover rate. So as we turn over those 20% of units a year, we’re capturing $430 per suite on average.
And when you look at that in terms of what it really means to the investor, it means that, you know, if we were to turn over all 22,000 suites that are within the REIT, it adds about $2.2 billion worth of value at our current cap rate of 4.95%. So, when you look at that and say, what does that really translate into, to an individual investor, if you looked at our current Unit price at $27.75, if we were to turn over all those units – which eventually we will; it takes time – you know, it basically adds about $29 per unit to that $27.75, so, effectively, you know, you’re doubling your Unit Value just by simply operating the business that we do day to day.
Now, obviously this is going to take who knows how long. You turn over 20% a year. You don’t always turn over a new 20% a year. But on average, we’re seeing good value gains year after year after year, which obviously increases cash flow. And it also increases the overall value of the REIT and the shareholders’ Units.
[00:14:02] Ray Punn:
Thanks, Matt, that’s well said. So, we talked in terms of value and in terms of growth for the portfolio. Another thing that investors, and more so portfolio managers, like to look at–or, for the matter of the REIT, you yourself – is cap rates, and you just alluded to cap rates. And we know that there was a softening of cap rates across the real estate board. And, you know, maybe a little bit less in 2022 and a bit more in 2023. How are you navigating this with overall valuations in your portfolio?
[00:14:36] Matthew Organ:
I think the important thing here with cap rates is, you know, we saw this through the pandemic, right? Obviously, interest rates went to historic lows and cap rate compression came on sort of fast and furious. So, you know, obviously with a low interest rate, you know, people were willing to pay more for the real estate, right? They could finance that.
They could pay a lower cap for it and still produce a decent return. We were very cautious through that time period, looking ahead down the road, saying, you know, obviously, 1.79% interest rates aren’t going to last forever. So as we were getting our appraisals throughout that period, when we go through our IFRS [International Financial Reporting Standards] valuations, we were, you know, I would say, guiding the appraisers in the sense of just, you know, implanting that in their mind as well, because sometimes they live very much day to day.
You know, “this building sold for X, therefore your building is worth X as well.” Or at least the methodology lines up and is the same. So when I say we’re cautious on the downside, you know, we could have probably pushed our average cap rate down to, you know, 4%, 4.25%, somewhere in that range. You know, essentially across the portfolio, I think we got to as low as a 4.7 cap. So when interest rates went up again, obviously, of course cap rates rise immediately. And, you know, we finished our 2023 IFRS valuation with a 4.95 cap. So we essentially went up 25 basis points, which again was very digestible. Again, basically through our mark to market terms and our suite turnovers, we’re capturing more income than we were losing in value on the rise of the cap rate.
So essentially, you know, that’s why we didn’t see our Unit Values go down. You did see some other REITs out there that either rolled back unit prices or in some cases suspended distributions. But ours did not change, right? Our distributions were made strong. We have enough value in the REIT to more than support the $27.75 that we’re currently valued at. We’re playing it cautiously. We think we’re at the top of the interest rate cycle right now. Cap rates should be stable. So the NOI growth that we’re going to get throughout 2024 should essentially equate to more value growth for the REIT.
[00:17:08] Ray Punn:
So, Matt, the art and science that any real estate fund is really, you know, three parts: it’s acquisition, it’s disposition, and it’s the overall asset management strategy. And it’s fair to say that not all REITs are created equally. And that also [goes] for the multi-res space. There’s REITs that vary by geographic holding. And that’s not just within Canada, but also south of the border.
Some hold student housing, others hold retirement living, low-rise, high-rise, and so on. Then you have the age of the asset. Uh, there’s new bills with, um, no rent controls. And then there’s older stock that fall under the conventional provincially regulated programs. So, some REITs are also holding office or retail assets within the portfolio, where the exposure may be too small for a standalone fund. What’s your asset management strategy specifically for the Fund, Matt?
[00:18:06] Matthew Organ:
Okay, I think there’s a bunch of -.
[00:18:09] Ray Punn:
It might be a two-parter in there.
[00:18:10] Matthew Organ:
It might be a bunch of questions in there. So let me just speak to the office side of it, you know, and I’ll give you an example. So, you know, when the Apartment REIT started back in 2006, within Skyline Group of Companies, it was the only fund.
So things that might not have been a pure play apartment strategy got put into Skyline Apartment REIT. And the biggest example of that is back in 2008, we had an opportunity to purchase six properties from The Co-operators insurance company, and that was roughly around 475,000 square feet of office space, which is really an ugly word today.
But at that time, you know, it came with a 15-year lease with an option for another 15, and an AAA tenant, being The Co-operators insurance. So, you know, we operated those assets for a number of years as they got sort of closer to lease maturity. We also recognized that there was potential risk there, so we started to sell off those assets.
And essentially before the 15-year lease expired in 2023, we had sold five of the six assets. So, we had good a income stream along the way. Our investors benefited from it. But we also recognize that there was some exposure in that market. So we divested of those assets.
We retained only one of those assets, a 36,000 square foot building, which we now lease back to Skyline at soft leases for one of our head offices. But we’re cautious on that. It’s not something that we would normally enter into. Again, there’s other [Skyline] Funds right now; obviously we have a Retail REIT, we have an Industrial REIT.
So there’s other proper channels to put those acquisitions in if it’s not pure play apartment. I don’t think anyone’s buying office, but we’ve got proper categories for those things. So, I would say with the Apartment REIT, just on the office front again, or the office and the mixed use – because some apartments obviously come with mixed use, depending where you are.
You build in certain municipalities today, the City’s mandating that you put mixed use on the ground floor. And that just may be a coffee shop, a hairdresser, or whatever it may be, but it’s something small. It’s usually a small percentage of the building. But I will say across the Apartment REIT right now, if you’re looking at the total value of the $5 billion that the Apartment REIT’s worth are mixed use stuff, non-core apartment would make up less than one tenth of 1% of the value of the Apartment REIT. So, you know, very small. And that’s the intent going forward. We’ll keep it that way. We’re in the apartment business and that’s what we’re going to continue to buy.
[00:20:52] Ray Punn:
So, Matt, the geography and age of the real estate assets have a bearing on performance and valuation. And we just touched on the secondary market approach earlier.
You talked about a few different things. You talked about, you know, cap rates and competition and being in growing markets as some of the primary drivers. How has this defined the strategy of the REIT?
[00:21:18] Matthew Organ:
Yeah. When you’re talking about geography again, you know, the early days, you know, really the Apartment REIT started in 2006. At the time, there was, you know, the guys [Founders] had started to buy buildings back in 1999, and there were 16 or 18 assets at that time that got rolled into the Apartment REIT, which the Apartment REIT adopted and then obviously grew from there.
And in the early years, you know, we’re buying things all over the country, right? Really started in Ontario. And it could be anywhere from Leamington to Kingston to, you know, to Thunder Bay.
So, you know, that was sort of the strategy when you’re in growth mode and there’s a good opportunity. You’re going out and you’re making those acquisitions as you can, and adding them to the portfolio. You know, as we built those assets up, again, with a few stages along the way, we would divest of certain things. And you’re simply doing that for a number of reasons.
It might just be a great opportunity that somebody’s willing to pay you too much for it, or more than you believe it’s worth. And you’re going to take a bunch of equity off the table and then reinvest it, and essentially produce more Net Operating Income [NOI] with that equity that you could take out than those assets produced when you own them. So, you know, we’re going to continue to do that. And we’re also looking at it from a geographical standpoint, from a management efficiency standpoint, right?
You know, we divested of a portfolio in Thunder Bay this year. Not a lot of assets up there that we had. Geographically challenging. You know, obviously we properly managed them and maintained them for the years that we had them. But when you do lose staff up there, or obviously you have to go up there for a variety of reasons, or work to be done, etc., anything that far away, sort of call it remote, it’s more challenging, right?
And it’s just not operationally as efficient. So, given where we are today in some of the new build opportunities that we have, we don’t necessarily need to push the boundaries and buy in some of those areas, even though they were good assets and they made a good return along the way. We’ve got better and different opportunities closer to home. And, you know, that’s what we’re concentrating on, right? We’re going to buy newer assets closer to home. The new stuff is good. It’s less capital expenditures required. Right now, we’re roughly sitting – when you look at the overall portfolio in terms of value – 42% of the value of the REIT is in assets that are built post-2009. So, essentially, in the last 15 years, you’re really seeing more of a shift to that over time. If you looked back into sort of 2016, 2017, that would have been about half the amount. You would have been down maybe around 20% at the most. So we’re concentrating on that. And we want to have product that people, you know, desire. Again, the REIT’s been around since 2006. Skyline’s been around for 25 years now, since 1999. And a lot of the assets, especially those built in Ontario were built back in the 60s and the 70s, right? In the early 70s, there was a big push. A lot of government incentives going on, and there were a lot of apartments built. While those apartments at this point are 50 to 60 years old in a lot of cases. So they do require more capital. There’s still good strong assets, but some of it’s about a desirability play as well, right? We’re looking down the road and we want to make sure that the portfolio is always desirable, always rentable. right? You know why people buy newer homes, right? It’s sort of the next new shiny thing. But they’re a different makeup, right? They have more amenities. They have in-suite laundry. They have, you know, quartz or granite countertops. And you’re appealing to a different tenant base than you are attracting with some of those older assets today. So, you know, that’s kind of where we are with that. We’re going to continue to do that, continue to try to rejuvenate the portfolio and move it forward, always with that look ahead down the road to make sure that the assets are really desirable, and that may be desirable from a tenant base going into it. It may also be desirable from a disposition base if you ever wanted to sell something, right? We want things that are desirable, possible for those two things. And it just strengthens the overall Fund. And it’s the best thing for our investors.
[00:26:02] Ray Punn:
I think you’ve really outlined the strategy very well. I’m going to put you in the hot seat now, and I’m going to throw you a question that I probably most often get from our investors and from institutions and advisors and portfolio managers. And that question is simply: what are the key differentiating factors? Or, why should I put my money with Skyline Apartment REIT versus the competition?
[00:26:28] Matthew Organ:
Yeah. Great question. I think everybody, and a lot of our investors, and obviously a lot of the people that we are on the shelf for that are dealing with Class F, you know, everyone’s aware of the public markets. So, I mean, it’s the easiest place for us to go as a comparison. I think it’s, you know, you don’t have that public volatility, and you don’t have to look back that far. Subprime was a great example, right? You know, 2009, everything fell apart. And, you know, when you looked at the multi-res sector, you know, we really had trouble – not trouble understanding it, but, you know, you’re looking at some of your peers that are publicly traded and the valuations simply, you know, didn’t correlate with what that asset class was producing, right? And we saw the same thing again, obviously when COVID hit. We looked around and a lot of our peers, their valuations or stock prices were in half, you know, or less in some cases. And, you know, they’re doing the same thing we are. You know, their tenant base hasn’t eroded, their income stream hasn’t gone, you know, the assets haven’t deteriorated any more. So, you know, that is the nice thing about being private. It’s a simple mathematical calculation as we come up with our Unit Value. And as long as we stay rented and we have a steady income stream, you know, our valuation is there. And as we turn over the suites, obviously the income stream goes up and the valuation goes up. So, I think that is really the biggest push. And it’s really what our investors like about it. You talk to any of the investors and it’s the stability, right? It’s the stability of knowing that if I need to withdraw my investment at some point in time. And I think we’ve got the chart up right now. You can steadily see the value growth from $10 back in 2006, up to $27.75 where we are today. And it’s never taken a step backwards. And I think it’s that stability that’s a real assurance for someone, because you don’t know. You don’t know what’s coming around the corner. People have personal situations. You don’t know when you’re going to need to pull your money out or pull some money out if you ever needed to. And having the confidence that it’s there, it lets people sleep at night. And I think that’s that’s the biggest driver, certainly for our investors, to invest here. And that’s why we have so many long-term investors that are with us.
[00:29:02] Ray Punn:
Matt, sustainability and efficiency, it’s a big part of Skyline investment mandates, not just the Apartment REIT – but let’s hone in on the Apartment REIT. Can you briefly walk us through your plans that are in place that relate to sustainability and efficiency?
[00:29:17] Matthew Organ:
Yeah. So, obviously, our goal is, you know, a few things here. Sustainability. Obviously we always use the term “green is green.” We do efficiency measures, obviously, as it translates into savings, which translates into return for our investors. So, you know, we do a number of things meaning, you know, a lot of the buildings, a lot of the utilities downloaded to the tenants, etc. As well as, you know, everything being more current, up to date, modern lighting, efficient, you know, low-flow toilets, essentially any form of energy savings. We’re capturing that when we do the new builds at this point. We’re also doing the same on any of the older properties that we buy. If we buy and they haven’t had that done, we’re going in and making those changes to them. One thing we did in the last year, sort of looking ahead down the road – or a couple of years ago, I guess, the program started – was implementing EV chargers at a lot of our properties. So, knowing that obviously a lot of the manufacturers have got mandates and are shifting to more electric vehicle production, and a lot of them have mandates that they’ll be, you know, either wholly or partly electric by 2030 or 2035 as an outset. We took advantage of a government grant and made an investment ourselves, obviously, in making sure that we’ve got electric vehicle chargers at each of the buildings. So, essentially, last year we installed over 900 EV charging stations at our properties. Now, these aren’t designed as fast charging stations, etc. And they are sort of pay-per-use. So, the tenant has the option of using them. But where we really want to position the REIT is that as people do come with an electric vehicle, it’s important that obviously they do have a place or an opportunity to charge it there. We don’t want to lose a potential tenant, or a good tenant, simply because we didn’t have that infrastructure in place. So, we made that investment, and we’re starting to see utilization on some of those chargers now. So, that’s very good.
[00:31:23] Ray Punn:
Thanks. I’m going to condense my last question here for you, just in the interest of time. The Skyline investments grew up in the private markets. We grew up with the high-net-worth investors, ultra-high-net-worth investors, and then the business pivoted and continued to grow in terms of distribution, with a focus on that retail investor, but also the introduction of series F to institution, endowment, financial advisors, investment firms, in short. And, you know, I really want to challenge that traditional 60/40 portfolio where, you know, a lot of financial advisors have adopted that sort of methodology. What I want to talk about is the introduction of alternatives to a portfolio. In your opinion, why have institutions and high-net-worth investors adopted this asset allocation in greater strides in the last, let’s say, ten years or so?
[00:32:22] Matthew Organ:
Yeah, I think the private alternatives such as, you know, that REITs offer – again, it’s really just, you know, it’s the predictability of it. It’s a steady monthly distribution. It’s stability at the end of the day. You know, and everyone’s rolled the public markets. We’ve seen the volatility. We’ve seen it go up and down. And, you know, COVID wasn’t that long ago. And it’s still fresh in everybody’s minds. And before that, it was, you know, ten years earlier or 11 years earlier we went through the same thing. And it will happen again, you know, is it going to be in two years, three years, five years? Who knows. But it is going to happen. So, I think a lot of people have recognized that and they want their, you know, they want their investment, something that’s a little more stable. As well as I think there’s been a big push, obviously, on the hard asset side. Right? We really saw that through COVID times. I mean, if you had money sitting in, say, fixed income, for example, it really got devalued. So, to have it in hard assets, you know, and particularly multi-family assets that have, you know, a kind of a perceived inflation-adjusted income to them, because we’ve got things in place, you know, such as, you know, the provincial guideline increases for rent every year. You know, it helps. Obviously, we’ve got inflation on one side of it, but we’re also getting adjustments on that income side on the other. And again, short-term leases, right? We’re not locked into 5, 10, 15-year leases with these tenants. You know, the multi-race space is generally one-year leases. And we get that month-to-month turnover. So, it allows for that mark to market rent capture, which leads to obviously, you know, more income, which means more distributable income. It also means value growth for the investors. So, it’s become a very desirable market. It always has been. But, I really think that sort of fleet of hard assets has been really recognized, like you say, over the last ten years, but particularly over the last five.
[00:34:30] Ray Punn:
Well said, Matt. So, with the REIT’s strategic positioning in the market, I think this is a great time to review your real estate holdings and your portfolios, and perhaps learn a little bit more about the multi-residential asset class. Skyline Apartment REIT is one of the investment offerings offered by Skyline Group of Companies. There’s Skyline Retail REIT, which is anchored by grocery and pharmacy in Canada. We have Skyline Industrial REIT, which is heavily focused on Class A assets. And we have Skyline Clean Energy Fund, which is focused on a mandate of solar assets as well as biogas in Canada. And they’re all considered leaders in their respective asset classes. Matt, I want to thank you for joining me today. I know we’re a little bit over time here. It’s been great to get your insights on Skyline Apartment REIT.