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Iain Grant: [00:00:00] And good afternoon over the course of this next hour. The information provided is solely the view of the commentators, not necessarily those of Skyline Wealth Management Inc, Newstalk ten, ten, or Bell Media products are not guaranteed and investor qualifications apply. Past performance may not be repeated. I’m Ian Grant. Good afternoon. This afternoon here on Ask the Expert. We’re talking about Canadian apartment real estate investing. Now on our previous show I spoke with Jason Castellan and Ray Pun from Skyline as we discussed their investment products. Well, today, with nearly 250 properties in 60 communities over seven provinces and with nearly 22,000 apartment suites, I’m joined by the fund president of one of those investments to talk about the Skyline apartment REIT. Matthew O’Regan President of the Skyline Apartment REIT. Matthew, good afternoon. Welcome. Thanks for joining.
Matthew Organ: [00:00:57] Me. Well, thanks for having me.
Iain Grant: [00:00:58] And Matthew, one of the things we should establish right off the top is a term that obviously we’re going to be using over the course of this hour. And for a lot of listeners who’ve caught our skyline shows in the past, they know exactly what we’re talking about. But there’s also a chunk out there who have never heard the term REIT before. So why don’t we start with that? What is a read?
Matthew Organ: [00:01:16] A REIT is quite simply a real estate investment trust in practical terms. In the case of real estate, it’s a pool of properties. Essentially that company like ours would put together and an investor has the ability to buy into the REIT, we call them units that they’re able to buy and they’re essentially buying a little piece of every building that we own and operate.
Iain Grant: [00:01:37] So it really is an investment that is open to investors that wouldn’t normally have a chance to play at this level. Is that a.
Matthew Organ: [00:01:44] Fair? Yeah, it is. You know, a lot of individuals out there that have certainly went and bought their own real estate or a small apartment building or a rental house per say. By doing that, they have to put up enough capital to secure that asset on their own and they have to have the financial backing to do it. And usually with that comes the fact that they are going to be also the hands on manager themselves in dealing with tenants and repairs and things that they, even though with great intentions, may not always be in their field of expertise. So by investing in a REIT, you’ve got a few advantages. You are invested into a large pool of properties. In our case, it’s about over 21,000 different apartments across 60 different communities throughout seven provinces. What comes with that is the safety of that geographical diversification. If you’ve got certain sectors or certain economies or certain geographical locations that may have economic downturn or some strain on them, you’re well insulated from having your entire asset not perform well because you’re spread across so many different communities that it balances out. The other benefit of it is that we’ve got a team of over 700 people that are just strictly geared to professionally managing those properties and that is their expertise.
Iain Grant: [00:03:01] Can you talk a little bit, Matthew, about the special tax treatment for Canadian income trusts?
Matthew Organ: [00:03:07] The Canadian government has allowed special tax treatment for real estate investment trusts. The REIT itself does not pay tax. All the income that it makes flows through to the unit holder. So if you were a unit holder within the REIT, your tax obligation flows from us. We give you all the income and it’s up to you to pay tax at your individual rate. Historically, what is often happened is we can use what’s called CCAR or a capital cost allowance, which is depreciation to offset some of that capital. Historically, some of the capital is returned or a lot of the capital has been returned to investors on a tax free basis because it is deemed return of capital, not taxable income.
Iain Grant: [00:03:47] And kind of the exciting part of this is that it’s, you know, it’s a living, breathing thing. I mean, it’s consistently growing larger. Skyline is strategically buying those multi residential apartment properties all over Canada.
Matthew Organ: [00:04:00] That’s correct. You know, we’re continually looking at different opportunities. Traditionally, we’d started back in Ontario. We started to acquire properties back in the late nineties, and then until the time that the REIT came into play in 2006, as we’ve done that, we’ve attracted more and more investments. Investors were happy with what we were doing and therefore the capital kind of continue to flow in and it allowed us to expand and obviously with buying more property and forming sort of more of what we call regions, you know, you get economies of scale and you get certain savings and efficiencies that come with that.
Iain Grant: [00:04:32] One of the things Skyline has always taken pride in is your relationship with the investors and their ability to, you know, pick up the phone, send an email and really communicate. And I have to imagine that as the economy takes its interesting turns that it has over the course of this year, it must be a good feeling for the investors to just pick up the phone and talk to you, say where are things headed? Is everything okay? And know that, as you said, the team that’s. Eileen has everything under control and it’s full steam ahead.
Matthew Organ: [00:05:03] Absolutely. And I think that’s one of the things that we hear this directly from investors all the time that sets us apart. We are we sort of always have an open door policy, so to speak. The investors can either email us through our wealth management division or contact us directly. And we’re happy to jump on the phone with an investor for 5 minutes or an hour and a half, whatever it takes to answer their questions and sort of be there for them. It really it really proved itself through the beginning of the pandemic. Obviously, no matter what anyone was invested in, be it the stock market, public investment, private investment such as ours, they everyone had concerns and had questions. And we spent a lot of time directly communicating with our investors and as a result of it. If you’re dealing with people in the public markets, people were people were dumping their stock left, right and center, and we didn’t lose any investors through that time period at all. In fact, they were they were very satisfied. And once we sort of kind of proved ourselves through the first few months of the pandemic, we were flooded with with people wanting to invest because they were just very satisfied with the way we handled it and very appreciative of the open communication that we were able to provide to them.
Iain Grant: [00:06:18] You’re listening to Ask the Expert here on Newstalk 1010. I’m Ian Grant. I’m joined this afternoon by Matthew Organ. He is the president of the Skyline Apartment REIT. The apartment REIT is one of three REITs that are distributed by Skyline Wealth Management.
Matthew Organ: [00:06:31] Yes, we have three different REITs. That’s correct. We’ve got the apartment REIT, which I am the president of. We also have an industrial REIT and we also have a retail REIT.
Iain Grant: [00:06:39] For anyone listening, by the way, if you have questions, we may not get to them on this show. We’ll certainly get to them in a follow up show. You can text them to the studio here 710 ten seven, 1010 Regular texting rates apply. And one of the questions that always comes up when we are talking about REITs is just how is it different from, you know, typical real estate ownership?
Matthew Organ: [00:06:59] You know, the biggest difference, obviously, is that you’re investing in a pool of properties, geographical diversification. You’ve got professionally managed. So again, we’ve got a team, obviously, as I mentioned, about 700 people across the country. That is their expertise to look after that real estate. That is one of the major differences. And the other part is just that we’re well capitalized. We’ve got access to good equity. We can typically buy properties that larger scale than, say, an individual were a lot of individuals buying and they may be looking at a rental house or a fourplex or a complex where we’ve got the ability to buy larger scale properties, which just sort of builds that security of the fact that you have more tenants paying your bills than just one or two. You’re not relying on a single or two or three tenants to pay your bills. In this case, we’ve got over 21,000 tenants paying monthly rent, which again just lends to the stability of the investment.
Iain Grant: [00:07:50] This really does offer investors that hands off approach to investing in quality real estate. Meanwhile, it’s a phenomenal number, 700 people. And as you said, they’re looking at everything out there, you know, the properties being purchased, finance, taking care of repairs, maintenance, capital projects and the investor. You don’t get that phone call at 2:00 in the morning saying, you know, my furnace isn’t working or my sink is leaking.
Matthew Organ: [00:08:14] Yeah, that’s correct. And I think that’s where it differs in a lot of people obviously are attracted to it from that standpoint, that it is truly hands off. They obviously go through the initial investment process. If you’re a retiree relying on the income, you can go to Florida for six months and you’re not getting a phone call that you’ve got a leaky roof or a broken furnace. As you mentioned, we again look after all the financing, we’ve got an internal financing department, legal department, etc.. So from A to Z, we’re there from the time of acquisition, right to the end for property management, rent collection, everything that needs to be done. It’s the entire package.
Iain Grant: [00:08:51] One of the areas you touched on earlier and it really is worth kind of nudging over again is the fact that because it is spread over such a huge geographic location and the diversification of the properties, you know, the investor owns a little bit of each of those properties across the country. And therefore, you know, particular economic strains, as you said, in certain sectors, the diversification really does benefit the investor.
Matthew Organ: [00:09:15] Yeah, that’s correct. And that is a very strong strength of the product that we offer here, being in 60 communities across seven provinces and investing in over 21,000 apartments. The big difference, obviously, again being as to an individual investor that chooses to own a single unit themselves or a small apartment building, they are definitely relying on a very small number of tenants. And if one out of four has a default, you’re 25% of your income is missing or you’re in a particular area where that does have economic strain, potentially you’ve got worse impacts on your investment. Where is being spread across that many units? You’ve again got 21,000 people paying your bills every single month. It’s really what makes this an extremely. Stable investment. Now, we certainly saw that through the pandemic when people weren’t sure what was going to go on. We’ve got a average rent actually of just under 1300 dollars a month. It’s very affordable housing and people are able to pay those bills even through hard times like the pandemic. Again, when the government was available to put $2,000 worth of cerb money in people’s hands if they had fallen on hard times, the ability to pay their rent came first. And obviously they had enough money left over for groceries. So it just lent to the the stability of this investment to see us come through that time and get out the other side with virtually unscathed.
Iain Grant: [00:10:40] Take a break. And when we come back after traffic, let’s talk more about the Skyline apartment REIT. We can talk about the history. We’ll talk about opportunities. And also take a look back at the past year and what may very well lie ahead. This afternoon, I’m joined by Matthew Organ. Matthew is president of the Skyline Apartment REIT. Skyline Wealth Management offers private alternative investment products in real estate and clean energy. Investors are enjoying historically stable investment performance. Skyline prides itself on offering investors a unique investment experience, helping to cut out a lot of the noise and emotion that many investors have come to experience in the public markets. Skyline believes that investing should be enjoyable. It should be engaging and it should be rewarding. Connect with Skyline and share your investment goals. For more information on investments on the advisory team and the Skyline investment philosophy and a whole lot more, check out their website Skyline Wealth Management Dot S.A.. Skyline Wealth Management dot CA. I’m Ian Grant and this is Ask the Expert on Newstalk 1010 Toronto. We’re back. This is Ask the Expert here on Newstalk 1010 Toronto. I’m Ian Grant. Thanks for joining us this afternoon. We are speaking with Matthew Organ. He is president of the Skyline Apartment REIT. Matthew, last time we did the show, we talked a little bit about the story of Skyline, which the apartment REIT is part of really is an interesting story with the co founders starting way back in 1999. Talk a little bit about when Skyline Apartment REIT came into that story.
Matthew Organ: [00:12:19] Skyline Apartment REIT was formed in 2006. Originally prior to the formation of the REIT skyline had been started in 1999 by the co founders and they were buying individual buildings which were set up as syndications. And what that meant was they would find a particular building, they would go out and find a particular pool of investors and they would invest in a single building. And this sort of lends to what we were talking about before. It was still a diverse investment in the sense that it was maybe a bit of a larger building and you had a number of investors on it. But the issue with that was when something went wrong with that particular building, if it was the only building you were invested in. Your returns might not have been as good or as stable as they should have been because you had sort of all your eggs in one basket, so to speak, Back in 2006. At the time, they had about 16 individual syndications, which then got rolled into a REIT. And under the REIT structure, all those buildings are allowed to share their income and their expenses. So if you have something go wrong at one building, you can spread that cost essentially against all the income from all the other buildings and it made it a much more stable structure. And obviously that’s something that we’re very happy we did and continue to expand on. And it’s sort of what’s got us to where we are today.
Iain Grant: [00:13:35] Now, you joined Skyline back in 2006 as director of operations. 16 years later, you’re still there and leading the most established and largest investment fund at Skyline. Did you ever imagine these kind of numbers? I mean, you’re talking about, what, $4.1 billion in portfolio value.
Matthew Organ: [00:13:53] When you compare it back to the beginning and you look at it now, obviously it seems quite substantial being here for that period of time. And obviously the co founders being here a little earlier, you know, it really has been slow and steady. You know, we’re not mandated to buy. We don’t even though we we sort of have internal growth targets, first and foremost is the investor. So we’re always going to look for the right deal, make sure it’s a creative and only buy when that deal makes sense. You know, that’s sort of been the slow, steady approach that we’ve always had, and that’s kind of got us to where we are. And that’s sort of again, the strength and the stability of this investment and the satisfaction of the investors come from that.
Iain Grant: [00:14:35] One of the challenges that the Skyline apartment REIT has is that not only do you have to make sure that the investors are happy, but you also have to make sure that the tenants are happy because there is this synergy. I mentioned that Jason Castellan, who’s co-founder, CEO of Skyline, when you guys were doing this in 2006 and looking at the exponential growth you’ve experienced over the past few years is. Actually, was there a concern that you may lose that personal touch, that attention to detail that Skyline has such a great reputation for? And you really haven’t. It has been maintained even as the company grows, that the reputation for attention to detail, for making sure that both parties, both the investors and the residents, are both happy and satisfied with what they’re receiving.
Matthew Organ: [00:15:24] Yeah, it’s a delicate balance. And again, I think that’s what sets us apart from a lot of the other companies out there. You know, there are many Canadian REITs, there’s some private and there’s some public. A lot of those REITs use third party property management, meaning they basically outsource the property management function as well as they outsource other functions as well. We’ve really taken care and taken pride in the fact that we try to internalize as much as we can, which is really what also gives us direct contact with our investors. We’re not a public entity, you know, we’re happy to pick up the phone and we hold investor events where hundreds of investors come all the time and we’re there. We’re available to answer questions and any concerns that they have. And I think that gives them a great deal of comfort. And that’s the feedback we always get on the tenant side. Again, because our property management is internalized. We have very much a hands on approach and an oversight just to make sure that the values that we sort of instilled back in the day are still exist. We truly do care about the tenants and we treat our properties as buy and hold, meaning we take a long term view on them. We’re not property flippers. We’re not buying something today with the intention of flipping it out tomorrow. We always take a long term view on everything and we do our very best to try to put the care into the properties and invest money back into the properties to make a very good experience for the tenant and a quality home for them to enjoy.
Iain Grant: [00:16:51] This is Ask the expert here on Newstalk 1010 Toronto. I’m Ian Grant, joined this afternoon by Matthew Organ. He is president of the Skyline Apartment REIT. Matthew, one of the real benefits to Skyline is from the very beginning you’ve had investors who’ve been there since day one are still there today. If there’s one thing about investing, people do not stick around with things that don’t work. And so, you know, the testimony is right there. But it also must be exciting to kind of grow up with these investors and kind of watch as the investment pays off for them and they use the return on that investment for things that can really benefit them and their family year in and year out.
Matthew Organ: [00:17:30] Absolutely. You know, we obviously dealing with the number of investors that we have at this point in the several thousands, you hear a lot of stories. We all have a cocktail party at Christmas and you get a chance to sit down with a lot of investors and have one on one conversations. You hear the excitement, you hear the stories that they have, how they’ve been retired for ten years. And this investment is what has allowed them to do that, or talking about putting their kids or even contributing to their grandchildren’s education or son or daughter’s wedding, etc.. You know, again, it’s the stability of it that they love. You know, historically, it’s just been a constant, steady rate of growth and a constant, steady rate of return for them. It’s hard to put into words, but it’s just a it’s a wonderful investment to be a part of because you see the stability and the joy that it’s brought to a lot of our investors and we get that feedback on a regular basis.
Iain Grant: [00:18:25] And Matthew, you were telling me you have personal experience with this. You were mentioning before the show that you transferred your self-directed pension from your former employee and you’re really reaping the benefits of that.
Matthew Organ: [00:18:35] Yeah, absolutely. I mean, personally, I was an investor prior to coming to Skyline and some of the syndications, and when I did join, I did transferring my former pension from my former employer here. And I’m absolutely happy with the results.
Iain Grant: [00:18:53] To say the least. It’s certainly been an interesting ride over the past two or three years. And I’m just curious, Matthew, what has the Skyline apartment REIT been up to over, say, the past year?
Matthew Organ: [00:19:03] So the past year has been another exciting year of, say, progression for the REIT. Last year we completed about $422 million worth of acquisitions and developments. We added roughly 1881 apartment suites to the portfolio. Most of these purchases were in areas where we already had existing product across Canada. It sort of strengthens our position in those key markets. Notably, we also celebrated our 20,000 suite milestone, which is a huge milestone for us. Obviously, when I joined the apartment REIT back in oh six, we had just over 1300 units. So to be sitting here today with over 20,000, it’s a huge accomplishment and huge accolades to the apartment REIT, our investors, our residents and our internal teams that help make that possible.
Iain Grant: [00:19:54] Let’s take a break. And when we return after traffic, why the Skyline apartment? It is a win win. It’s a win for tenants and it’s a win for investors. And why doing all of this at an affordable price point for everyone involved is so critical. I’m Ian Grant and this afternoon I’m joined by Matthew Organ. Matthew is president of the Skyline Apartment REIT. Skyline Wealth Management offers private alternative investment products in real estate and clean energy. Investors are enjoying historically stable investment performance. Skyline prides itself on offering investors a unique investment experience, helping to cut out a lot of the noise and emotion that many investors have come to experience in the public markets. Skyline believes that investing should be enjoyable. It should be engaging and it should be rewarding. Connect with Skyline and share your investment goals. For more information on investments on the advisory team and the Skyline investment philosophy and a whole lot more, check out their website Skyline Wealth Management Dot S.A.. Skyline Wealth Management dot CA. I’m Ian Grant and this is Ask the Expert on Newstalk 1010 Toronto. We are back. You are listening to Ask the Expert here on Newstalk 1010 Toronto. I’m Ian Grant, joined this afternoon by president of the Skyline Apartment REIT Matthew Organ. Matthew, as he’s mentioned before, responsible for the operational and financial performance of Skyline apartment REIT’s real estate portfolio and as you said, comprising tens of thousands of multi residential suites across Canada. Matthew, can you just explain to us, you know, the difference we talk about private REITs and public REITs. Which one is the Skyline apartment REIT?
Matthew Organ: [00:21:39] Skyline Apartment REIT is a private REIT. It’s not publicly traded on a stock market. The only way to become an investor, our REIT is to go through our Skyline Wealth Management, which is an internal sort of wealth management division that we have here. We’ve got licensed exempt market dealers that have the ability to qualify you and process your investment.
Iain Grant: [00:21:58] You know, the past performance does not guarantee future results. Speech aside, another difference from what I understand is that the valuation of private REIT units is typically a bit more stable or less affected by public market emotion. Is that reasonable?
Matthew Organ: [00:22:13] Yeah, it’s very reasonable. You know, in a good example of that, again, I mean, we’re not too far out of it, but roll the clock back to the spring of 2020 when the global pandemic hit. You can pick any stock in the stock market, REITs included, and you could see what what happened to them through that time period. And these are our peers. But at the end of the day, like a lot of the public, REITs know they’re in the same business we are and you saw a lot of the valuations fall through that period simply because they are public. It’s emotion often that drives the stock market. Of course there are fundamentals there, but when there’s something going on in the world that is negative, emotions kick in and the stock market responds to that, where our valuations have never taken a step backwards. They’ve always just taken steady steps forward. As our income grows, the valuation of the property grows. And it’s a simple mathematical formula supported by third party appraisers that we get every year, and that’s simply how we’re valued. One of the main differences between what where our share price, or we call it a unit price sits and sort of the stock price that you see in the publicly traded entities.
Iain Grant: [00:23:18] Matthew One of the things Jason Castellan pointed out to me is that there’s a real comfort for the investors out there. You know, they wake up in the morning, they pick up the newspaper and they read about issues, you know, as we’re doing now in Russia, Ukraine, all over the world. And, you know, there is that sense of comfort knowing that it’s not related to the stock market. As long as that property is doing the job that that property should be doing wherever in Canada that property is, then all is well.
Matthew Organ: [00:23:46] Obviously, there’s a lot that goes on behind the scenes, Ian, but it’s on the surface. It is quite a simple business. I mean when you break it down, we’ve purchased an apartment building, you’ve got your residence, as we like to call them, that pay the rent every month. And then we’ve got you’ve got your expenses, you’ve got water, electricity, property taxes, etc. And most of these things are very predictable. You know, the bottom line is, I mean, you’re taking your income, you’re subtracting your expenses. The rest is the distributable income that we pass along to the investor. Again, it’s not a complicated business at all. A lot goes on behind the scenes to make those things happen, but it is very stable. And again, back to the fact that it’s sort of your basic shelter in our average rent being under 1300 dollars a suite across the country, it makes it a very, very affordable option, which also puts it in very high demand, especially where the housing prices are today. It lends to the stability of it. You know, when you’re talking about someone waking up and open the newspaper and being happy, they don’t have to worry day to day about their stock price fluctuating or if if they were about to pull money out for something or a big purchase of their own, it’s not so. Much about market timing and did I get in or out at the right time? It’s just a steady progression and most of all, it’s an extremely stable, steady progression.
Iain Grant: [00:25:07] This is us, the expert here on Newstalk 1010 Toronto, I’m Ian Grant. Just a reminder, you have questions. We can take them on the text board. Seven, ten, ten, seven, ten, ten. Send us your text questions. We may not get to them this show. We’ll certainly get to them on a follow up show. I’m speaking with Matthew Organ this afternoon. He is president of the Skyline Apartment REIT. Matthew, the REIT started in 2006. So just, you know, thinking back, it’s weathered a couple of times of real economic uncertainty. Obviously, the 2007 2008 financial crisis. And as you’ve mentioned a couple of times during this show, COVID 19, you know, which was a challenge for just about everyone out there. Were there different strategies to get through these times?
Matthew Organ: [00:25:47] Not really, to be honest. I mean, our strategy has always been the same buy good assets in good communities where we feel you’ve got stability. We’re in a lot of tertiary and secondary markets. Our strategy has always been that and remains that and we’ll be that in the future. You know, I think one of the differences that is that, you know, and it’s just proved to be and especially through the pandemic, is that you saw in in major centers like Toronto, obviously when a lot of people switched to a sort of work from home strategy, there were a lot of high priced rentals in the city that did take a hit. People did move out to look for something cheaper because if you were in a 3000 a month apartment and again, if you happen to be financially strained because of the pandemic, that maybe became unaffordable and people look for cheaper options. So it’s certainly been proven through that time that our strategy held strong and the flee out of some of those centers into some of the smaller markets. Really the strength in our position through that period of time, we saw our vacancy rates fall. And obviously with the housing, the situation it’s in in Canada right now, it’s it’s remain that way. We’ve remained very strong on an occupancy level and we continue to see really high demand from the properties that we have in those areas.
Iain Grant: [00:27:04] And it also ties into what you were just talking about, one of the benefits of the private REIT being sheltered to a certain extent from any swings in the public market.
Matthew Organ: [00:27:13] Absolutely. Being a private REIT, we certainly don’t have the emotional up and down that the public markets do. Our valuations are strictly mathematical based and as our income steadily rises, the value of the apartment building steadily rises and the unit holders, shares or units, as we call them, steadily rise in conjunction with that.
Iain Grant: [00:27:34] Matthew, Another reason, obviously, is that the Skyline apartment REIT offers an essential need shelter. And based on what you’ve been saying over the course of this hour, you do that at an extremely affordable price point.
Matthew Organ: [00:27:46] Yes. Again, the fact that our apartment suites have an average rent right now of under 1300 dollars per unit, and obviously that’s climbing over time because rents are going up like everything else. But it still remains an extremely affordable option, especially to homeownership. In these times. We don’t see that changing. And when we look across, I often compare it to other countries around the world because we look to sort of see where the trends are. And when we look to the other countries, either in the G seven or the G 20, Canada still has one of the biggest gaps in between what rental prices are and what homeownership is. So our rental price is really on the low end. And the homeownership price obviously in this country, as many people know, is more on the high end. But the fact that there’s such a large gap in there just tells us there’s a reasonable lot of room for those rents to move upwards and still be at a huge discount to homeownership, which again just enforces the demand for properties in the areas that we’re in.
Iain Grant: [00:28:46] And touching one more time On the keeping both the investors and the residents satisfied. I know that Skyline is very proactive in maintaining and improving the quality of these properties. It’s not like you walk in, buy them and then just, you know, take what you can out of them. This is an ongoing process.
Matthew Organ: [00:29:02] It is an ongoing process, and we dedicate a considerable amount of capital each year to improving our properties. We buy we do build some new properties and we do have a number of older properties because in a lot of areas such as Ontario, a lot of the buildings were built back in the fifties, sixties and seventies and depending on the owner that you bought them from or the entity, they may have done some reasonable capital repairs and they may not have. But through our due diligence process, when we’re looking at that, we obviously do an in-depth dive and allocate the necessary capital, which is built into our proforma at the time when we’re looking at these properties into the plan that we’re going to make for these properties once we take ownership of them. The goal is obviously to bring these things up to a modern day standard and that may include new balcony concrete, new roofs, new efficient boiler systems, new efficient lighting, efficient water systems in the building. New elevators, etc.. So, you know, there’s a considerable amount of work that goes into that. But by doing so, again, we’re able to create a nice product where people want to live. It’s safe, it’s up to date, and because of that, it’s in high demand. So it’s a win win. It’s a win for the tenants. It’s a it’s a win for our investors.
Iain Grant: [00:30:15] Let’s take a break. And when we return after traffic, the special tax advantages of a REIT and how in some cases part of your investment could very well be returned to you tax free. And what type of properties are ideal for the Skyline apartment REIT? All that and more. This afternoon I’m joined by Matthew Organ. Matthew is president of the Skyline Apartment REIT. Skyline Wealth Management offers private alternative investment products in real estate and clean energy. Investors are enjoying historically stable investment performance. Skyline prides itself on offering investors a unique investment experience, helping to cut out a lot of the noise and emotion that many investors have come to experience in the public market. Skyline believes that investing should be enjoyable, it should be engaging, and it should be rewarding. Connect with Skyline and share your investment goals. For more information on investments on the advisory team and the Skyline investment philosophy and a whole lot more, check out their website Skyline Wealth Management Dot S.A.. Skyline Wealth Management dot CA. I’m Ian Grant and this is Ask the Expert on Newstalk 1010 Toronto. We are back. This is Ask the Expert here on Newstalk 1010 Toronto. I’m Ian Grant. Thank you for joining us this afternoon. I’m joined by Matthew Organ. He is president of the Skyline Apartment REIT. Matthew, for anyone who has joined us over the past 45 minutes or so, what is a REIT? I mean, what are the benefits it offers to an investor?
Matthew Organ: [00:31:48] So A stands for real estate investment trust. And essentially what that means is that as an investor you have the ability to invest in a pool of properties. In our case, obviously it’s a fairly geographically diverse pool of properties. At this point we’ve got about just over 21,000 apartment units, over 60 communities across seven provinces, which lets the investor essentially own a little piece of every building. That’s sort of what creates a stability of the investment within our private REIT. One of the other benefits of a REIT is certainly the tax advantages of it. The Canadian government has special tax treatment for real estate investment trusts, which essentially allow us as a REIT to not pay taxable corporate level, but instead we flow all our income through to our investors and then the investment is taxed at their individual income tax level. And the other advantage is that some of that income is is deemed return of capital and may be returned to the investor tax free for a period of time.
Iain Grant: [00:32:47] Matthew, how do you determine then what properties you buy for the Skyline apartment REIT?
Matthew Organ: [00:32:51] So we’re essentially looking for any assets that we can create value in or that create value for the investor. So we’ve traditionally been drawn to sort of secondary and tertiary markets. We found great value in returns in these markets. We look for older assets that may be distressed or may need capital injected into them, but then have good what we call mark to market rent cap. So you may have a lot of sitting tenants in those buildings that haven’t moved for years, but the fact that you’re buying these buildings and deploying a bunch of capital into them gives you the ability, once those tenants move out, a new tenant moves in and you’re offering them essentially a much different product. Because we’ve spent money on the building, we’ve updated a lot of the systems on the building, we’ve updated the suites, we’ve modernized hallways, etc. and essentially revitalize that asset. Because of that, it becomes an asset that’s in high demand and people want to live there. In turn, you’re able to extract some more rental income from that asset, which is what does create value for investors.
Iain Grant: [00:33:52] Matthew, you’ve talked before about how you believe there’s always going to be this very high demand for quality rental accommodation in the markets that you’re in. The math really does add up perfectly. People looking for affordable places to live, to retire to, to move to. And the markets that the Skyline apartment REIT operates in offer that balance.
Matthew Organ: [00:34:15] Yeah most of our markets again being tertiary and secondary markets the rents remain very, very affordable by today’s standards. So when you look across the country at the housing crisis that’s going on in Canada today, obviously housing prices are at an all time high. And that gap that we have, again, between the cost of home ownership and the cost of renting, especially within our REIT at an average rent below 1300 dollars a door, it makes an extremely affordable option for tenants. And if you’re a retiree or somebody selling your home or if you’re a young person just starting out, you know you need an affordable place to live, but a quality place to live. We’ve got lots of product in that sort of in that space and. We believe the demand for that will continue to stay extremely high for the foreseeable future.
Iain Grant: [00:35:03] And the Skyline apartment REIT is made up of older, more established buildings as well as especially recently, your acquisition of more modern and new builds.
Matthew Organ: [00:35:14] That’s right. So again, we’ll continue to sort of seek value in some of these older assets that we find. We’ve recently more recently branched into building newer buildings. There’s a demand for it. You’ve got that baby boomer demographic in the early stages of retirement, and they’re looking for quality products and they’re happily sell their homes and move into something. But it’s got to be the right thing, the opportunity for us to build new. And a lot of these secondary communities where you do attract a lot of retirees, that’s something that we’ve recognized we are actively doing now. And it’s we’ve got quite a few projects that have already been completed and we’ve got a number underway and it’s proven to be a great strategy and lets us offer a really nice quality home to to people in that space that are looking to sell a house but want something with granite countertops and ensuite laundry, etc. and good amenities for them to socialize in, etc. indoor and outdoor. These are the things that we’re providing and our tenants seem to be very, very happy with it.
Iain Grant: [00:36:15] You’re listening to us, the expert here on Newstalk 1010. I’m Ian Grant. Just a reminder, any tax questions? Any questions at all? Text us at seven, ten, ten, seven, ten, ten. You don’t get to them on this show. We’ll certainly weave them into one of our upcoming shows. I’m speaking this hour with Matthew Organ. He is president of the Skyline Apartment REIT. I want to find out more. By the way, Skyline Wealth Management, dot, RCA, Skyline Wealth Management Dot, RCA is the website. Matthew, are there any specific types of projects that you may undergo when you buy a property or incorporate into a new build property?
Matthew Organ: [00:36:49] Certainly what we buy an older property, there’s a fair bit of work to be done. We’re going to go in and look for efficiencies, which obviously are they have financial benefit to them and they also have environmental benefits to them. A lot of these older properties will have very high capacity toilets. They have old light fixtures and old bulbs. So there’s there’s a lot of energy and water savings to be had by addressing low hanging fruit, by doing these things right off the get go. And we’re also looking looking ahead to the future. We’ve currently got a program underway where we’re implementing a lot of EV charging stations at our buildings. You know, this is sort of the future where our energy is going and our tenants are certainly going to be adopting electric cars, as everybody will in the future. And we want to be on the forefront of that and be able to offer them a place to charge their vehicles, which again, will just make our buildings desirable and keep our vacancy rates low because we have the ability to offer them that service.
Iain Grant: [00:37:47] I know that municipalities that skyline moves into a really appreciative of the effort that Skyline makes to work with the local area, you know, to benefit the local area, to improve the local area. You know, in essence, Skyline moves in and things get better all the way down the line for the residents, for the investors, for the municipality. It’s you seem to have just come up with a formula that works.
Matthew Organ: [00:38:11] Yeah, we definitely try to give back to the local communities we’re in and often on a when we’re doing new builds in many of these areas now, you know, at the end of the new build is part of a sort of token of our appreciation to allowing us to become part of the community. We’re often doing donations to local charities in that area to sort of celebrate the fact that we’ve got a new product in the area, sort of as a thank you to the community for allowing us to do that. A lot of these municipalities have been great. You know, as you know, everybody needs housing right now across the country. So a lot of them have sort of rolled out the red carpet to us and worked very closely with us to help to get rental product built and built quickly and efficiently and to be able to sort of give back to these communities is one of the ways that we can to say thank you for forming a good partnership with us and allowing these things to happen.
Iain Grant: [00:39:01] Matthew Permanent supportive housing also badly needed in so many communities, and the apartment really takes pride in contributing to that solution as well.
Matthew Organ: [00:39:09] Supportive housing and affordable housing is absolutely a charge in this country where we can. We certainly want to make contributions to that. Got an example in golf. We have an apartment building. We have a spare piece of land or an additional piece of land behind the apartment building, which we have donated to a supportive housing project here in golf, as well as the land. We’ve donated a lot of our legal and a lot of our expertise time sort of to the total value of about $2.7 million into this supportive housing project. And we’re certainly very, very proud to be a part of that.
Iain Grant: [00:39:43] Matthew Organ is the president of the Skyline Apartment REIT. Fascinating. Matthew, thanks very much for joining us. Thank you. And with nearly 250 properties in 60 communities over seven provinces and with. Nearly 22,000 apartment suites. The fund president of the Skyline Apartment REIT joining me this afternoon, Matthew O’Regan Skyline Wealth Management offers private alternative investment products in real estate and clean energy. Investors are enjoying historically stable investment performance. Skyline prides itself on offering investors a unique investment experience, helping to cut out a lot of the noise and emotion that many investors have come to experience in the public markets. Skyline believes that investing should be enjoyable. It should be engaging and it should be rewarding. Connect with Skyline and share your investment goals. For more information on investments on the advisory team and the Skyline investment philosophy and a whole lot more, check out their website. Skyline Wealth Management S.A.. Skyline Wealth Management Dot S.A.. I’m Ian Grant and this has been asked the expert on Newstalk 1010 Toronto.