Transcript
Listen to Podcast
Iain Grant: [00:00:00] The information provided over the course of this program, solely the view of the commentators, not necessarily those of Skyline Wealth Management Inc, Newstalk 1010, Toronto or Bell Media. Products are not guaranteed and investor qualifications apply. Past performance may not be repeated. I’m Iain Grant. Welcome to Ask The Expert here on Newstalk 1010 on the series of shows that we’re now doing here. We’ve talked with Jason Castellan, who is CEO and Co-Founder at Skyline, Ray Punn, Vice President of Skyline Wealth Management. We got a chance to talk about the Skyline Wealth Management model. We also spoke with Matt Organ from the Skyline Apartment REIT, and we discussed Canadian Apartment Real Estate investing. Rob Stein joined us from the Skyline Clean Energy Fund, discussed Canada’s clean energy sector, and we’ve spoken with Gordon Driedger, who is President Skyline Retail REIT. And we got a chance to talk a bit about Canada’s Real estate sector. Well, this afternoon we are joined by another of Skyline’s Fund President Mike Bonneveld is joining me this afternoon. He is President of the Skyline Industrial REIT. And this hour, we’re going to be talking about investing in Canada’s Industrial Real Estate sectors. Mike, welcome in. Thanks for joining me.
Mike Bonneveld: [00:01:16] Thanks, Iain. And great to be here.
Iain Grant: [00:01:17] Good to have you, sir. Mike, Skyline Industrial REIT, a premium Canadian REIT portfolio, consists of state of the art industrial warehousing and logistics focused assets located along major transportation routes across the country. Now, the REIT, from what I understand, currently has properties spanning five provinces across the country. For our audience who might not be familiar. Can you tell us a little bit about the Skyline Industrial REIT? Basically, what is it and how does it work?
Mike Bonneveld: [00:01:45] Sure. Skyline Industrial REIT, much like the other Skyline REITs, is a privately held real estate investment trust. The portfolio is 100% focused on industrial, primarily warehousing, logistical and cold storage facilities across the country. We have about 9.3 million square feet in the portfolio. As I said, the majority focused on that larger, higher quality logistics kind of warehousing users.
Iain Grant: [00:02:17] Now, this will mark the ten year anniversary last year of the REIT being introduced and it is doing exceptionally well.
Mike Bonneveld: [00:02:25] When we started the REIT back in 2012. We had seeded the portfolio with a handful of smaller assets, did a couple of sizable transactions early on, really focusing on small bay industrial. The reason being is kind of it was more opportunity driven at anything else at that point, but really buying smaller assets with large numbers of tenants, which really help with a diversity and kind of insulating from a NOI and kind of portfolio performance standpoint as we’re kind of growing the portfolio. Over the past ten years, we’ve now grown the portfolio to be in as that kind of year end, 2022. We’re now about 1.4 billion in assets within the portfolio. As you said, we’ve expanded. We’re now in five provinces with strong focuses in southwestern Ontario, Montreal and Alberta.
Iain Grant: [00:03:22] Now 61 properties across those five provinces. As you said, you know, 9 million square feet of industrial space. And yet much like the apartment REIT or much like the other REIT’s that we’ve talked about, you know, someone who is investing doesn’t necessarily need to have that expertise in industrial warehousing, etc. That’s where your specialty comes in. You know, they’re there as an investor, not as an expert.
Mike Bonneveld: [00:03:47] Correct. You know, again, as you said, very similar to the other REITs, but where someone wants exposure within the real estate sector but doesn’t want to be hands on and own or trying to own and acquire and manage real estate assets on their own. Investing in Skyline Industrial REIT allows an investor to get exposure to the rapidly, I would say, growing and expanding warehouse logistics asset class in the country. But without having to take on that individual responsibility, you get the diversity across those 61 assets and growing. But also the biggest part of it is the expertise of the management company, of the senior staff in terms of sourcing new acquisitions developments and really managing that portfolio in a very hands on way. Day to day.
Iain Grant: [00:04:39] This is us, the expert here at Newstalk 1010 Toronto. I’m Iain Grant joined this hour by Mike Bonneveld. He is president of the Skyline Industrial REIT. And one of the interesting correlations and to be honest, I never honestly gave it that much thought until, you know, we were chatting about it earlier, was that with the massive growth in e-commerce, well, with all that stuff being ordered, there has to be somewhere to put all that stuff. And so there, you know, with the e commerce growth, there’s also been that significant increase in the demand for industrial real estate.
Mike Bonneveld: [00:05:08] The trend that you described, while that’s been evolving over the last ten years with the advent of online shopping and of companies like Amazon, what’s really accelerated that transformation obviously was COVID, where for 18 months people weren’t comfortable going out and shopping and so everything got delivered to your front door. That convenience is hard to walk away from. And prior to that, the general warehousing model for the majority of retailers, no matter what the form was always a just in time inventory policy, which was basically let’s keep as little inventory as we can, but as long as we can keep our customers happy and deliver product on a timely basis, the less product we have to buy from the manufacturers and store and reduce the amount of time we have to store it for the higher the profitability of that business. What Covid’s done and really pushed ten years worth of evolution into two is we’ve gone from that just in time to just in case. And what I mean by just in case is the warehousing inventory requirements for lots of businesses that you buy shoes from or furniture or school books for your kids, all of that because the business can’t sell you something if they can’t deliver to you. And if you don’t get it within X amount of days, you’re going to move on and you’re going to buy it from somebody else. And so there’s been a exponential growth in the demand of warehousing requirements and it’s globally. But if I look at on a Canadian basis, it’s everywhere. And all you have to do is drive along any major arterial and not just in the GTA or Montreal, but smaller centers, right? As you drive along the 401corridor in places like London and Guelph and Cambridge, Kingston and Belleville, the requirement for delivery of those goods is wherever the population is. So the growth really in that warehousing sector has expanded dramatically as customer needs and demands on timing has drastically changed.
Iain Grant: [00:07:19] And Mike, I’m one of those guys who, if I’m on Amazon or whatever, looking for a product, I want it. I want it tomorrow. If it doesn’t say delivery available tomorrow, I’ll move on and find something else. And I’m, you know, in the Toronto area. The surprising part to me is that that expectation reaches out. I’ve got friends now in northern Ontario and I say to them, you know, I get next day and he says, well, so do I. You know, it’s at the mailbox, it’s the post office. The next day. They’ve come to expect that service. It’s not just this little urban world that I live in where that’s an expectation. It’s all over the province. And I guess that also helps explain something else. The record vacancy rates that are, you know, not just here in Ontario, but across Canada for sure.
Mike Bonneveld: [00:07:58] And that’s been a fairly recent phenomenon, although the trend for falling vacancy availability rates within the industrial sector has been trending down for a number of years. But definitely, really like if you if you look at the stats since really kind of 2019 and then obviously 2020 when COVID hit, that’s where things really kind of fell off the map, just a sheer demand in terms of requirements. And we’ve been in that world now for, let’s call it, 36 months, and there’s been a significant amount of new development and we’re part of that across the country. That development hasn’t been able to keep up with the ever increasing demand. Right now, as you mentioned, the national vacancy level for industrial in Canada is hovering. I think the cue for stats that I saw that’s hovering around 1.5% nationally. And that’s a long, long ways away from what a tenant or a leasing agent would call a stabilized market. Where there’s balance, there’s a lot of inventory across the country and a lot of markets that’s in process that’s going to be delivered in the next 24 months where we’re at in terms of current occupancy plus the additional demand that is coming. You know, we’re a long ways away from being at a more balanced standpoint.
Iain Grant: [00:09:24] This hour. We are talking about the Skyline industrial REIT. And when we come back from traffic, let’s find out exactly what the REIT is comprised of. My guest this afternoon, Mike Bonneveld. He is president of the Skyline Industrial REIT. The Skyline Industrial REIT is a premium Canadian REIT portfolio consisting of state of the art industrial warehousing and logistics focused assets located along major transportation routes spanning five provinces across Canada. Skyline Wealth Management offers private alternative investment products. In real estate and clean energy. There are 5500 investors currently enjoying historically stable investment performance. They pride themselves on offering investors a unique investment experience, helping to cut out a lot of the noise and emotion of what many investors have come to experience in the public markets. All of the investments that Skyline Wealth Management offer are considered alternate investments, providing access to investments that are de-correlated from the public markets and driven by the underlying asset value. The Skyline commitment to investors to provide trusted advice and long-term investment excellence while building and strengthening extraordinary client relationships. Skyline believes that investing should be enjoyable, engaging and rewarding. Skyline wants to connect with you and hear about your investment goals. To learn more about Skylines investment philosophy, go to SkylineWealth.ca that is SkylineWealth.ca, to get in touch with the Skyline Wealth Management team and find out more about Skyline Industrial REIT. SkylineWealth.ca. I’m Iain Grant and Ask The Expert continues here on Newstalk 1010 Toronto and we are back this is Ask The Expert here on Newstalk 1010 Toronto I’m Iain Grant joined this hour by Mike Bonneveld. He is president of the Skyline Industrial REIT, a premium Canadian REIT portfolio consisting of state of the art industrial warehousing and logistics focused assets located along major transportation routes across the country. Now, Mike, we got a good introduction to the REIT during the last segment. I guess now we’re going to move on to just what exactly is the REIT comprised of.
Mike Bonneveld: [00:11:46] So we have a little over 9.3 million square feet of warehouse logistics, cold storage space across the country, as we mentioned before. The asset base is really larger bay. So larger tenancies and I would say more national, better covenant tenants right now I think as of end of Q3, occupancy was about 98 and one half percent. Again, really in line with what market vacancy levels are, which again is as we mentioned before, is exceptionally low. If you look to what the averages have been over the last kind of 10, 15, 20 years, one of the key features as we’ve built this portfolio and especially over the last number of years, has been acquiring a number of long term single tenant assets, be it via acquisition, which we’ve been fairly active on in the last couple of years, but also via a number of development partnerships that we put together really beginning in kind of mid 2019, 2020. Some of the key features, as I look at our portfolio, we’re about and we look at this a couple of metrics that we look at internally on a fairly regular basis. You know, our average in-place rent based on where we track our relative market rents in the specific nodes, we’re probably about 15 to 20% under market, which gives us lots of runway in terms of top line revenue growth as those leases roll over and leases escalate within their existing terms, but also to the covenants of those tenants. A number of the larger tenants we have in our portfolio would be groups like Nespresso, Canadian Tire, Purolator, Conduit Canada, and that’s just to name a few. But really kind of that kind of quality of business that’s really underlying the cash flow. And in the end the returns to the investor within the Skyline Industrial REIT.
Iain Grant: [00:13:44] Mike, a great point you brought up though, was that it’s not just, you know, basic warehousing space. The minute you mentioned refrigerated, it hit me that it’s not just, you know, four walls and a door that you’re offering here. It’s obviously of very of a variety of specialized environments.
Mike Bonneveld: [00:14:02] Yeah. And that’s an area that, you know, the whole cold storage business, which, you know, and from an operational standpoint is obviously a very complicated business, you know, relative to just providing a empty shell of a box as all of us go to the grocery store every week or every day, the amount of frozen goods that consumers demand today versus 20 years ago or even on the prepared food side, when you know, you go to your local grocery store, you know, the vast majority of people are buying a number of prepared meals. And so all of those need to be refrigerated, right. Whether it’s at -17 degrees or it’s at plus four degrees where it’s like a refrigerator, the demand for that type of facility continues to grow. The infrastructure cost to build a cold storage or freezer facility is multiples of just building a standard warehousing box. The barriers to entry on that business can be quite capital intensive and high. We’re in the process right now of doing a build to suit for conjecture with one of our development partners in Montreal. That building should be completed by Q3 of this year. And we’re really excited about that. It’s a state of the art, 50 foot clear height, building a number of different temperature zones. It’s about the whole complex is about 320,000 square feet. It’s going to take 70% of that pursuant to a 20 year lease. So it’s developments and relationships like that that we’re really excited about as we as we look forward to 23 and 24.
Iain Grant: [00:15:39] This is us, the expert here on Newstalk 1010 Toronto, I’m Iain Grant, joined by Mike Bonneveld. He is president of the Skyline Industrial REIT. Mike, you were just saying there about, you know, the specialized environments. And again, it’s a great indicator as to how Skyline thinks. I mean, you know, again, it would be easy to put up four walls and call it a storage facility, but when you start adding, you know, not only the real estate aspect to it, but the investment aspect to it, you know, thinking outside the box and creating these different forms of storage is a great way of adding additional investment value to your real estate value.
Mike Bonneveld: [00:16:15] Yeah, absolutely. And in the case of this one, you know, obviously it’s a partnership with the tenant. The entire refrigeration system is paid for by the tenant because it is a very specialized business. You know, you want to be essentially partnered with the tenant so that you’re all there’s an alignment of interest as opposed to the landlord building the whole thing. The tenant signs a short-term lease and then decides, Oh, I’m going to go somewhere else, and now you’re stuck with that massive capital cost. So we acquire and build in that refrigerated cold storage space on a very selective basis. And, and we really have to be happy with who we’re partnering with and the covenant and the quality of the operator for sure.
Iain Grant: [00:16:58] Since we started doing these shows and we cycle through a lot of them. You know, my initial conversation with Jason, we have talked about the story of Skyline and how it developed and the one you know, the one area of the secret sauce is that each REIT complements the other. It all fits together like a big jigsaw puzzle. I’m curious, where does the industrial REIT fit into the Skyline story?
Mike Bonneveld: [00:17:21] The starting point for the industrial REIT was back in 2012 and actually back then it was called the Commercial REIT. And the reason for that is it was the portfolio was a bit more mixed in terms of asset composition. So, you know, there were some office buildings, there was a lot of small bay industrial, there was a number of manufacturing facilities, as I would say, the industry and the demands have changed within the industrial and warehousing sector. We’ve kind of evolved how we’ve kind of grown and trimmed the portfolio. The interesting part, I think when we started the industrial REIT and it was really driven much like the retail REIT where a number of our existing investors that have been with us at Skyline for a long time had said, “wee love what you guys have done on the multifamily side. Can you guys provide a different product?” And so at that point we looked at the market and we looked at opportunities in terms of asset classes and the commercial/industrial side was really that next step to providing other alternatives for our investors. But it was always, you know, was it was opportunity driven where we saw a portfolio or a group of assets that it made sense making sure we had experienced operating people that could run the portfolio and senior management that would be representing and looking after investors capital. And when just shortly after we started the Commercial REIT back then we had brought on Mike McKenzie. Mike had tons of experience running industrial commercial properties and we were really lucky to hire him on. And he really grew the entity from when he got hired up until last year. And so, you know, it’s been a really interesting evolution to take a portfolio that started out with 100 million-ish in assets and now be, you know, a billion and a half looking towards 2 billion hopefully within the next 12 to 24 months.
Iain Grant: [00:19:34] Wow. This hour, we are talking about the Skyline Industrial REIT. And when we come back from traffic, Mike, we have talked a lot about the REIT, but now it’s time to find out a little bit about you and the journey that brought you to Skyline. My guest this afternoon, Mike Bonneveld. He is president of the Skyline Industrial REIT. The Skyline Industrial REIT is a premium Canadian REIT portfolio consisting of. State of the art industrial warehousing and logistics focused assets located along major transportation routes spanning five provinces across Canada. Skyline Wealth Management offers private alternative investment products in real estate and clean energy. There are 5500 investors currently enjoying historically stable investment performance. They pride themselves on offering investors a unique investment experience, helping to cut out a lot of the noise and emotion of what many investors have come to experience in the public markets. All of the investments that Skyline Wealth Management offer are considered alternate investments, providing access to investments that are correlated from the public markets and driven by the underlying asset value. The Skyline commitment to investors to provide trusted advice and long-term investment excellence while building and strengthening extraordinary client relationships.
Iain Grant: [00:20:59] Skyline believes that investing should be enjoyable, engaging and rewarding. Skyline wants to connect with you and hear about your investment goals. To learn more about Skylines investment philosophy, go to SkylineWealth.ca that is SkylineWealth.ca. To get in touch with the Skyline Wealth Management team and find out more about Skyline Industrial REIT. SkylineWealth.ca.I’m Iain Grant and Ask The Expert continues here on Newstalk 1010 Toronto. We are back. This is Ask The Expert here on Newstalk. 1010 Toronto. I’m Iain Grant. I’m joined this hour by Mike Barneveld. He is president of the Skyline Industrial REIT. Aretha currently has property spanning five provinces across Canada. It’s a premium Canadian REIT portfolio consisting of state of the art industrial warehousing and logistics focused assets. We’ve talked all about it for the first half of the show. Mike So I’ll tell you what for this part. Let me find out a little bit about you. Can you tell us a little bit about you and your professional journey? And I guess, you know, how did you end up in the president’s chair?
Mike Bonneveld: [00:22:05] I started in the real estate industry a long time ago, back in 94. I got hired on by a UK based real estate consulting and advisory firm, work with them, primarily doing consulting and valuation work in Toronto. So I spent about three or four years there and then I moved over to the investment banking side again with a real estate focus. Spent five years there with one of the Tier one investment banks on the corporate finance side, doing as you do when you’re when you’re younger and at an investment bank, you know, doing a number of different roles, everything from equity raises for existing companies, IPOs, mergers and acquisitions, work worked on the CMBS team for a while and some larger brokerage on behalf of the bank left there actually went on a bit of a sabbatical with my wife for a while, did some traveling after working a lot, 100 hour weeks and then came back, joined an existing Canadian real estate trust, and I ran acquisitions for that company for about three years and then got asked to come back to a different investment bank.
Mike Bonneveld: [00:23:17] Three more years there. So it takes us to 2008 and at that point was actually working on an advisory disposition transaction on behalf of the bank where Canadian Life Company was the client Skyline Back then, dealing with Jason Castellan was the acquirer for part of the portfolio. And at the end of that process, after a number of conversations, Jason asked me to join. The process took about eight months and by Feb of 09, I had come on and was asked to run the acquisitions and finance groups for the Skyline Apartment REIT at that point in time. And since then at Skyline really spent the majority of the time running acquisitions across all the REITs. We started the industrial commercial REIT in 2012 and then also for the retail REIT. And then as those entities, we built the teams out within both of those, the apartment and the retail REIT in terms of acquisitions and asset management, then really focusing 100% earlier and as I mentioned in 22 with Mike retiring so that now I’m 100% focused just on the industrial REIT.
Iain Grant: [00:24:26] Guys to give you a different kind of hands on experience. I mean, just looking over your experience with the huge banks in the country, obviously people would recognize the names right away, but working with those organizations, it can’t give you that same kind of granular hands on, Let’s try this, let’s move that, let’s work with this. That you do know. Obviously, with Skyline.
Mike Bonneveld: [00:24:47] Until I had joined Skyline, all the firms I were with were larger global firms for the most part. And there’s obviously, you know, there’s benefits within those firms. But for sure. Especially early days joining Skyline. The ability to sit down with the founding partners and say, okay, how do we take ourselves from A to B? What do we need to do as opposed to doctrine being kind of put down from a CEO You’ve met once before in your life and you’ve worked at the business for five years, right?
Iain Grant: [00:25:16] So, absolutely. I’m just curious, you know, you mentioned that the Skyline industrial REIT, you know, it pretty much came to life around 2012. So we’re sitting here ten years later. It’s an entirely different world out there than it was a decade ago. How has the strategy changed or I guess, evolved since its inception?
Mike Bonneveld: [00:25:38] It’s a great question because I think we’ve really kind of pivoted the cruise ship pretty dramatically in that ten years. I would say the first six, seven, eight years, the focus was really on small bay, multi industrial. We had acquired a couple of portfolios and not every asset within a 30 or 40 building portfolio fits your long-term strategy. So we’ve always been pruning assets, the portfolio that we didn’t think fit 100% with what we wanted to do at that time. So we’ve always been doing that. But about 18 months ago, Mike Mackenzie and I had a long chat about how we wanted, based on what we were seeing about the dynamic shift in inventory requirements for businesses and tenants, but also what we were seeing as a result of COVID and the whole massive shift in terms of online shopping and door to door delivery. We made a decision to sell the vast majority of our older assets, specifically the older, smaller base stuff that we had, which the predominance was in Ontario. We started that process early 2021. We’re virtually through it now. We have a couple of small assets that are still in process and I hope we’ll get cleaned up over the next kind of two three quarters. But since that time period, we’ve sold in and around a half a billion dollars worth of real estate, which when the time when most people are trying to acquire more industrial, no matter what it looks like.
Mike Bonneveld: [00:27:04] We got a lot of questions on it. In a couple of years. We’ll see if that was the right decision. But as I sit here today, especially as you know, every economist is talking about the pending or recession we are in right now, I’m really happy about the decisions we made, the equity we generated for our investors as a result of those dispositions, and then also being able over the last eight, 12 months to redeploy 100% of that capital into, as we described before, the larger, more modern institutional quality real estate that we think is a little more defensive if we get to that downside scenario at some point. So we’re really happy with that decision. Again, like time will tell. You know, as we sit here today with almost a billion and a half dollars worth of real estate, all that capital redeployed, we’ve got a couple of development partnerships, primary one in Montreal with a group called Rosefellow, and we have another equity partner in that fund as well. We’ve got about two and one half million square feet of state of the art industrial that is in process of being built, but most of that will get done by hopefully kind of end of 25. We’re really excited about as those assets get completed, stabilized and operational within the portfolio.
Iain Grant: [00:28:24] This hour, we are talking about the Skyline Industrial REIT and take a break. When we come back from traffic, let’s ask Mike to look forward. I’m going to ask him to peer into his crystal ball and see what opportunities he thinks 2023 may have in store. And also, I guess, what kind of challenges could be lurking on the horizon. My guest this afternoon, Mike Bonneveld. He is president of the Skyline Industrial REIT. The Skyline Industrial REIT is a premium Canadian REIT portfolio consisting of state of the art industrial warehousing and logistics focused assets located along major transportation routes spanning five provinces across Canada. Skyline Wealth Management offers private alternative investment products in real estate and clean energy. There are 5500 investors currently enjoying historically stable investment performance. They pride themselves on offering investors a unique investment experience, helping to cut out a lot of the noise and emotion of what many investors have come to experience in the public markets. All of the investments that Skyline Wealth Management offer are considered alternate investments, providing access to investments that are correlated from the public markets and driven by the underlying asset value. The Skyline commitment to investors to provide trusted advice and long-term investment excellence while building and strengthening extraordinary client relationships.
Iain Grant: [00:29:55] Skyline believes that investing should be enjoyable. Engaging and rewarding. Skyline wants to connect with you and hear about your investment goals. To learn more about Skylines investment philosophy, go to SkylineWealth.ca. that is SkylineWealth.ca. To get in touch with the Skyline Wealth Management team and find out more about Skyline Industrial REIT SkylineWealth.ca. I’m Iain Grant and Ask The Expert continues here on Newstalk 1010 Toronto. We’re back. This is Ask The Expert here on Newstalk. 1010 Toronto. I’m Iain Grant. Today we are talking about the Skyline Industrial REIT. It’s a premium Canadian REIT portfolio consisting of state of the art industrial warehousing and logistical focused assets, assets located along major transportation routes across the country. I’m in conversation with Mike Barneveld, who is president of the Skyline Industrial REIT. Mike, one of the things that I admire about Skyline is the great respect that the company has for the path that’s brought you guys to where you are today. But it also is really never taking an eye off what’s lying ahead as well. And I’m curious, while I got you here, what other opportunities do you see emerging in the industrial sector in the upcoming year.
Mike Bonneveld: [00:31:15] With national vacancy levels at historic lows? We’re participating in a number of development partnerships and we really see a flight to quality of tenants where they have the options, where they can at least that type of space. We’ve got about two and one half million square feet that we see coming online in the next couple of years. And the other thing that’s quickly changing in terms of the types of assets that are being built by others but also by us is really from a sustainability lens. Five years ago, seven years ago, there was talk about if you’re building a new office building, you’re going to build a lead building. It’s a little tougher when you’re building warehousing because you’re really building a box. It’s a harder thing to quantify the advantage of, especially to a tenant. But as we look at the developments we’re working on right now, we’re working on the REIT’s first zero carbon and net zero energy building out in development in Halifax with some partners. A number of our Montreal developments we’re working on again trying to get buildings to net zero energy basis and net zero carbon where we can, you know, and I think that’s really in the best interests of all of us, but especially as we’re investing our unitholders capital, looking towards what the demands are going to be in the future from tenants and what’s going to be important to them. You’re starting to see institutions look at their portfolio the same way and disposing of assets that they don’t think they can achieve that with. A lot of the larger institutions in their real estate components are saying they’ve mandated themselves to be either zero carbon or net zero by a specific date in the not too distant future. So there’s a big shift there. And I think, again, it’s something we all need to be trying to do to the best of our abilities. But there’s also going to be and we haven’t we’re not quite seeing it yet, but there’s going to be a pull from the tenants requiring it for those type of tenants that want best in class facilities.
Iain Grant: [00:33:13] And obviously, as we talk about, you know, what’s, you know, we’re looking forward to in the future, what about challenges that may lie ahead? What are you watching out for?
Mike Bonneveld: [00:33:21] You know, anybody who’s looking to put capital anywhere, the interest rate hikes we’ve seen over the last eight months is something I’ve never seen in my 30 years in any parts of this business. So we’re cognizant of that. Valuation methodologies are changing as we speak, given the higher cost of capital, whether it be cost of equity, cost of debt and where capital is going to move when you’ve got such volatile times as we’re in right now. But I think the opportunity in that is when capital’s cheap, especially when interest, when you can refinance an asset and you’re paying two and a half percent or 3% interest on a historic levels, that’s basically free. And so and institutions want to lend capital out where they can in a more challenging lending environment as we’re in today. I actually think that leads entities like Skyline and specifically in the industrial side of the business, it’s opportunity for well capitalized groups. As I mentioned before, our balance sheets very strong as a result of the disposition program. We’ve gone through our debt to IFRS value and we’re not going to get the number exactly right, but we’re in the mid forties, which I’m really happy with. And so what that does is it gives us a lot of ability to be opportunistic when we see opportunities happen, be it from an acquisition side, be it from a development standpoint or being able to step into someone’s shoes where maybe they’re not quite as well capitalized as we are.
Iain Grant: [00:34:46] You’re listening to Ask The Expert here on Newstalk 1010 Toronto. I’m Iain Grant, I’m joined this hour by Mike Bonneveld. He is president of the Skyline Industrial REIT. Mike, I’m just curious, how do you determine which properties are suitable for acquisition for the REIT. Are there specific assets you’re looking for?
Mike Bonneveld: [00:35:05] You know, as we look forward and with the flexibility that our current financial position puts us in is we’re really looking towards that, call it institutional quality, best in class asset. One of the things that as I look at as we possibly sit in a recession, is looking at covenant of the tenants in place. If we’re buying existing IP asset, there’s probably going to be some distress depending on how long we sit in a recession, you know, and what five and one half percent debt does for both businesses and other real estate owners. Our focus is really that best in class asset that in poor economic times tenants will gravitate to. But also a newer asset needs much, much less capital, which again, from our investors standpoint is an advantage, but also looking towards what the trend as we see inventory models change, as we see efficiency requirements from tenants change. And even if we look at power requirements from tenants as that continues to evolve and go up as parts of the inside of businesses go all electric where it used to be. A good example is to move inventory around that used to be propane and now when you go into most facilities it’s all electric. As all of that equipment is pulling power from the grid, the power that you need even in a warehouse facility, that power requirement is going up. So we look at on a go forward basis what requirements we may need to fit in as people’s businesses change. We do look a lot to the US and see what trends are there because generally they’re ahead of us in terms of what’s being rolled out by both on the development side but also from some of the national and multinational tenant requirements that you see in major transportation hubs like LA and Chicago.
Iain Grant: [00:37:00] Mike, as we wrap up the arc, you tell us a little bit more about the REIT’s development pipelines. Any partnerships?
Mike Bonneveld: [00:37:06] Yeah, and I think and that’s a part for me personally, you know, the stuff that we’ve put together in the last couple of years is the most exciting. As I look towards 23, 24, we’ve got a couple of partnerships. The largest one, as I mentioned before, is with Rosefellow partners and our equity partner on that BitVentures. It’s an industrial focused development funds that we’re in. We’ve got 11 projects at various stages of development. We anticipate by Q3 of 23 for three, possibly four of those assets to be fully constructed and fully leased with us acquiring the unowned interest that our partners have. So that would add about 850,000 square feet to the portfolio. And we have a number of other large parcels within that fund that we’re kind of early stages on. We could probably see for 24 another million square feet being added just strictly from that development partnership. So that’s an exciting thing we are looking towards and we spend a lot of time with our partners going through where we’re at in terms of be it entitlement or on the construction side or the leasing side. We also entered a partnership in Halifax. The net zero buildings that we’re building out there in the Bayer’s Lake area, that would be our first venture on the East Coast. So really looking forward to that. And we continue to be big believers in the growth, not only industrial warehousing market in Alberta, but where rents are relative to the balance of the country, we think specifically Calgary, but also Edmonton. There’s a lot of runway of where rents can go compared to where they at and what you’re seeing there are half of what they are in Toronto and about 60 or 70% of what they are in Montreal. So we’re big believers in what that near-term top line revenue number is going to look like within our Alberta portfolio in the next couple of years.
Iain Grant: [00:39:04] Wow. Mike Bonneveld President Skyline Industrial REIT. Mike, thank you so much for joining us this year.
Mike Bonneveld: [00:39:09] Oh, thanks very much, Iain. It’s been it’s been a pleasure.
Iain Grant: [00:39:11] The Skyline Industrial REIT is a premium Canadian REIT portfolio consisting of state of the art industrial warehousing and logistics focused assets located along major transportation routes spanning five provinces across Canada. Skyline Wealth Management offers private alternative investment products in real estate and clean energy. There are 5500 investors currently enjoying historically stable investment performance. They pride themselves on offering investors a unique investment experience, helping to cut out a lot of the noise and emotion of what many investors have come to experience in the public markets. All of the investments that Skyline Wealth Management offer are considered alternate in. Investments, providing access to investments that are d correlated from the public markets and driven by the underlying asset value. The Skyline commitment to investors to provide trusted advice and long-term investment excellence while building and strengthening extraordinary client relationships. Skyline believes that investing should be enjoyable, engaging and rewarding. Skyline wants to connect with you and hear about your investment goals. To learn more about Skylines investment philosophy, go to SkylineWealth.ca that is SkylineWealth.ca. To get in touch with the Skyline Wealth Management team and find out more about Skyline Industrial REIT. SkylineWealth.ca. I’m Iain Grant and this has been asked the expert on Newstalk 1010 Toronto.