PV, Mit & Jeff
Welcome back to Investor Q&A. Last week we covered how the unit price works, tenant screening, Development Fund 1, and timing around the audit. This week, we're answering the next four questions that come up on almost every call.
If you're thinking it, someone else is too. We'd rather answer the tough questions upfront than have you wonder about them after.
As always, reply to this email with your question and we'll answer the best ones next Thursday. Nothing is off limits.
Portfolio vacancy rate. Across 350+ units, we consistently maintain vacancy under 2%. Industry average for Southwestern Ontario apartment buildings sits closer to 3% to 5%. Strong tenant screening, same day maintenance response, and renovated units drive demand. Lower vacancy means more consistent income flowing to investors.
Nothing in investing is guaranteed, and we will never use that word. Here's how the return breaks down. The 7% is a fixed distribution, paid monthly into your account. It comes from the rental income our buildings generate. We collect rent, pay operating expenses, service the mortgage, and distribute the net income to unitholders. We have paid this distribution every single month since inception. The other 8% is capital appreciation, which we target through renovations, rent lifts, and operational improvements that increase the value of our buildings. We have met or exceeded that target every year since inception. Together, that's ~15% in total targeted returns. The 7% hits your account monthly. The 8% compounds inside your unit price over time. You can also reinvest your distributions through our DRIP at a 2% discount on the current unit price.
This is a private investment, which means your units are not listed on a stock exchange. You cannot sell them with one click the way you would a public stock. However, FCPRET does have a redemption process. If you need to exit, you submit a redemption request and we work with you on timing. Redemptions are subject to the terms in the offering memorandum, and in practice we have been able to accommodate every request to date. That said, this investment is designed for people who are comfortable with a longer time horizon. The returns are built on real estate fundamentals that compound over time, and investors who stay in longer benefit from both the monthly distributions and the capital appreciation. If liquidity is your top priority, this may not be the right fit, and we'll tell you that upfront.
London, Ontario · CMHC Financing + GST Rebate Eligible
Government Grants + De-Risked Capital Stack
Targeted Returns: 24% to 27% Annualized
Public REITs trade on an exchange, which means their unit price moves with market sentiment, interest rate speculation, and broader stock market volatility. You could own the exact same buildings and see your portfolio swing 20% in a quarter because of macro headlines that have nothing to do with the actual properties. FCPRET is a private trust. The unit price is based on the Net Asset Value of the real estate we own, updated quarterly based on internal NOI review, with an annual audit by MNP as an additional verification layer. It moves when the buildings improve, not when the stock market panics. The other major difference: we manage every building ourselves. No third party property managers. Our own renovation crews, our own maintenance staff. That operational control is what allows us to drive NOI growth consistently. Most public REITs outsource management entirely.
Yes. FCPRET units are eligible to be held in a TFSA, RRSP, RESP, LIRA, or non-registered account. This is one of the most common surprises for new investors. Most people don't realize that exempt market investments can be held inside registered accounts. Here's why that matters: if you hold FCPRET in your TFSA, both the 7% monthly distributions and any capital appreciation are completely tax free. In an RRSP, your investment grows tax deferred until withdrawal. The process is straightforward. Your investment is processed through Equivesto, our licensed Exempt Market Dealer, and they handle the transfer with your account custodian. Most investors are fully set up within two weeks of their first call. Book a call and we'll walk you through it
Cash-Flowing Apartment Buildings · Southwestern Ontario
Targeted Total Return: ~15%
Distributions: 7% Annualized, Paid Monthly
"I had cash sitting in my RRSP earning almost nothing. GICs at 4% that barely kept pace with inflation. My accountant mentioned there were exempt market options that RRSP accounts could hold. I found Foundation Capital and the timing worked out perfectly for my contribution room. The 7% in distributions alone beats what I was getting before."
This week PV, Mit, and Jeff break down the latest portfolio updates, new unit creation at our London buildings, and what the April 30 closing means for investors looking to lock in before the next unit price change.
Got a question about the fund, the portfolio, distributions, or the development? Reply to this email. We'll answer the best ones next Thursday. Nothing is off limits.
To your success,
PV, Mit & Jeff
P.S. If you've been holding FCPRET in a non-registered account and have TFSA or RRSP room available, reach out. We can walk you through how to optimize your position across accounts. Book a 15 min call
