PV, Mit & Jeff
Most commentary about Canadian real estate focuses on three things. Interest rates. Housing policy. Who is in office. All three matter on a two year horizon. None of them matter nearly as much on a ten year one.
We do not need rates to cooperate. We need people to keep moving to Ontario, permits to stay constrained, and replacement cost to keep rising. All three are happening.
Our conviction in Ontario multi family is not built on a rate forecast. It is built on three structural forces that keep pushing rents up regardless of what the BoC does next week or which party forms government after the next election. Here is what we are actually watching
1. Demand. Immigration is pouring into Ontario. Canada is targeting roughly 500,000 new permanent residents per year. Ontario absorbs close to 40% of them. Over the next five years that is nearly 1.9 million new residents. The vast majority land in rental housing first. They do not buy homes for years. That is 1.9 million new renters competing for the existing rental stock.
2. Supply. The pipeline is collapsing. Housing starts in Ontario are down roughly 35% from their 2021 peak. Municipal approvals are slower, development charges are higher, and construction financing costs remain meaningfully above pre 2022 levels. The buildings that would have eased supply pressure in 2027 and 2028 are simply not being built. That shortfall is already locked in.
3. Cost. Replacement cost keeps rising. Labour is up. Materials are up. Land is up. The cost to build a new rental unit in Southwestern Ontario is roughly 38% higher than it was in 2020. Every existing rental building in our portfolio is more expensive to replace, and more valuable as a result. You cannot build new supply below the cost of existing supply. That is a floor under asset values.
25 Storey Purpose Built Rental · Southwestern Ontario
$100K Minimum · Accredited / Existing FC Investors
Targeted Return: 20% to 24% Annualized
These three forces do not make returns easier to predict month to month. They make them easier to predict over a ten year horizon. Rates will move. Political cycles will change. Credit markets will tighten and loosen. None of that changes the math of 1.9 million new residents competing for a shrinking pipeline of rental units.
Our job is to own, operate, and steadily improve multi family buildings in submarkets where these three forces are strongest. London, Chatham, Ingersoll, Sarnia, and St. Thomas all sit in the path of Ontario's population growth without the speculation premium that drives Toronto and Ottawa pricing.
We buy at disciplined cap rates. We improve NOI through turnover. We refinance and hold. The thesis compounds. That is how the 15% target becomes realistic rather than aspirational.
Cash Flowing Apartment Buildings · Southwestern Ontario
$10K Minimum · RRSP / TFSA / RESP / LIRA Eligible
Distributions: 7% Annualized, Paid Monthly
"I owned two rental properties for eight years. By the end I was exhausted. Tenant issues, maintenance calls, mortgage stress. I sold them and moved the capital into FCPRET. Same exposure to real estate, similar returns, zero involvement. Best financial decision I have made in the last decade."
The BoC rate decision lands Tuesday, April 29. Whatever it prints, none of the three forces above moves an inch. The April 30 FCPRET closing is one day later. Two back to back events. One is noise. The other is the next quarter of your distribution.
The short horizon belongs to rates and politics. The long horizon belongs to fundamentals. Population up. Supply down. Cost up. Those three lines do not need a rate cut to keep working. They keep working because they are built into how Ontario actually grows. Our job is to own the assets that sit in the path of all three. That is the thesis. It has been the thesis since inception. It will be the thesis through 2030.
To your success,
PV, Mit & Jeff
P.S. Six days to the April 30 FCPRET closing. If the question you have been sitting on is whether this thesis holds up over the next ten years, reply to this email with "interested" and we will walk you through the math on a call.
By the Numbers
