PV, Mit & Jeff
You've probably seen the headlines. Immigration is down 18% year over year. Canada lost a net 290,000 non-permanent residents last year. The government cut permanent resident targets to 380,000 and capped international students. Rental vacancy is rising. Some are calling this the end of the rental boom. We see it differently. Here's why →
Canada's housing shortage was not created by the recent interest rate cycle. It reflects decades of underbuilding in the places people most want to live.
The narrative is simple: fewer immigrants means less rental demand, which means trouble for landlords. National vacancy has risen to 3.1%. CMHC expects lower immigration and an increase in first-time homebuyers to "continue to reduce rental demand throughout 2025 to 2027." In some markets like Calgary, vacancy jumped from 1.4% to 4.8% in a single year as new supply flooded in.
The immigration slowdown is real, but it doesn't erase decades of structural underbuilding. Between 2015 and 2023, Canada's housing stock fell short by 545,000 units. CMHC says Canada needs 3.5 million additional units by 2030 just to restore affordability. Even with immigration cuts, that gap will take years to close. RBC Economics put it clearly: the cuts will help narrow the gap, but they won't solve the crisis.
And here's the part most people miss: at the same time that demand is cooling slightly, new construction is collapsing. Condo starts in Toronto have dropped 88% in three years. Apartment starts fell 80% in Toronto in 2025. Projects are being cancelled and shelved. Given multi-year development timelines, today's decline in starts creates a renewed supply shortfall within two to three years. The Parliamentary Budget Officer projects household formation will stay below its historical average until 2030.
It's also worth noting where rents are actually dropping. The declines are concentrated in luxury and higher-end rental products, particularly new-build condos and Class A towers in downtown cores. That's not our market. FCPRET owns apartment buildings in Southwestern Ontario that serve core housing demand: working families, healthcare workers, and essential service providers who need affordable, well-maintained places to live. That demand doesn't disappear because immigration policy shifts. Our vacancy sits under 2%.
And our buildings keep going up in value, even as the broader market softens. We actively pursue turnovers so we can renovate units and bring rents to market rates. Every turnover increases Net Operating Income, and in apartment buildings, NOI drives property value. We don't need the market to go up. We create equity through operational improvements.
FCPRET pays 7% annualized distributions, deposited monthly. On $250K, that's $17,500 a year in cash flow. Add the targeted 8% appreciation from our value-add improvements and you're looking at $37,500 in total return on $250K in year one.
Cash-Flowing Apartment Buildings · Southwestern Ontario
Targeted Total Return: 12 to 15%
Distributions: 7% Annualized, Paid Monthly
"We've been investing with Foundation Capital for the past 7 years, and it's been one of the best decisions we've made for our family. Unlike the stock market, where volatility can feel unpredictable and out of your control, this approach to real estate investing feels tangible, strategic, and backed by real assets. Over the past seven years, they've delivered the consistency in returns they promised. That reliability has protected our hard-earned money and is exactly why we continue to invest more."
Most developers have hit pause. Tariffs are driving up construction costs. The condo model is broken. But we're not building condos. Wellington Tower is an $80 million purpose-built rental project designed to qualify for CMHC financing and government grants that directly reduce our construction costs compared to a typical condo developer. There is a significant shortage of core rental housing in Ontario, and every developer who shelves a project today makes that shortage worse by the time we deliver.
When we build Wellington Tower, the building gets valued based on its Net Operating Income, not what individual buyers are willing to pay per unit. We tenant the building, stabilize the income, and sell it to FCPRET or another institutional buyer at a price based on that NOI. The exit is predictable because people always need somewhere to live. And by the time we deliver, we'll be one of the few new buildings in a market that has been starved for supply for years.
The Development Fund targets 24% to 27% annualized returns over a 4-year horizon. We started with 50 investor spots. 17 are already committed. 33 remain.
Purpose-Built Rentals · Build-to-Core, 4-Year Horizon
CMHC Financing + Government Grants
Targeted Returns: 24% to 27% Annualized
The Supreme Court struck down Trump's IEEPA tariffs on Friday in a 6-3 ruling. Trump pivoted to Section 122 with a 15% global tariff, but it's capped at 150 days and CUSMA-compliant goods are exempt. Steel and aluminum tariffs remain under separate authority. The CUSMA review is targeted for July 1. We're watching how this reshapes construction costs and new supply over the coming months.
Immigration policy will shift again. It always does. But the structural shortage took decades to build and it won't be fixed by a few years of lower intake. The projects that got shelved aren't coming back quickly. And in the meantime, our buildings stay full, our NOI keeps growing, and we keep building what the market needs most.
To your success,
PV, Mit & Jeff
P.S. Headlines change. The structural housing shortage doesn't. If you want to understand how our two strategies work together to capitalize on this, just reply to this email and say "interested" and we'll set up a time to walk you through it.
By the Numbers
