Two Ontario purpose built rental projects moved forward this week. One broke ground. One is heading to council. Same asset class. Two very different rooms. Only one of them actually moves the needle on the housing crisis.
PV, Mit & Jeff
The room every private developer is chasing, versus the room this country actually needs to build in. A side by side you cannot unsee.
Yesterday we walked through the sliding scale on Wellington Towers. Between 10 and 50% of the total units across both towers held as deeply permanent affordable, depending on how much capital the three levels of government put on the table. At the top of that scale, up to 500 doors coming off a 7,000 household waitlist.
This morning, RENX ran a story about another Ontario purpose built rental starting construction. Daniels Corporation and Emshih Developments, 256 units, 16 storeys, on Dundas Street East in north Oakville. First phase of the Oakville Yards master planned community. It is a legitimate project. It is well designed, well capitalized, and it will lease up.
It is also nothing like what we are building at Wellington.
Today's Deep Dive is a side by side on the two projects. Same asset class. Same province. Same news cycle this week. And two completely different theories of what a purpose built rental is for.
Oakville is one of the highest income municipalities in Ontario. Median household income comfortably above $130,000. A short GO Train ride into Toronto. The Dundas Street site sits in the north end, adjacent to the growing uptown core, near parks, trails, and new retail. A young professional couple moving into a two bedroom there is doing well. The site is well selected for the tenant it targets.
London is a working city with median household income closer to $75,000, an economy anchored by manufacturing, healthcare, education, and the trades, and a residential vacancy rate under 2%. The Wellington Towers site sits directly on the corridor the province just spent roughly half a billion dollars building the Bus Rapid Transit line on. This site was picked because it is where the working city gets to work. A cashier at a Wonderland Road grocery store, a home care aide making the rounds through Westmount, a warehouse worker at the airport industrial park, a nurse at Victoria Hospital. That is who rides the BRT. That is who the building is designed for.
Neither site is wrong. But they are answering completely different questions about who a purpose built rental should serve.
Daniels' own description of the target renter is telling. Young professionals looking for a high quality rental. Couples. First time renters. Downsizers. Families in two and three bedroom rentals. Every one of those tenants exists. Every one of them can afford aspirational suburban rent. That is the room the private rental market has been building for since 2015.
Now compare with the London community housing waitlist. More than 7,000 households. Working families with kids who cannot access $2,200 for a two bedroom on the private market. Seniors on fixed income. Households on ODSP. Working Londoners earning $22 an hour and paying more than 60% of their income to their landlord. Nurses on the night shift at Victoria Hospital who can afford $1,100 but not $1,700.
Every affordable door Wellington delivers between $980 and $1,100 per month is a door that comes off that list. Depending on where the government capital lands, that is between roughly 100 and 500 households pulled out of a waitlist and into permanent housing on a transit corridor. That does not happen at market rent. It cannot. The private market cannot underwrite $980 rent without either a subsidy in the stack, or an operator willing to run permanently below market. We are willing to run permanently below market on 10 to 50% of the units because the government is putting up the capital to make the math work.
The Oakville project is financed by Scotiabank and Laurentian Bank. Straight private commercial construction financing. No CMHC involvement. No federal or provincial capital in the stack. That is a rational financing choice for a market rate building serving Oakville renters at market rents. The banks are the right lender. The tenants can pay.
Wellington Towers is being structured to pull three levels of government into the equity stack alongside private accredited LPs. Federal, through Build Canada Homes. Provincial, on the affordable side tied to the transit oriented density the BRT investment was funded to unlock. Municipal, through the City of London's own affordable housing tools. The reason the government is at that table is that they cannot get 500 permanently affordable doors on a transit corridor any other way, and they know it. A commercial bank cannot underwrite $980 rent. A subsidy voucher runs out in five years. Public capital in the equity stack is the only structure that delivers permanent affordability on private operating expertise.
This is not a subtle distinction. It is the difference between a project that adds 256 market rate rentals to Oakville, and a project that adds up to 500 permanently affordable homes to a city with a 7,000 household waitlist.
The private rental market in Canada is very good at serving the top of the income distribution. Rooftop pools, geothermal, curated amenity stacks. There is no shortage of capital chasing that room. The Oakville project will lease up. It will do fine.
The room Foundation Capital operates in is different. Workforce and affordable rental, from $980 up to roughly $1,500 per door, in mid market Southern Ontario cities. That is the room where waitlists are years deep. It is also the room where private operating expertise plus public equity capital is the only viable structure. Very few private operators have both the operating chops to run below market and the credibility to bring three levels of government into the stack. That combination is the moat.
On the FCPRET side, it is the same team, the same operating platform, and the same tenant thesis, running across roughly 350 units of existing multi family in London, Chatham, Ingersoll, Windsor, and Wallaceburg. Monthly cash distribution. Registered account eligible. The room we have been building in for a decade.
PV and Jeff walk through the ministry meeting, the 7,000 household waitlist behind the demand, and what the September council file actually decides.
$10K Minimum · RRSP / TFSA / RESP / LIRA Eligible
Targeted: 15% Annualized (7% cash monthly + 8% appreciation)
Mid market core workforce housing across Southern Ontario. Open to new subscribers.
Roughly 1,000 Units Across Two Towers · London, ON
Tranche 1 closed. Accredited investors interested in Development Fund III should signal now.
Talk soon,
PV, Mit & Jeff
P.S. The Daniels and Emshih project is a well designed building for its room. The comparison is not a critique of their work. It is a map of the two rooms Canadian rental capital gets deployed in, and which one is still under built. Reply Rooms if you want to talk about where FC fits for you.
