Five things shaping Canadian housing this June. The one number worth watching. And what changes at midnight on July 1 for any investor sitting on a FCPRET subscription right now.
PV, Mit & Jeff
Five things to watch in Canadian housing this month, why each one matters for the Foundation Capital portfolio, and the one date that resets the math for FCPRET investors.
A lot happened in May. Ed Holder joined the senior advisory team. The Foundation Affordable Housing Fund officially launched. Wellington Towers Tranche 1 was extended. The FCPRET Canada Day promo opened. Today's briefing is what all of that compounds into for June.
June is where it all has to compound. Today's briefing is the five things we are watching this month, why each one matters for the portfolio, and the date that resets the math at the end of it.
Between now and Canada Day. That window is when every FCPRET subscription receives 2% bonus units on top of the standard allocation. On a $100,000 subscription, that is roughly 149 additional units, worth about $2,000 at today's $13.40 unit price. After July 1, the same subscription gives you only the units you paid for.
The BoC has been signalling a continued pause. Markets are pricing in no change. Whether they move or not, here is what does not change inside Foundation Capital. Our financing is locked with CMHC. Our cost of capital is set. The 7% FCPRET distribution still lands on the 15th. Rate moves change the math on bonds and the math on retail mortgages. They do not change the math on a rent cheque, and they do not change our debt service. That is the entire reason we are in this asset class.
The federal forecast has been revising downward all year. Housing starts are projected to keep falling through 2028. Less competing supply at our 2030 stabilization date is good for the exit on Wellington Towers and good for rent dynamics on every building FCPRET already owns. The longer this trend holds, the wider the moat gets for buildings already in the ground.
PV, Mit and Jeff cover the Ed Holder announcement, the K shaped economy, Development Fund III in early scouting, and the family office conversations driving the next phase of the portfolio.
More than 1.2 million Canadian households renew their mortgages this year, most at rates roughly double what they locked in five years ago. That is monthly payment shock for owners. It is also structural demand for rentals, because every household that decides homeownership no longer works has to live somewhere. Apartments fill from this pressure quietly, every quarter.
A Montreal based fund quietly took down hundreds of unsold Toronto condos this spring to convert them into rentals. Berkshire Hathaway just placed a $6.8 billion bet on US housing, one of the largest single moves into residential they have ever made. Family offices we have been speaking with are actively scoping Canadian apartment portfolios. The buyer pool that exits Wellington Towers in 2030 is getting deeper, not thinner. Every quarter that this trend holds makes the institutional exit math more durable.
Last week we announced that Ed Holder, former Mayor of London and former Federal Minister, joined the Foundation Capital senior advisory team. He has already started. Initial conversations are underway, and we are working through the first set of introductions on the projects in our pipeline. Every file in our pipeline now has a senior advisor whose name is recognized at city hall before the package even opens. The downstream effect plays out across the next several months.
The BoC rate decision. The June 15 FCPRET distribution landing on schedule. The first formal city hall conversations with Ed Holder. The next round of NPO and family office calls on FAHF. We will recap on Friday.
Reply to this email with the question you would actually want a private REIT to answer. The bonus math. The exit on Wellington. The mechanics of FAHF. How any of it fits your portfolio. The best questions get answered in Thursday's Q&A.
$10K Minimum · RRSP / TFSA / RESP / LIRA Eligible
Targeted: 15% Annualized (7% cash monthly + 8% appreciation)
Subscribe by Canada Day for +2% bonus units (29 days left)
432 Units · 25 Storey Purpose Built Rental · London, ON
$100K Min · Cash Only · Accredited / Existing FC Investors
Tranche 1 Extension: 24% Net Annualized Targeted Return
Permanent Affordable Rental · Southwestern Ontario
Accredited Investors Only · Three Classes
Have a strong week,
PV, Mit & Jeff
P.S. The 29 day window on the FCPRET bonus is real and it expires at midnight on Canada Day. If you have been waiting on a subscription for any reason, this is the month. Subscribe directly through the Equivesto link above, or reply FCPRET and one of us will walk you through it on a call this week.
