Apartments have outperformed every other category of Canadian commercial real estate over two decades. Today, the data nobody puts in one place, and the two sided way we play it.
PV, Mit & Jeff
Office got disrupted. Retail got reshaped by Amazon. Industrial got speculative. Hotel got cyclical. Apartments quietly compounded through every one of those cycles. Today, why, and how we play both sides of the trade.
If you go back through the institutional real estate return data over the last two decades, one finding shows up again and again, and almost nobody outside the asset class talks about it. Canadian multi-family apartments have produced higher risk adjusted returns than office, retail, industrial, and hotel real estate over every meaningful holding period since 2005.
It is the quietest outperformance story in Canadian investing. The asset class did not generate front page headlines, no one ran an IPO around it, and most retail investors only ever heard about it second hand. While the loud asset classes ran their cycles, the boring one compounded.
Today, why that happened, why it is more true now than at any point in the last 20 years, and how we play both sides of the trade.
Each commercial real estate category had its own story. Multi-family was the only one that did not need a happy ending.
Office demand depends on how companies want to work. Retail depends on where people want to shop. Hotel depends on whether they want to travel. Apartment demand depends on whether people need somewhere to live. That is not a question with a cyclical answer. It is the most durable source of demand in commercial real estate, and it strengthens every year that the housing shortage stays open.
Ontario's rent guideline is tied to CPI. On turnover, units reset to market. Office leases get locked for ten years and the landlord eats inflation in between. Apartments reprice in months, not decades. Inflation does not erode apartment cash flow, it lifts it. That is why apartments outperformed in 2022 to 2024 while every other real asset category absorbed inflation as a cost.
Mit and Jeff sit down with Canadian real estate investors on what is actually breaking the market right now, and how disciplined operators are positioning around it.
Canada needs 3.5 million more homes than it currently has, against new household formation of roughly 300,000 a year and a construction completion rate of well under 100,000 rental units. Even a record construction pipeline does not close that gap this decade. Every other asset class has a clear supply response when demand picks up. Apartments do not. The shortage is the regime.
The thesis is structural, so the position should be structural. We hold the asset class through two complementary vehicles.
FCPRET owns multi-family residential apartments across Southern Ontario in mid-market core workforce housing at $1,500 to $2,200 per door. CMHC backed long term mortgages, monthly cash distributions targeted at 7%, and a unit price that tracks NOI growth. This is the income engine. Every dollar of structural tailwind described above flows directly into the existing portfolio's cash flow and unit price.
Owning what already exists is the income side. Building the next generation of stock is where the equity side of the return lives. Wellington Towers is our 432 unit purpose built rental tower in London, 25 storeys, with CMHC financing already locked under the pre June 19 terms. 90% of units priced at roughly $1,500 per door, 10% at $980 as deeply affordable units, against a London one bedroom market comp of $1,800. The entire building is positioned below market on purpose.
The plan is straightforward: build, lease up to stabilization, exit to an institutional buyer. The asset class data above is exactly why the exit is durable. Pension funds, life cos, and private equity rental platforms all need to deploy capital into purpose built rental and there is not enough product to absorb the money rotating into the asset class. A stabilized, CMHC financed, sub-market priced, 432 unit tower is precisely the product they buy. We expect to lease up fast because the building is priced below market, and we expect the exit to clear at institutional cap rates because the buyer pool is structurally short product.
If you want monthly cash distributions backed by existing stabilized buildings inside the asset class that quietly outperformed everything else for twenty years, FCPRET starts at $10,000 and is RRSP, TFSA, RESP, LIRA, and cash eligible.
If you are accredited and want to be on the equity side of the next generation of the asset class, the Wellington Towers Tranche 1 extension targets 24% net annualized.
The Canada Day 2% bonus on FCPRET runs for another 19 days.
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
$10K Minimum · RRSP / TFSA / RESP / LIRA Eligible
Targeted: 15% Annualized (7% cash monthly + 8% appreciation)
Subscribe by Canada Day for +2% bonus units (19 days left)
Have a great weekend,
PV, Mit & Jeff
P.S. The quietest outperformance story in Canadian investing only stays quiet until enough people notice. The institutional rotation is already underway. Reply Thesis if you want one of us to walk you through how to take a position on either side of the trade. FCPRET 2% Canada Day bonus is open for 19 more days.
