Alignvest Student Housing – Q2 Management Report

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We are pleased to send you the June 30, 2021 Management Report of Alignvest Student Housing Real Estate Investment Trust (“ASH REIT”).

Q2 2021 has been an exceptionally busy quarter for us: we closed our Waterloo acquisition on March 31, 2021 and have focused on integrating staffing, maintenance, leasing and other activities; we spent considerable time on the due diligence of our upcoming acquisition in Ottawa, which we expect to close imminently; and we have experienced very strong pre-leasing activity for Fall 2021.

In particular, over the past eight weeks, our leasing teams have signed on average 105 leases per week, taking our September 2021 pre-leased occupancy at our privately managed properties from about 50% at the beginning of the quarter to about 85% today. In addition, our university managed property has confirmed occupancy and pending offers for 90% of its beds and outstanding applications to fill the remaining beds. With just over a month to go before the start of the school year, we are optimistic that our portfolio will return to pre-pandemic occupancies. Student housing has definitely proven itself to be a resilient asset class.

Below is the link to our Management Report. Please contact us if you have any questions or need additional information.

Report

Alignvest Student Housing – Q1 2021 Management Report

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MARCH 31, 2021 – MANAGEMENT REPORT

 

We are pleased to send you the March 31, 2021 Management Report of Alignvest Student Housing Real Estate Investment Trust (“ASH REIT”).

Throughout Q1 2021, we continued to focus on operations and growth while maintaining the health and safety of our team and residents at our properties. With the roll-out of vaccines in Canada and our universities issuing “return-to-campus” announcements for Fall 2021, we are starting to see signs of a return to normalcy in Canada.

We expect that high-quality accommodations will be in demand as students return to campus. With this in mind, we completed a strategic acquisition of two properties in Waterloo that added 795 beds to our portfolio, and we have secured another attractive acquisition in Ottawa with over 500 beds that we expect to close in early Q3 2021. With these acquisitions completed, our assets will be valued at over $650 million. We are continuing to raise equity capital to fund these acquisitions.

Below is the link to our Management Report. In addition, below is a link to our recently issued 2020 audited financial statements. We have included enhanced financial disclosure and commentary in this report. Please contact us if you have any questions or need additional information.

 

March 31, 2021 - Management Report

2020 Audited Financial Statements

 

 

Northpoint Global Partners Fund – Financial Statements

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Please click on the below link to view the 2020 Northpoint Global Partners Fund Financial Statements.

 

2020 Northpoint Global Partners Fund

Alignvest Student Housing – Opportunity

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Dear Investors,

 We are excited to announce that Alignvest Student Housing (ASH) is acquiring two high-quality properties in Waterloo.  Additionally, ASH has entered a contract to acquire another asset in Ottawa.  The total value of these acquisitions is approximately $220M and will require $75M of equity to close.  In an effort to fund this growth, the REIT is raising $50M of equity.  The next closing date is scheduled for April 1st

 

 Existing unit-holders should consider making an additional investment and are encouraged to pass this opportunity along to others.  We will be hosting a ZOOM meeting featuring Alignvest senior management this coming Thursday March 4th at 3:30pm SK time.  Anyone is welcome to join.  Stay tuned for the formal ZOOM invite.

 

 

Investment Summary

Last year, in spite of COVID, student housing assets in the U.S and Globally had the highest ever recorded amount of transactions ($11B in the U.S. and $20B Globally) at record breaking prices. We know we are on to something special here and are well positioned to be the leader of Purpose Built Student Accommodations in Canada. Below is a quick commentary from MFG on Alignvest Student Housing (ASH).

 

Goals
  • Build Canada’s premier portfolio of Purpose-Built Student Accommodations (PBSA)
  • Provide investors with stable cash flows and a material gain upon sale of the portfolio
  • Consolidate portfolio for sale in 2023/2024

 

Consolidation Strategy
  • The consolidation of PBSA began approximately 15 years ago in the United States
  • ASH is the first group to put together a relevant portfolio roll up strategy in Canada
  • ASH is now the largest owner and operator of PBSA in Canada
    • Well on its way to creating a $1Billion+ portfolio
  • Building valuations increased dramatically during the consolidation of PBSA in the United States
    • We anticipate similar valuation increases in Canada
    • ASH is well positioned to capture this opportunity

 

Recent Developments
  • The REIT has entered into a purchase and sale agreement to acquire two  properties in the Waterloo – $100M acquisition
  • They have also entered into an LOI for an additional property in one of their core markets (Ottawa) – additional $116M acquisition
  • The acquisitions are another great step forward as we will solidify ourselves as the leader in PBSA with 4700 beds and $650M in properties

 

How Alignvest is increasing value
  • Through acquisition of high quality and accretive properties
  • Increasing Net Operating Income (NOI)
    • Our team at Alignvest is hyper focus on increasing NOI. Please find their strategies outlined in their corporate presentation or contact an MFG team member to discuss.
  • The table below illustrates how an increase in NOI from a poorly managed property to a well managed property increases the building value – while maintaining the same Cap Rate.

 

 

Target price and total return for investors

It is our opinion that the 12-month target price of the units should be $125/unit. Current valuation of $112/unit implies an annual return of 18%+ for 2021 (including distributions). We have also modelled a long-term target price at exit of $173/unit based off of the current assets owned by the portfolio. The $173/unit valuation simply calculates the current portfolio (not the acquisitions outlined above) at the same value as multifamily assets in the same market. It does not include future acquisitions or NOI growth going forward.

 

Summary

From now through to our targeted exit date of 2023/2024

  • ASH will continue to acquire high quality buildings at good valuations
  • Optimize NOI
  • Look to sell the portfolio to a large institutional investor
    • This sale will be highly competitive as ASH is the largest owner of PBSA in Canada.
  • The current entry point for investors of $112/unit represents a great opportunity for investors. The uncertainty from COVID throughout 2020 kept our unit values stagnate. As outlined above, the future is bright for these assets and highly sought after. Unitholders will be handsomely rewarded for consolidating such a unique and compelling portfolio of assets.

 

Alignvest Attachments
    • First attachment is a quick one pager from the company titled Alignvest Teaser. It outlines the current capital raise they are completing, the recent accomplishments of the fund and a brief outline of the acquisitions they are working on.
    • Second attachment is the corporate slide deck. It is a very comprehensive presentation that discusses all aspects of the business.

 

Please call your MFG representative once you have had a chance to review the information.  Again,  please forward this to anyone you think would be interested.

 

Click below to view:

 

Alignvest Teaser

 

Investor Presentation

Pacific Calgary Opportunity Trust II – December 2020 Update

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Pacific Calgary Opportunity Trust (PCOT II): Investor Update

 

January 2, 2021 –  We hope this update finds you and your loved ones safe, and that you were able to make the best of an unusual holiday season. The Coronavirus pandemic of 2020 has certainly challenged the resilience of the economy and businesses of all kinds, including land development. Thankfully, Pacific’s land investment model is itself resilient to unfavourable economic conditions. We look forward to better times as the province and the country worm to recover lost ground over the coming months and years.

As was shared with Investors in June of this year, there was a pause in land development activity earlier this year that continued through September, which gave Pacific with an extended period to investigate the cost basis under which the McClellan Business Park lands will be eventually developed. With Hopewell’s Interlink Logistics Park now underway to the west of our property, across Dwight McClellan Drive, Pacific was able to gain valuable information on regional servicing in East Balzac. Hopewell has brought municipal services almost to our borders to serve their own interests, which has allowed for more precise negotiations with Rocky View County. At the same time, Pacific made the decision to simplify the design of McClellan Business Park substantially, and the resulting cost basis for the eventual development of the lands is now at a much more favourable level. Refining the development cost basis for the next developer supports the value of the sale and exit Pacific is now working to achieve.

McClellan Business Park features excellent transportation connections to two major arteries (QEII and Stoney Trail) and the Airport (as an Inland Port for logistics). The East Balzac region, over the past year, seems to have reached a tipping point where there is less development land available compared with lands that have already been developed and occupied. Pacific has fielded enquiries on our lands from several developers over the past year. Specifically, a development corporation we are discussions with has shown interest in acquiring our lands, and here in the New Year, we will restart discussions toward the goal of having an Offer on the table.

In closing, we remind Investors about the world we are all living in. Like many other industries, the land development community is still coming to grips with what the economic disruptions caused by the pandemic over the past year will mean to land and development going forward.

The overall picture of Calgary, Alberta, is of a downturn, and what bright spots there are, or what market confidence exists to support large or long term land purchases isn’t yet clear for 2021 and beyond. Still, two community developers we are in contact with were, recently, somewhat surprised to report their own sales absorption rates for 2020 are not much different from that of an average ‘down’ year. They also noted it was much more effort just to reach those moderate sales numbers. So, while 2020 was a very challenging year in this and many more respects, there is reason for optimism in the resilience people and companies can demonstrate in times of crisis, and here is hoping the worst of the pandemic will soon be behind us all.

Pacific Investments & Development Ltd. wishes you a safe and happy Holiday Season, and we look forward to a prosperous year in 2021. 

 

Best Regards,

Pacific Investments & Development Ltd

 

 

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