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.

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 1^st. 

 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 4^th 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