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

 

 

Alignvest Student Housing – Q3 2020 Management Report

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SEPTEMBER 30, 2020 – MANAGEMENT REPORT

We are pleased to send you the September 30, 2020 Management Report of Alignvest Student Housing Real Estate Investment Trust (“ASH REIT”).

September is the most important month for our REIT as it is the start of the school year. This year, in particular, with the onset of the “second wave” of the COVID-19 pandemic and uncertainty around university operations, we have been hyper-focused on occupancy and managing the health and safety of our tenants and employees. We are pleased that the majority of students showed up, are occupying their units, are excited to partake in the university experience, and are paying rent on time.

We are cautiously optimistic that our occupancy figures will continue to improve in the coming quarters with the recent announcement by the government to allow international students to enter Canada as of October 20, 2020.

Please let us know if you have any questions.

Click the link below for the September 2020 update.

Management Report

Alignvest Student Housing – Update

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ASH Unitholders,

September 1st is a very important date for our student housing assets. Most of our leases run on a September – September term. We wanted to provide some real time information as to how September appears to be going. The following attachment gives some raw numbers of our current portfolio. We wanted to provide some additional information in order to help best understand theses numbers and what they mean:

 

  • Our overall portfolio is 85%+ leased for the year. This is well above our estimated breakeven occupancy of 65%.
  • There is ONE building in our portfolio that is managed by a University. This is the annex building in Ottawa. The Annex has been recognized as the best building in the Universities portfolio and is the most occupied building. Its current occupancy is 57%. This is expected to be the case for at least the first term. Generally this building is fully occupied with a long waiting list.
  • We continue to be operating in a positive cash flow environment and we have plenty of cash on our balance sheet to weather any storm or take advantage of an opportunity to acquire quality assets.
  • At this point in time, management sees no reason to cut the distributions to unitholders and therefor distributions will continue.

 

See the below update:

 

Flash Report

Passive Income Rules

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Introduction

In July 2017, Finance Minister Bill Morneau announced potential options for changing the taxation of investment income earned by private corporations. The proposed changes were strongly opposed by many stakeholders and, in October 2017, Minister Morneau announced that changes would be made to the proposed new rules and that draft legislation would be released as part of Budget 2018. The resulting highly anticipated Budget was tabled by Minister Morneau on February 27, 2018. While Budget 2018 has scaled back many of the proposed measures from the July 2017 Consultation Paper, it has moved forward with various amendments to the Income Tax Act1 that will affect small business corporations in Canada. The amendments with respect to passive income earned by a private corporation will still have an adverse effect on small business owners and may affect the way small business owners choose to invest their retained earnings. In particular, the effect of the changes on the small business deduction (“SBD”) will likely leave small business owners seeking tax-efficient options for the investment of corporate retained earnings that will reduce the impact of these changes.

Bill C-74, which contains the legislative provisions to implement the new passive income rules, received Royal Assent
on June 21, 2018

 

See below for full article:

 

passive income rules

Meet the Insurance Team

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We are thrilled to highlight our Insurance Team and introduce a new section of our blog to partner with our investment updates. Our inhouse Insurance experts have over 100 years of combined experience in the business. We will be updating periodically with articles and information we believe is important to our clients.

 

 

Click here to find out more:

MFG Insurance Blast

Alignvest Student Housing – Flash Report

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Please find below the most recent update on Alignvest Student Housing. Management wanted to share the latest numbers regarding the lease up for the 2020/2021 school year and the collection of April rents. In summary, we are ahead of where we were last year with respect to leasing for the upcoming school year. Our properties are proving to be highly desirable and some of the feedback received has been that higher quality properties are even more in favour during these times of uncertainty. With respect to April rents, we are tracking to get over 97% of rent cheques. Although lower than usual, it is still far above any amount that would have management concerned about cash flow.

 

COVID-19 Flash Report

Alignvest Student Housing – Q4 2019 Management Report

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DECEMBER 31, 2019 – MANAGEMENT REPORT

 

Please see the attached for the December 31, 2019 Management Report of Alignvest Student Housing Real Estate Investment Trust (“ASH REIT”). As of December 31, 2019, we have acquired seven of Canada’s premier purpose-built student accommodation (“PBSA”) properties and have over 3,300 beds valued at ~$400 million in four university markets.

 

We are excited about the progress we have made over the past 18 months, raising substantial amounts of equity capital and investing it into attractive tier-1 PBSA assets, which has allowed us to become the largest owner/operator of student housing properties serving Canadian universities. Our focus on integrating the local properties into a single operating platform and driving operational performance has resulted in year-over-year same property NOI growth of ~12% and we are forecasting a further ~9% increase in 2020 relative to 2019.

 

We are now poised to return to market and acquire additional high-quality assets at attractive prices to further expand our portfolio.

Below is the link to our Management Report.

 

Report

 

Alignvest Strategic Partners Fund Quarterly Report

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Please see the attached for our fourth quarter 2019 report for Alignvest Strategic Partners Fund. The Q4 update discusses performance over the past quarter and our thoughts going forward.

Q4 2019 Performance

• Alignvest Strategic Partners Fund was up 2.7% (Class F, net of fees) during Q4 2019. The Fund delivered a 2019 calendar year net return of 10.2% while maintaining the same ~4.5% annualized volatility as we have since inception.

 

 

Q4 2019 ASPF Report
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