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The Fight Against Inflation – Where Are We Heading

Inflation from 2023 is coming down from where it was–hopefully to a point where things like groceries can be afforded by families, and that the average business can function. We’ve heard of businesses who had to close because their costs of goods were too high and they couldn’t pass that on to their customers, or it’s affecting their business as a result. The good news is that I think this year, it would turn around.

One of the main reasons why we got into the real estate business was learning how to protect my investments and hedging them against inflation. For me, the answer was real estate, and it still is a great way to protect investments. This is also why we’ve seen a lot of clients invest in real estate with InvestPlus because they want that hedge against inflation as well. And for this year, we’re headed in the right direction.

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What’s shifting in the marketplace – Looking ahead into 2023

What we’ve seen that’s different from the transition of 2022-2023 is that at least for the Bank of Canada, there is light at the end of the tunnel in terms of keeping inflation somewhat tamed or maybe even lower. This gives investors a bit of confidence that we are not going to have such a tumultuous year like last year. The previous year was a year filled with uncertainty. While it was a much needed effort in trying to keep inflation under control, it really made a lot of investors nervous! Once you have a market that you can somewhat predict or make decisions on, you will see a lot more activity. Given that, I think we are going to have a better year.

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Positioned for Success – Macro Global Economics & InvestPlus REIT

The global macro picture is going to be favorable for Western Canada. It’s opening up people’s eyes on how critical it is to have security in energy. In a big wat, this has opened up the doors for global manufacturers to look at Alberta and Saskatchewan as placed where they can sustainably and reliably manufacture their goods, knowing that they have a resource base and that they have energy supply.

There are always other parts of the world which was brought to light by the war in Ukraine where companies had to shut down just to ration the energy that they had. From a standpoint of global risk and global positioning, we’re positioned very well. In terms of responsible energy, Alberta and Saskatchewan are doing that.

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The Future of Western Canada

We see a very bright future ahead of Western Canada. We have a resource-based economy, giving Western Canada a great position there. Over the course of the past 2-3 years where the movement has been towards renewable energy, it has shifted to some degree. Those who are inside and outside of the oil and gas district recognize that we need to do something.

The biggest aha! moment for everyone was when we realized we needed affordable energy. That put Alberta, Saskatchewan, and BC in a very good position from a natural gas standpoint. This also creates a much more sustainable growth situation as opposed to the boom-bust cycle. Companies have also realized this—giving more attention to paying down debt vs. increasing production. Those companies are going to be responsible for getting us to net zero by 2050!

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Tenants-First Case Study

We’ve had one client who was looking to consolidate two or three of their locations into one. In this specific case, they were very specific in the size that they were looking for. We went out and searched the market, found a really good location and a great looking building. However, it turned out to be twice the size they were looking for.

We showed it to them nonetheless, and they ended up moving forward with it. What we learned from this situation is that sometimes, you’re given a task but you don’t know what the ultimate goal is. By providing that solution to the tenant, they realized that they can create a new business model with the additional space. Simultaneously, we were able to work out a deal for both parties where they were able to continue their normal course of business but also allowed them to invest in another business to grow.

 

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Tenants First

We all start somewhere! For InvestPlus REIT, it was in 2015, in Calgary, Alberta. InvestPlus Real Estate Investment Trust is a private real estate investment trust provides investors an opportunity to participate in the industrial real estate market across Western Canada, without the responsibility of having to own or manage a building themselves. Since then, we steadily grown WITH our tenants, and this is one of the things we pride ourselves on.

We Put Our Tenants First

First and foremost, without our tenants, we just own bricks and mortar. This is at the core of our business and is something we give the highest importance to. Without our tenants, our buildings will just be stagnant spaces, and in the real estate industry, nobody wants that! Our tenants are our NUMBER ONE assets. They are the top driving factor that have contributed and continue to contribute to our upward trajectory.

From the start, we partner with tenants who align with our goals: to scale our business and continue growing—locally and nationally. The better we understand our tenants the more we can understand their needs.  This alignment of goals help us see our destination clearly, and with common goals in mind, we are able to provide each other that supportive environment that can push both of our businesses upward.

From our end, we offer the business support that can alleviate some of the load that our tenants have to face. From locating new locations for our tenants, to streamlining their business by standardizing lease terms, we anticipate how to positively impact their business to bring returns to their businesses, and ultimately, ours.

Our Relationship with Our Tenants

We differentiate ourselves from other real estate/commercial space providers by building a genuine and solid relationship with our clients. We pay attention to their needs and hear them out—communication is key! It is imperative to hear out their concerns and keep ourselves updated with their changing goals so we can find ways to provide business support where we can. By focusing attention on what our tenants need, we create the business model we want, but we also develop sustainable return for our unit owners. With this kind of business synergy, everybody benefits and that’s the kind of environment we’re after. The majority of our tenants operate internationally within the transportation, e-commerce, energy sectors and distribution services. 

Whether our tenants are looking to grow locally or nationally, we’re prepared with real estate solutions to grow alongside them. We believe that tenants shouldn’t have to start over from square one when they relocate or expand to a new region. By striving to be their one-stop-shop for real estate solutions,  offering real estate solutions and communicating to our tenants that we will be with them along the way, we lessen the burden that comes with expanding their business. This allows our tenants to bravely entertain the prospects of expansion, and at the same time, we are able to provide valuable insights on locales they may have their sights on. 

With our philosophy, we nurture a space for them to grow their business, and simultaneously find creative ways to grow our business as well.

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Operational Excellence and Hidden Assets in Real Estate

There are so many factors that contribute to or prove to be detrimental to any business’s success. Being in the real estate industry for many years now, InvestPlus REIT has seen and experienced all sorts of challenges. During times of adversity, this is when businesses are tested most, and this is where operational excellence comes into play.

What is operational excellence, and why is it important to your business?

Operational excellence in real estate is being able to manage a huge volume of real estate properties really well—consistently. Not everyone can do it right, and it takes a certain skill set to grow a real estate company successfully. With operational excellence as part of your arsenal, better business-related decision-making can be expected, resulting in positive effects for your company.

Handling the marketplace can truly be stressful at times, especially during recessions and special unforeseen events such as the pandemic. When everyone is affected by soaring interest rates, measures must be taken in order to ensure profit for both the seller and buyer. How do we achieve this?

Debt Can Be an Asset!

About 5−6 years ago, we started exiting multifamily and went into industrial real estate. It is important to note that exiting and knowing when to sell falls under operational excellence too. Always keep in mind that exiting or selling will depend on where your company is, what your goals are for your company, and how exiting aligns with those factors.

For InvestPlus REIT, there were challenges when we moved into industrial real estate. Buyers wanted long-term financing and we found ways to work on this as well as timelines ourselves. Fortunately, we locked in our rates before the W.H.O declared the pandemic which drove interest rates up. It is in this kind of scenario that assumable debt becomes an asset.

With solid mortgage terms, you can sell your property along with it assumable debt that in time, still proves to be profitable even for the buyer. From the outside, this asset may be invisible! This is why working with reliable real estate investors can truly pay off for interested parties, as advice and factors taken into decision making are backed by years of experience.

Creativity is an Asset Too

It is important to note that each and every scenario is different. As an example, InvestPlus REIT President and CEO Domenic Mandato has faced about four recessions in his years as a real estate investor. All those instances raised the following questions:

  • How are the problems going to be handled?
  • How can we take advantage of the situation?
  • What is working/not working in the company?
  • What S.O.P.s can be standardized and improved?
  • How can we still generate income even within our portfolio?

Market crashes and times of adversity are always great opportunities to look inward. It’s a good time to reflect and rethink what works and how to build on it along with what is no longer serving the goals of the company. Discovering inefficiencies help us improve and exercising creative thinking plays an important role in coming up with solutions!

Scratch that—being creative is critical to success. No matter your role in the company there are always different perspectives that can and should be taken into consideration when coming up with innovative solutions. Consider this…

Ask your co-workers, spouse, someone who isn’t in the same field as you are, or even your kid a question that relates to your business and listen closely to their insight. This kind of creative brainstorming can spark genius solutions you would not have thought of because you’re so deep into the world of real estate. Hearing fresh input can re-jig your senses and come up with new answers to the all important real estate question: Where else can we grow?

Remember operational excellence and your hidden assets!

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From Dom’s Desk: Let’s Talk About Growth…

Right off the bat, if you’re not growing, you’re dying. It may sound harsh, but that’s the truth! For any business, growth is of utmost importance, and even more so in the real estate industry. Traditionally, the primary factors that contribute to growth in real estate include (but are not limited to) finding properties and investors. Here at InvestPlus REIT though, growth means something else.

We strongly believe in growing together with our tenants. In our years of experience, this has largely contributed to our continued success, and this is one of the things that makes us different and evergreen in the scene! So, what makes us different and how do we go about it?

We focus on understanding our tenants’ needs. This is crucial when it comes to providing an environment that helps our tenants grow. What are their plans for the future? What are their goals? Are they a national or international company? What can WE do to help them achieve these so that we can ultimately grow together? Unlike the classic landlord-tenant relationship where oftentimes there is a certain level of antagonized interactions, we eliminate that by maintaining a great relationship with our tenants—which we achieve by focusing on them; understanding their needs and putting those on the forefront of our business relationship.

Having been in the industry for a good amount of time now, we’ve come to view “assets management” in a different, more personal way. Hear us out… This technically refers to the size of one’s portfolio; the number of buildings owned, figures on a spreadsheet, etc.. But it isn’t just that. Our relationship with our tenants is THE absolute asset. This is why we do our best to build and protect it. From the get go, we build authentic relationships based on communication. This circles back to communicating about what they need and what we can do to provide it. By understanding their goals and providing a support system, we help them become more successful. This, in turn, makes us more successful too!

Further to the above, we are a solutions-focused real estate business, and we look for solutions for our tenants’ needs. This is important because this makes a positive lasting impression on our tenants. Whether it’s providing a meeting room for 10 or 30 people, or having free parking that gives them and their clients the added convenience, we take all the measures to provide as much business solutions as we can. It’s these little thoughtful touches that go a long way. This is why even in struggling economies, we are able to rise and grow through the challenges because we are able to add value to our business and our tenants love us for it.

Providing solutions and support for our tenants is a powerful factor that tips more of the odds to our favor. We aim to be the first in our tenants’ mind when they need anything related to real estate by showing them they can depend on us when they need solutions for growth. By building and continuously taking care of our relationship with our tenants, our history of providing solutions allows us to standardize certain factors—terms and conditions in our growing relationship moving forward. If they’re considering an expansion outside of Western Canada (where we are), we willingly explore all options and communicate with all our tenants to find the most viable solution that support everyone’s growth.

We see even more opportunities in the months and years ahead. What’s amazing is how these opportunities open up and in part are supported by the tenants we have been growing with!

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From Dom’s Desk: Growing with the Times

Investing can be a truly scary thing, especially considering today’s market conditions. However, there are ways to mitigate your risks and position yourself in an advantageous spot despite the many challenges presented by investing in the real estate scene. At InvestPlus REIT, we take years of experienced backed by numbers and data into consideration when making investment decisions. These have allowed us to grow even during the pandemic—not an easy feat given the global challenges all businesses and markets were, and still are facing!

How were we able to do this?

We knew that industrial real estate was the next big thing way back in the day. Back in 2012, Domenic Mandato (CEO of InvestPlus REIT) had discussions with real estate investors who first introduced industrial real estate to him. That was when the seed was planted, but it wasn’t until 2017 that he positioned himself in that market. Industrial real estate isn’t governed by the same factors as residential or other commercial real estate market conditions. Because of this, it can stay in demand for the long-term.

The ecommerce boom placed a lot of pressure on commercial space. Opportunities for a business’s growth can often come from the birth of other circumstances, in this case, the legalization of marijuana and the rise of ecommerce. Investors in this market need buildings to grow multiple crops, and with industrial real estate properties, they are able to do so. The demand for space is there—it still is! And since the government takes a long time releasing land, being in a position where we can rent out industrial real estate properties puts us in an advantageous point. Acquiring in times of uncertainty can position you where there might be opportunities!

Last but definitely not the least, the InvestPlus REIT’s team’s expertise, strategy and talent paired with marketing and technological support has definitely contributed to the continuous growth of our company. We are very grateful for the people we work with in making this dream possible—for our business and for others!

REITs and the Future

While predictions always come with their own risks, we are able to take calculated risks by looking at the numbers because at the end of the day, numbers do not lie. We always consider: “What is the rental income for this property?” and determine the yield and cap rates because value comes down to that. We have seen a big trajectory in acquisition in the last two years, even buying in the middle of the pandemic. It is important to note though that InvestPlus is very selective when it comes to acquisition, taking cap rates, interest rates, and sellers’ expectations all into consideration. Some investors refinance properties. In our case, most of our portfolio is locked in with half of the interest rates today, and mortgage will come up at about 2025, and given the tumultuous market where the value of properties drop and interests rise, more investors are considering diversifying into REITS.

For anyone looking to diversify their investment portfolio, REITs allow them to do that with rules set in place that protect the interests of the investor. These rules include but are not restricted to: always having a board and the investors getting paid with 90% of REIT cashflow that the company produces. Because of this and other rules firmly set in place, there is safety, stability, strength, and protection when diversifying one’s investments with REITs.

These are just some of the reasons why REITs have performed so well in the past 20-30 years, and why it will continue to have an edge over residential and/or other commercial real estate properties.

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InvestPlus Hits $100 Million of Assets Under Management

InvestPlus Hits $100 Million of Assets Under Management, Pushing InvestPlus Commercial Portfolio to more than 500,000 SF Under Management!

InvestPlus REIT is excited to announce the addition of a 109,066 sq ft commercial building (Thatcher Ave) to its portfolio for $8,700,000 at an existing cap rate 8.78%. Thatcher Ave is located in a prominent industrial business park in Saskatoon. Conditions were removed in December of 2021 with a close date of June 20, 2022. The addition of Thatcher Ave will bring the overall commercial space under management to more than 500,000 sq ft and our Assets Under Management (AUM) to $100 Million. We continue to further our footprint in the Industrial Space and adding assets with strong tenant covenants. Thatcher Ave will be tenanted with a Fortune 500 company focussed on providing mechanical equipment to the agricultural and mining industries and has signed a long-term lease. This building will serve as their main distribution warehouse to supply 19 branches across BC, Alberta and parts of Saskatchewan. A great tenant with a strong covenant and business.

The Thatcher Ave building is in the heart of Saskatoon, Saskatchewan industrial park and is projected to be accretive by an average of more than $450,000/year after unit-holder distribution for the term of the lease. This accretiveness will help sustain our distributions and help push our unit value up. The acquisition of this building also pushes our overall assets under management to $100M bringing our growth for 2022 up by 12.8% since December 2021.

We will continue to target strong-tenanted buildings in Western Canada that will not only provide us the performance and returns we are looking to achieve for our unit-holders but also assets and tenants that can and are weathering the storm in these tumultuous times. Please look forward to our next acquisition announcement, coming to you soon.

InvestPlus Real Estate Investment Trust (IP REIT) is a private real estate investment fund, based in Calgary, Alberta. IP REIT is a growth-oriented real estate investment trust focused on increasing unitholder value through the acquisition, ownership and management of commercial and residential properties in primary and secondary markets in western Canada. Management currently manage 19 buildings located in the provinces of BC, Alberta and Saskatchewan. The current portfolio is appraised at more than $100,000,000 and comprised of 101 rental units and more than 500,000 square feet of rentable area.

Schedule a discovery call with InvestPlus REIT today.

Click HERE to find out more about InvestPlus REIT’s Current Offering Memorandum.

 

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