CAPREIT's Earnings Call

CAPREIT held its Q3 earnings call yesterday. Today we will share the highlights, and much more.

November 10th, 2023

Read Time: 3 minutes

CAPREIT held their Q3 earnings call yesterday.

As CAPREIT's the largest residential REIT in Canada - attending this call is mandatory listening for our team.

In today's newsletter, we'll share the highlights from the Q&A section.

With a diverse and well-run Canadian portfolio, we find CAPREIT to be a great proxy for the sentiment of many of the large multifamily players today.

(did someone forward you this email? Sign up [here](http://www.onmultifamily.com)).

Two quick housekeeping items before we dive in:

Our Team Is Growing!

Our nimble Ontario team has closed over $250M in sales this year. Next year we hope to double that. We're looking to add another salesperson to the team to help with this mission.

If you know someone who might be a great fit, please reply to this email. Our team values resourcefulness, integrity and obviously hard work. Bonus points if the applicant is Jewish (and I'm only half kidding as we are sorely lacking in this department).

MLS Listings Today - Worth Reviewing

MLS has historically been a terrible place to find multifamily opportunities. But in today's environment, it's worth examining some of these listings. The market has shifted, and many sellers just want offers (even below their ask).

Linked below are the opportunities we consider worth reviewing. Please take a look and reply to this email if you have any interest. Our team would be happy to represent you on the buy side to ensure you get the best deal. [Woodstock/Brantford/St Catherines](http://v3.torontomls.net/Live/Pages/Public/Link.aspx?Key=5dd6b8fefb0a43f8818fccec5ffe1d90&App=TREB) (3), [Kitchener-Waterloo](http://v3.torontomls.net/Live/Pages/Public/Link.aspx?Key=9968f776a6df4e95bb66406f4d3ca3a2&App=TREB) (4), [Toronto](http://v3.torontomls.net/Live/Pages/Public/Link.aspx?Key=1ee32eaaf9724920b7a9608c1047d2eb&App=TREB) (2), [Prince Edward County](http://v3.torontomls.net/Live/Pages/Public/Link.aspx?Key=b28a307e207246f3805b51d58c910482&App=TREB) (1).

CAPREIT's leadership did a tremendous job on the earnings call.

Below are our team's notes with reference to Mark Kenney and Julian Schonfeldt (CAPREIT's CEO and CIO respectively).

Market Outlook: Navigating Future Valuations Amid Interest Rate Shifts:

Mark Kenney's Market Analysis: Kenney provides a reassuring outlook on property values, attributing stability to easing bond yields and a potential end to the tightening cycle: "the tightening cycle is at least plateauing at this point and not expected to get much worse."

Julian Schonfeldt on Rate Impacts: Schonfeldt agrees, suggesting cap rates are nearing a high point, with promising rent growth offering a buffer for future property values: "the cap rate expansion is... potentially at its peak."

Investment Landscape: Changes in Competition and Acquisition Opportunities:

Julian Schonfeldt on Acquisition Trends: He notes a shift to a less competitive environment for acquisitions, with current high bond yields and capital scarcity: "it's not anywhere near as competitive."

Mark Kenney Predicts Institutional Movement: Looking ahead, Kenney anticipates increased trading activity by institutions in response to monetary policy and market rates by the next year: "A real pick up probably Q2Q3 of next year."

Rental Market Analysis: Assessing Stability and Regional Dynamics:

Mark Kenney Reports on Rental Trends: He points to stable conditions in the rental market, with specific challenges in Ontario's market due to its low turnover rates linked to housing affordability: "The strongest market in Canada is clearly Ontario."

Strategic Acquisitions: Capitalizing on Current Market Pressures:

Julian Schonfeldt's Approach to Opportunity: Schonfeldt highlights the company's strategic position to take advantage of the current market, with its robust financial standing and agility: "we are able to act quick."

Mark Kenney on Building a Strong Reputation: Kenney underscores the company's longstanding reputation as a significant strategic asset in facilitating rapid and successful acquisitions.

Operational Strategy: Pivoting Towards Efficiency and Value:

Mark Kenney Discusses Strategy Shift: Kenney speaks to the company's transition from focusing on growth by numbers to enhancing operational efficiency and quality of assets.

Looking Ahead with CAPREIT 2.0: The company aims to rebalance its portfolio by trading high-value assets for those with better long-term prospects, marking a strategic evolution into what Kenney calls "CAPREIT 2.0."

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