B.C. real estate investment firms feature prominently on Business in Vancouver’s top-100 list of the most profitable companies in the province – but it’s out-of-province investments that are helping keep those firms near the top of the list.
One of them, Pure Multi-Family REIT LP (TSX-V:RUFU), has put money on the market in states such as Texas and Arizona, seeing them as better places for real estate investment because they lack many of the physical and regulatory restrictions that exist in major Canadian markets including Vancouver.
“We like owning apartments in the States a lot because it’s very competitive down there,” said Andrew Greig, director of investment for Pure Industrial Real Estate Trust (TSX:AAR.UN) and Pure Multi-Family REIT LP. “It’s a totally different market, there are no rent controls and the employment growth in select markets is very strong.
“There’s a lot of data down there, so you get to see which markets are growing and you can participate in that growth strategically by buying in those areas.”
In 2012, when Pure Multi-Family was started, it was the only Canadian real estate investment fund investing in properties in the United States. Now, according to Greig, there are about six Canadian real estate investment trusts that strictly invest in Canada versus four in Canada that strictly invest in the U.S.
Greig says the United States offers a more attractive real estate investing environment than Canada. Stringent rent control in Canadian cities limits the amount of investment growth to what the regulations allow, while in Texas, investment growth is limited only by natural market forces.
Utility costs are also a factor in the choice to invest in the U.S.
“In Canada, many of the apartment real estate investment trusts pay the utility costs whereas in the States, our U.S. tenants pay their own utilities,” said Greig. “So we find that in any given quarter we can raise rental rates to what markets will allow and we don’t have to worry about fluctuating temperatures and their corresponding impact on utility cost.”•
