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Newly Constructed

Case Study

 

Newly Constructed Apartments

Newly constructed apartments can be a lucrative opportunity for real estate investors. When looking to acquire a newly constructed property, as a reminder, Equiton looks for buildings in areas with strong market fundamentals that offer stable cash flow and high tenant quality with longer duration tenancies.

Welcome to Emerald Hills Landing, a newly constructed building in our portfolio located near Edmonton, Alberta. The suites in this building are generously sized, averaging 902 sq. ft. and feature in-suite laundry, quartz countertops, stainless-steel appliances, and provide ample natural light. The building boasts amazing amenities including a social room, lounge area, and a fitness centre all of which contribute to higher rents.

Why Emerald Hills Landing

We purchased this property because it offered immediate positive cash flow as newer buildings are more efficient to operate and require lower expenditures for capital improvements, maintenance, and unit turnover compared to older buildings. Edmonton added a record number of new units to their rental market last year, due to strong demand as the economy recovers.

Located 20 minutes from downtown Edmonton, Emerald Hills Landing is a hub for commuters as well as those interested in a more suburban setting. This property is a mature lifestyle community drawing individuals that tend to be wealthier, reliable, and interested in living in rented homes for longer time periods. As a new apartment, it contains energy efficient building systems that reduce utility consumption and has internal social programs to increase community awareness.

Financial Benefits of the Property

This property has a higher average rent, in line with the average market rents in the surrounding area. As a newly constructed building with numerous amenities in an area with strong demand, rents are roughly ~30% higher than the average rent across our portfolio. With higher quality tenants anticipated to have longer duration tenancies, and fewer maintenance costs, Emerald Hills Landing was a great addition to our portfolio.

We purchased this property in September 2022 for $27.7M. Indicative of the strong market fundamentals, it was appraised 3 months later for $28.3M.  This newly constructed property, with its low vacancy rate and the lower expenditures is a prime example of the benefits of adding newer properties to a portfolio.

Benefits of Adding Newer Properties to a Portfolio.

  • Stable cash flow​.
  • Better appreciation​.
  • Higher tenant quality and longer duration tenancies​.
  • Fewer maintenance costs​.
  • Rents closer to market value​.
  • Rent can increase along with the market.​
  • More efficient to operate and manage. ​
  • Higher profit margin, costs = ~30% of revenue. ​
  • Investors benefit from higher revenue and capital appreciation.

Stable Cash Flow

New buildings offer stable cash flows and require lower expenditures for capital improvements, maintenance, and unit turnover compared to older buildings.

Expansion

This is the first acquisition outside of Ontario for Equiton. This is an opportune time to invest in Alberta since the economy is starting to rebound, which will result in an influx of residents, decreasing vacancy rates, and an increase in property values. Furthermore, as the seat of Government, the Greater Edmonton area has a relatively stable economy.

Strong Market Fundamentals

There was a record number of new units added to Edmonton’s rental market last year, and this was met with strong demand as the economy recovers from the pandemic and years-long energy sector slump.

Attractive To Residents

This property will be very competitive in the market as it offers tenants new, large suites with high-end features and finishes. It’s also in a great location close to shopping centres, hospitals, and outdoor recreational activities.

Low Vacancy

The property is now fully leased so there will be no vacant units on closing.

ESG Components

The building contains energy efficient building systems to reduce utility consumption, internal social programs to increase community awareness, and an affordable housing component (21 suites).

Desirable Tenant Base

This property is a mature lifestyl