Yeretsianonrealestateinvesting's Blog

Wrong Again!

yeretsian on real estate investing — Fri, 27 Jan 2012 12:49:51 +0000

Why do these guys make forecasts from far away about a place they just don’t understand and know?

American Demographer/economist-forecaster Harry Dent Jr. has decide to share with us his future view

and at the same time promote his next book by predicting a CRASH in Toronto real estate by as much as 50%.

Has he got your attention yet?

He was wrong eight years ago about the Dow going to 40,000 and he is wrong about Toronto real estate today.

“About eight years ago, U.S. economic forecaster Harry Dent Jr. made headlines predicting the Dow would hit 40,000 by 2009. Now, he’s calling for a crash by this summer and is urging followers to get 100 per cent out of equities. His dire outlook doesn’t end there: he also foresees a 50 per cent or more price collapse in Toronto and Vancouver housing markets. (Read the full story here.)

Widely known as a true contrarian, Mr. Dent focuses on demographic trends for much of his economic analysis and is concerned about both the European debt crisis and aging babyboomers who will be spending less to spur economic activity. While the Dow never hit 40,000 (it only reached 14,000 in 2007), some of Mr. Dent’s earlier predictions have been right despite being met with much skepticism, including his call on the slowdown in the Japanese economy and the Dow hitting 10,000 in the early 1990s.” (Globeinvestor, January 2012)

We at Envoy Capitol Realty Inc., brokerage do not foresee any decline or crash in Toronto real estate in the near term.

However Condominiums are a whole different story (they do concern us), they may be over built/building them ( 137 projects plus currently underway) does concern us and that over 70% have been purchased by foreign investors/ speculators. Exercise caution with Condos, get good expert advice before you move into them as an investment.

The single detached home is your best option and if you are going to move in and live there even better.

What are your thoughts about Toronto real estate and you think it is going ?

Visit our website : www.envoycapitol.com

Email: capitalmoves@gmail.com

Blog: www.capitalmoves.blogspot.com

Envoy Capitol Realty Inc.,brokerage Toronto , Canada

Trophy Tower for One billion ?

yeretsian on real estate investing — Wed, 25 Jan 2012 01:08:59 +0000

At least the latest news in Toronto real estate is not about another residential Condo tower going up,

it’s about an Office Tower becoming available for sale in the heart of the financial district.

The street is a buzz with word that soon a trophy property may be available and with a potential price tag of $ 1 billion.

The 68 - storey building in the financial district is ranked the second tallest skyscraper in Canada, since 1988 when it opened.

Ann DeRabbie, a bank spokesperson said (via email) ” We are the only large bank (Scotia) that currently owns

our head office in downtown Toronto and given market conditions, this could be an opportune time to

maximize the value from our holdings.” These are certainly sweet words to any investor’s ears and heart when your investment

understands maximizing valuation of assets is centrally important.

Who would be the most likely candidates to acquire this kind and size of investment opportunity?

The usual suspects are Canada’s pension funds possibly in partnership with some of the larger REITs or

Foreign pension funds or sovereign funds.

With Europe in Fiscal Crisis mode and the Americans distracted with their own crisis and talk of a slow down in Asia, it will be interesting to see who steps up and moves forward with a potential acquisition of this ultimate trophy property in Toronto.

The Canadian Pension funds may be fully vested in their real estate category and currently owning most of the

other trophy properties in the area – it may be challenging for them to make the case to purchase another property at this time.

Could the Canadian Life insurance companies step up? They do have their own problems, however with the right

partnership they could syndicate the acquisition.

Yes interest rates are at an all time low, but is financing really available for and does it have an appetite to fund this acquisition.

These trophy properties ” are scarce and valuable commodities.” says Prof. James McKellar ( Schulich School of Business, York U.)

If and when the property does comes on to the market and a sale in the range of one billion dollars is achieved it would rank it at the

top, as the largest single building transaction for that price in Toronto.

Any offers/ bids? Let us know we can put together a team to do your bidding.

What are your thoughts, should the Bank be selling off this major real estate asset?

Is real estate dead money in this new fast paced e-commerce world economy ?

Where everyone and anyone can work from anywhere – in this 24/7 world?

Share your thoughts with us, let’s collaborate. Leave a comment below.

Visit our website : www.envoycapitol.com

Blog : www.capitalmoves.blogspot.com

Email: capitalmoves@gmail.com

Envoy Capitol Realty Inc.,brokerage Toronto , Canada

Everyone Wins

yeretsian on real estate investing — Mon, 23 Jan 2012 05:02:05 +0000

Everyone Wins!

The concept is coming alive with shovels in the ground for the Athlete’s Village” for the coming 2015 Pan Am Games in Toronto.

A contaminated site of the cancelled Ataratiri housing project which was set aside – in the early 1980s will be through a Private – Public Partnership transformed into a new community.

This will be the home for about 10,000 competitors in three years and then evolve into a new community to be house a mixed use neighborhood complete with; affordable housing (253 units), student housing (500 units for George Brown College), Condos (787 units), parks, shopping and a YMCA.

The Project will create an estimated 5,200 jobs and at a cost of $1.4 billion with the

Athlete’s Village being the most expensive component at an estimate of $514 million being developed by Dundee Kilmer, reports the Toronto Star.

Everyone wins, nice stimulus for the City of Toronto, future tax revenues and the resolution of these contaminated lands.

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Envoy Capitol Realty Inc.,brokerage Toronto , Ontario

Protect Your Investment!

yeretsian on real estate investing — Thu, 19 Jan 2012 22:44:38 +0000

Your Public Image and your success are your biggest assets in this and any business.

It is very upsetting when some realtors just don’t care and they fly by the seat of their pants, leaving waves and damages all around.

How do you protect your biggest investments?

It may be counter-intuitive for some realtors, believing, getting coached and trained to generate the numbers – close the deals at all costs at any cost. The short-term thinking that plagues some realtors as demonstrated by their practice and behavior with other realtors, it’s not good for anyone. The “ Do whatever it takes to close the deal, burn all bridges/boats because we will get the deal done or die trying”. They reason that the end game is only earning and banking the commission(s) and too bad for anyone that gets in the way. There are always unintended consequences in any action and collateral damage in any war. The means justify the end , and that’s there is to it.

Do as many deals as possible in the shortest amount of time and if it gets to be too much for one person to handle we can multiple the effort with teams and groups of trained marketing professionals – that will get the job done; Sell that house!

Just do the work, do the deals – work the numbers; the law of large numbers says we win !

Don’t worry about fall out, things falling through the cracks, complaints to RECO or law suits – we have insurance, right? We are covered, right!

Just run the numbers and close those deals! Well the insurance doesn’t really cover RECO visits or fraud (that’s criminal), it only covers stupid/incompetent things the realtor may have done which causes the damages. But don’t worry about that, just do your work, keep working and doing the numbers – it’s going to work itself out in the end.

How could the public image of the profession of real estate sales not be effected by this kind of practice by a very few realtors?

Do all the business you want, but do it professionally – do it ethically and do it in a way that there is minimal negative consequences. You get there by caring about each and every deal and showing you care ( the right attitude) people can feel your love for them and the work you do in the end.

Protect your client’s best interests. Sometimes this means having to walk away from a deal/ an opportunity because of the risk(s) to your client. Protecting your client from damages and harm.

Can you practice real estate sales where both the seller and the buyer feel well served, with loyalty, honesty and fairness and therefore happy with you and your service?

It takes such a long time to build a great reputation in a community however it only takes seconds/minutes to destroy it forever.

What are your thoughts? Leave a comment or your own story below and share it with us…

Visit our Website : www.envoycapitol.com

Email us at : capitalmoves@gmail.com

Visit our Blog at : www.capitalmoves.blogspot.com

Envoy Capitol Realty Inc.,brokerage Toronto, Ontario , Canada
Buy, Sell, Lease, Manage, Consult, Develop, Syndicate — Investments

Major Office Building Recap in 2011 in US, 2012?

yeretsian on real estate investing — Thu, 19 Jan 2012 05:08:30 +0000

The Office market place is doing better than was anticipated a year ago with fear about the refinancing of mortgage obligations as they became do and whether anyone would show up to lend the needed capital. As challenging as the commercial lending business is/was, things got done and buildings were refinanced.

According to the Wall Street Journal’s article by A.D. Pruitt ,good things happened in the office building market in the U.S. in 2011.

“Some of the nation’s biggest real-estate investors took stakes in major office properties in 2011, a year that registered a record amount of recapitalizations for that sector, according to Real Capital Analytics.

“There were a lot of white knights coming to help recapitalize” buildings that had mortgage loans coming due last year, said Dan Fasulo, managing director at real-estate data firm Real Capital. Recapitalizations in 2011 were at the highest level since RCA started tracking them in 2001.

Such deals usually involve an investor buying a big stake in a property by injecting additional equity or taking over a loan and restructuring borrowing terms. The sheer volume of $13.3 billion in office recapitalization last year underscored the massive amounts of debt office landlords had accumulated on their buildings during the boom times. This recapitalization volume also surpassed the last peak of $11 billion in 2007.

The number of re-capitalizations is “the function of the market fixing itself,” Mr. Fasulo said. To be sure, each property owner’s decision to recapitalize could be driven by a number of factors outside of maturing loans.

The largest recapitalization in 2011 was Paramount Group and Beacon Capital’s purchase of a 49% stake in a New York building, 1633 Broadway, from a Morgan Stanley joint venture. The deal valued the building at $1.62 billion and the interest at $793.8 million. The next largest recapitalization was by Vornado Realty Trust’s acquisition of a 49.5% stake, valued at $646 million, for 666 Fifth Ave in New York. Eight of the 10 largest deals were in New York; the other two were in Houston.

Real-estate companies, especially publicly traded real-estate investment trusts, have been raising massive amounts of capital over the past year via equity raises and debt issuance in order to pounce on these kinds of acquisitions, which are expected to continue to rise this year.

The above historical information is interesting only from a learning and discussion point of view, what will come will come.

In general, private investors have been less successful at raising debt and equity over the past six months amid concerns that Europe’s debt crisis could filter down to hurt U.S. credit markets by raising the cost of capital.”

2012 will be an equally interesting year on the financing front as the Europe debt crisis continues and
forecasters suggesting that Greece will be defaulting by the second quarter of this year.

We don’t have all the answers to these challenging questions, however a good plan with a competent team of advisors,
ready to engage with mindful execution – we believe increases your odds of success.

How will this effect all financing out there and valuations on real estate?

What are your thoughts? Leave a comment below and share your experiences…

Visit our Website : www.envoycapitol.com

Email: capitalmoves@gmail.com

Envoy Capitol Realty Inc., brokerage Toronto , Canada

European Debt Crisis and Consequences for Canadian Real Estate

yeretsian on real estate investing — Thu, 19 Jan 2012 04:45:16 +0000

The Governor of the Bank of Canada : Mark Carney said he is concerned about the European Debt crisis and it would affect Canada negatively to the tune of approximately $10 billion dollars in lost trade and other dealings. The Bank of Canada decided to stay the course on interest rates leaving the rate at 1%.

Some suggested this will leave the Bank with room to manuever, if it needs to stimulate the economy at a future date.

The Canadian Real Estate Association (CREA) said yesterday that there is no bubble in the Canadian housing market and indicated affordability and supply demand levels are operating reasonably. Although the Minister of Finance chimed in with his own concerns and suggested a further tighting of credit arrangements on mortgages such as reducing further the amortization periods. Making future mortgage arrangements more expensive on a monthly basis for Canadians that need to borrow to purchase a home, which is mainly the middle and lower level of home purchasers.

In the meanwhile the Canadian Banks started jockeying with reduced rates on home mortgages with BMO offering 2.99% and the TD Bank following suit. This would suggest there is desire for more business or there is not enough business currently for the Banks – lack of demand or a positioning for the Spring Market. In any case good news for the Canadian home purchaser or those that need to refinance /renew the mortgage contracts. It is all interesting how things are coming together and the efforts by the various parties – the powers that be, showing their leadership in the housing sector of the Canadian economy.

Although it is still challenging to find capital in Toronto for small commercial investment projects at workable/ reasonable rates; for say multi-unit industrial buildings, small office building, small retail strip plazas requiring 7 % plus rates with brokerage fees, plus environmental reports ( costing thousands ), surveys, appraisal reports,inspection reports, etc..and mostly for short lending periods ( these are not CMHC insured loans, so banks are shy to lend and the borrower is left to the private sector with its aggressive terms ).

What are your thoughts? How’s it all going to end ? Leave a comment below…

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Email : capitalmoves@gmail.com

Envoy Capitol Realty Inc.,brokerage Toronto, Ontario

Small Investors Beware!

yeretsian on real estate investing — Wed, 18 Jan 2012 01:36:23 +0000

Small Investors/Landlords should Beware , rules are changing again in the residential tenancy business !

Here is the latest information on the evolving nature of the Residential Rent Control Legislation proposed by Ontario’s current government and it will hurt the small residential real estate investor / landlord. Thanks to OREA Real Estate College ;

” The Government of Ontario has introduced legislation that, if passed, would cap the annual Rent Increase Guideline at 2.5 per cent. The legislation, called Bill 19, Residential Tenancies Amendment Act (Rent Increase Guideline), 2011, would also ensure that the annual rent increase never falls below one per cent.

The province’s Rent Increase Guideline is a government policy that is in place to ensure price stability for tenants.

While the Government of Ontario has maintained that Bill 19 balances the needs of both tenants and landlords, the Federation of Rental Housing Providers (FRPO) disagrees.

In a release issued shortly after Bill 19 was introduced, FRPO CEO Vince Brescia argued that, “setting an arbitrary price ceiling fails to recognize that housing industry costs, like repairs and maintenance, are not subject to any price caps. The government is unilaterally imposing a cap without any discussion with an entire industry and is initiating a policy that will be particularly devastating for small landlords.”

Read a copy of their press release here.

OREA is opposed to rent control legislation. OREA President Barb Sukkau wrote the Minister of Municipal Affairs and Housing, Kathleen Wynne, noting that “while the current formula worked well in the past, recent economic conditions have caused fluctuations in the consumer price index hurting the economic circumstances of those who rent. While we agree with that statement, it is equally true that recent fluctuations have also hurt landlords. Their situation is expected to become even worse in future as electricity rates begin to rise dramatically.”

The Ontario government is going in the wrong direction in this area if they want a good supply of residential rental properties to be constructed and put out on the market. They are continuing to take away any motivation a small investor/landlord would have in investing in this sector. Which intensifies the challenges faced by the average individual seeking rental accommodation at a reasonable and competitive price. If you have no incentive to invest in small rental properties and maintain them at the highest standards you wouldn’t and we all suffer. The market place is being wrecked by these governmental policies that do not create a level playing field for small landlords and tenants.

Why would anyone bring their hard-earned taxed paid cash to this area of buying residential/small multi-unit residential properties when they have a world of other investment opportunities to invest in and earn yields and profits which will help them – as they work towards build a nest egg for retirement ( and again paying taxes on any gains as they work to retirement)?

More bureaucracy moving into this area, where they will tell you and me what to do – and how to do it and what to charge for the experience.

Money , like water flow/ moves to the point of least resistance.

Where’s the Leadership? What’s the agenda?

What are your thoughts and suggestions to deal with or improve this situation for the small landlord/investor?

Merits of Paying for a Second Opinion

yeretsian on real estate investing — Tue, 17 Jan 2012 02:00:44 +0000

Professional judgements could certainly be based upon a subjective determination

based upon the knowledge and experience of the individual rendering it.

Can a professional be wrong?

Unfortunately there are no real guarantees in our lives and so the patient or client needs to be educated

with a basic understanding of the subject they are seeking some guidance in otherwise you are at the mercy

of the professionals ( who have their own challenges in life, from time/personal/business/family,etc..or just tried.)

They could be wrong because their frame of reference does not include the possibility of a reasonable/economic solution

to your challenge.

This link to an article that deals with the idea of the benefits of seeking Second Opinions in the health care industry ;

have a read, then come back and leave a comment below and share your experience and insights:

http://online.wsj.com/article/SB10001424052970203721704577159280778957336.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsThird

We at Envoy Capitol Realty Inc.,brokerage would like to encourage clients to seek second opinions and do their homework

before taking action with their real estate investment or capital. You should act when you
are ready and in full awareness of the possible consequences and the whole picture of costs
or sales proceeds before and after tax.

Simply said; know before you go!

Visit our Website : www.envoycapitol.com

Blog: www.capitalmoves.blogspot.com

Envoy Capitol Realty Inc., brokerage Toronto , Canada

Big Bet on Retail Market Recovery!

yeretsian on real estate investing — Mon, 16 Jan 2012 05:33:05 +0000

Exciting things are happening and big money is feeling confident as demonstrated by putting its investment capital to work into

commercial – retail real estate. With the assistance of professional advisers such as Goldman, Sachs & Co. served as advisor to DDR on the acquisition. Citigroup Global Markets Inc. and Eastdil Secured, a subsidiary of Wells Fargo & Company, served as advisors to Blackstone and JP Morgan served as advisor to EPN.

Costar reports that; Private-equity kingpin Blackstone Group (NYSE: BX) made its latest foray into commercial real estate, joining forces with DDR Corp. (NYSE: DDR) in a deal to acquire a shopping center portfolio from EPN Group, an affiliate of Tel Aviv-based Elbit Imaging Ltd. The transaction, which is expected to close in June 2012, is valued at $1.43 billion, including at least $950 million in assumed debt and new financings.
The open-air power center properties being acquired by the newly formed joint venture are spread across 20 state and total 10.6 million square feet, with 90% of the space leased.
Blackstone will own 95% of the venture with an affiliate of DDR owning the rest. DDR will invest $150 million in preferred equity and will continue to handle leasing and property management for the properties as it has for EPN Group and EDT Retail Trust, formerly Macquarie DDR Trust, which finalized the sale of the portfolio to EPN last summer.
The agreement also gives DDR the right of first offer to acquire 10 of the assets under certain conditions.
EPN Group said the sale is subject to lender approval and certain other closing conditions
following the completion of a shortened due diligence period ending Jan. 31.
The states with the largest concentration of properties involved in the transaction (ranked by annual base rent) are Massachusetts (12.7%), Ohio (10.6%), Minnesota (9.5%), New York (9.2%); Texas (6.9%); Illinois (6.4%); Florida (6.2%); Connecticut (5.3%); Colorado (4.9%) and Kansas (4.4%), according to mid-year 2011 financial from EDT Retail.
The top tenants (also ranked by annual base rent) include the TJX companies, Kohl’s, PetSmart, Dick’s Sporting Goods, Best Buy, Bed Bath & Beyond, JoAnn’s, Old Navy, Walmart and Home Depot.
There was a slight discrepancy in the number of centers being sold, reportedly because the prospective seller counted the Riverdale Village shopping center in Minnesota as two properties. EPN reported the number at 47 shopping centers, while the joint venture reported that it’s acquiring 46 properties.
EPN acquired a 47.8% stake in EDT Retail and the portfolio for approximately $116 million in a recapitalization in 2010, and became the joint manager of the properties along with DDR. Last summer, EPN purchased the remaining stake for $242 million and privatized EDT Retail Trust, making it a wholly owned subsidiary. DDR has an intimate knowledge of the portfolio, having leased and managed all the assets throughout all the changes, in some assets dating back to 1995.
DDR President and CEO Daniel B. Hurwitz said the transaction “illustrates our access to off-market opportunities, while creative structuring enables risk mitigation and non-dilutive deleveraging. Lastly, this transaction enables the retention of significant fee income, and enhances our current ownership and future access to prime assets.”
Alex Berman, EPN Group co-founder and CEO, described the sale of the EDT portfolio “a bittersweet event” for EPN Group.
“On one hand, we have enjoyed immensely our association with EDT and DDR, and wish well to Blackstone and DDR, two of the most prominent and sophisticated real estate investors. On the other hand, we are proud of EPN’s ability to successfully acquire, create value and realize significant profit for our investors on a large and complex investment in a span of two years.”
Despite the pending sale, EPN is not planning to exit the U.S. entirely. Berman said EPN Group sees further investment opportunities in the market and intends to continue raising funds for possible direct and joint-venture acquisitions.
The pending acquisition is being viewed as another major bet by Blackstone in a strong recovery in U.S. retail property values. In June of 2011, the private equity firm closed on its purchase of 585 shopping centers in the U.S. from Australia’s Centro Properties Group for $9.2 billion. That deal included Centro’s U.S. property management platform, comprised of 18 offices and 600 employees. Then in December, Blackstone bought 36 shopping centers for $473 million from Equity One Inc. (EQY). The retail properties are located in the Atlanta, Tampa and Orlando markets, with additional assets located in North Carolina, South Carolina, Alabama, Tennessee and Maryland. Prior to that, Blackstone invested $500 million in General Growth Properties Inc. (GGP) as part of the mall owner’s emergence from bankruptcy in 2010.
Since peaking in the first quarter of 2010, the retail vacancy rate has steadily declined across the U.S., dipping under 7% in the fourth quarter of 2011 for the first time since 2008, according to CoStar Group’s latest market analysis. Despite the challenging retail environment that saw several high-profile retailers go under, the retail property sector has benefitted from several consecutive quarters of positive absorption and very little new construction.

What is happening in your area, have you noticed any move with retail space on available space and the rents being demanded ?

Share your experiences with us by leaving a comment below…

The above is meant for discussion and learning purposes only and is not meant to be a call for action.

In the event you are moved to act in the real estate investment area,
it would be advisable to seek the appropriate professionals before you act.

Visit our Website : www.envoycapitol.com

Twitter : EnvoyCapRealty

Blog : www.capitalmoves.blogspot.com

Envoy Capitol Realty Inc., brokerage Toronto, Canada

Parking Your Money In Storage Space

yeretsian on real estate investing — Sun, 15 Jan 2012 18:29:41 +0000

I have some money to invest and I want to invest it in real estate!

What are the areas doing well in the commercial ( non-residential) real estate sector, asks a friend.

There are many areas of real estate one could got into…

How much money are we talking about and what’s your investment time horizon?

Have you every considered storage facilities, they could be very profitable wealth building opportunities?

We could buy land and build them in convenient locations in our city/town.

Here is a link of an article that tells you a little bit about them and their recent success , from the Wall Street Journal.

Read it and let’s discuss it , it’s about Storage Facilities and the Warehousing of stuff ;

One of real estate’s least-exciting businesses—warehouses that allow people to store their unused sofas,
lamps and other household goods—have become a hit with investors.

The widely watched reality-TV show, “Storage Wars,” which follows investors as they bid on repossessed storage lockers
in search of hidden treasure, put self-storage on the pop-culture map.

An Extra Space Storage facility in Emeryville, Calif.

But the storage companies themselves have turned out to be winners, too, as their stock prices surge.
Last year, the stocks of real-estate investment trusts in the self-storage business posted a total return of 35.4%,
the strongest gain of any REIT sector for the second consecutive year.
Those results greatly outpaced the 8% return for all REITs, as measured by the Dow Jones All REIT Equity Index.

Profits in storage “far exceeded where most thought they would come in,” said Michael Knott,
an analyst at Green Street Advisors.

“Almost every situation in life can create demand for self-storage, like moving, divorce and
getting married, [that is] irrespective of where the economy may be.”

The foreclosure crisis also has boosted demand for storage space as families downsize into smaller rental housing.

Among the four self-storage REITs tracked in the Dow Jones index, Extra Space Storage Inc., the second-largest public storage operator with 882 facilities in 34 states, packed the biggest punch, with a 2011 total return of 43%. Public Storage, the largest operator, had a return of 36%. Sovran Self Storage Inc. returned 21.35%, and CubeSmart returned 14.97%.

While most self-storage companies performed well, analysts said that Extra Space, based in Salt Lake City, benefited more than others because customers are drawn to its newer facilities located in densely populated markets.
That allowed the company to increase occupancy 3.4% in the third quarter to 89.1%, the company’s highest-rate ever for a third quarter. Extra Space asking rents jumped 3% in the third quarter compared to the same period a year earlier and discounts dropped 9%

“Along with the rest of the industry, [Extra Space] had a very good year, including increased occupancy and rising rents,” said Paul Adornato, an analyst at BMO Capital Markets. He said he anticipates a favorable business environment for the company this year.
Mr. Adornato also is a satisfied customer. He is renting an Extra Space facility in Brooklyn, N.Y., for six months as he remodels his home.

Still, Mr. Adornato has an “underperform” rating on the stock partly because he doesn’t believe occupancy can rise much higher.
“We think some of the easy gains from increasing occupancy may no longer be available to the company,” Mr. Adornato said.

“Investors may look elsewhere…in the REIT world for better returns.”

Self-storage has long been viewed as a stable business because it is an expense borne out of necessity.
“We are a solution to a problem or a challenge that has been life-changing for an individual,” said Spencer Kirk, chief executive of Extra Space. “It’s not glamorous, but it’s stable,” he said.

”It’s recession-resistant. and if properly managed, it can produce a great return for an investor.”

Mr. Kirk noted that during the downturn, public-storage companies only suffered mild revenue declines compared with the double-digit drops by other commercial landlords. And, while Extra Space did drop rents for new tenants, it continued to raise rental rates for existing customers every month.

The company wasn’t completely unscathed by recessionary pressures.
Like its rivals, Extra Space saw an exodus of longer-term tenants of seven to 10 years who ditched the storage facilities to save money.

The company also was the most-vulnerable among the four storage REITs because it used hefty amounts of leverage to fund an ambitious development pipeline.

Extra Space repaired its balance sheet by securing bank loans on some 800 properties that it used as collateral. In addition, the company also permanently closed its development business in 2009 because it couldn’t get financing to build new facilities.

Mr. Kirk says the business will continue to benefit from higher rents in part due to the absence of new competition.
“There has been virtually no new supply added over the last few years.
As an existing operator for self-storage, it bodes well for the future,” he said.

What are your thoughts? Shall we look to acquiring land and go into developing new facilities – because you have all the financing to do it?

The above is an illustration, for discussion and teaching purposes only and is not intended to provide financial or investment advice.

Kindly consult the appropriate professionals before proceeding or getting involved in any type of investment opportunity
and doing all the appropriate degree of due diligence before investing your money.

Share your experience with a comment below.

www.envoycapitol.com

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Email : capitalmoves@gmail.com

Blog : www.capitalmoves.blogspot.com

Envoy Capitol Realty Inc., brokerage Toronto , Canada