1st Quarter 2019 Newsletter
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We are excited to share the first quarter edition of Centurion's newsletter for 2019. This issue features a Q&A with Centurion President and CEO Greg Romundt plus a recent interview by Wealth Professional on Private Debt. We also have important news on Centurion Apartment REIT's recent acquisitions, as well as our regular fund performance updates.
The first quarter of 2019 has been very busy and exciting as we look forward to a promising year ahead.
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Q&A with Centurion President
and CEO Greg Romundt
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Q: Where are you finding potential property acquisitions at reasonable valuations?
A:
Our focus has been on newly constructed properties for the past few years on a relative value basis. Almost everything we have under contract, or are considering, is coming from our own pipeline, from the relationships we have in our mortgage lending business, or are otherwise newly constructed.
Q: What is the level of interest rate sensitivity of the three Centurion funds?
A:
It is low. While rates moved up marginally last year (which has reversed this year), capitalization rates actually declined when normally these would be expected to move in unison. The reason they have diverged is that (1) marginally higher rates plus tightened mortgage rules have significantly tightened rental market conditions pushing up rents, and (2) the market is anticipating strong rental growth, which it is pricing in via capitalization rates. Further, all Centurion funds are net receivers of interest, with most loans set with a floor rate that increases if rates rise. So on an income basis, rises in interest rates produce increased income on a net basis to all of our funds.
Q: What effect does an inverted yield curve have on Centurion’s Funds?
A:
It has a limited impact but is modestly advantageous as we tend to borrow long-term at the lower rates and lend short-term at higher rates, so this has the potential to increase the spread (increase the profitability) of borrowing long-term to lend short-term.
Q: Why the U.S. and what is your strategy there?
A:
The U.S. is a large and attractive market where they build a lot of new rental product on a relative basis, unlike Canada which tends to build condos. Population demographics and the strong preference for rental products are driving the increased demand for new rental products. Our U.S. strategy is similar to our Canadian construction pipeline strategy that has been successful here. We are looking to finance and joint venture with strong U.S. development groups that can supply us with a pipeline of new properties over time.
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REIT, REOT, and CFIT – OPEN FOR INVESTMENT
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Centurion Apartment Real Estate Investment Trust ("REIT"), Centurion Real Estate Opportunities Trust ("REOT"), and Centurion Financial Trust ("CFIT") are open for investment.
The REIT re-opened for investment in April 1, 2019. We have been presented with investment opportunities requiring new capital. As such, Centurion Apartment REIT will be open until further notice.
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Centurion's Head Office will be moving to Suite 1800 within the same building at the end of June.
All of our contact information remains the same.
Please update your records with our new address:
25 Sheppard Avenue West, Suite 1800
Toronto, ON M2N 6S6
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Centurion Apartment REIT Continues its Expansion into the U.S., Announcing its Acquisition of a Multi-Residential Apartment Community in Athens, Georgia
Centurion Asset Management Inc., the asset manager of Centurion Apartment REIT, is pleased to announce the acquisition of a 75% interest in a multi-residential community in Athens, Georgia. This transaction is Centurion’s second acquisition in the U.S.
Centurion President and CEO Greg Romundt shares,
"This acquisition continues to grow Centurion's presence in the U.S. and complements our existing portfolio nicely. Centurion is excited about this recent acquisition and looks forward to expanding our footprint across the border.”
Click
here
to view the announcement.
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Centurion Apartment REIT Announces the Pending Acquisition of an Apartment Portfolio in Langford, British Columbia
Centurion Asset Management Inc., the asset manager of Centurion Apartment REIT, is pleased to announce the pending acquisition of 100% interest in an apartment portfolio in Langford, British Columbia. Village Walk West Apartments, Roberts Place, and Roberts Landing have a total of 136 units with a mix of one, two, and three-bedroom suites, as well as two commercial units. This portfolio complements another recent pending acquisition located in downtown Victoria, allowing for operating efficiencies amongst the portfolio.
Centurion President and CEO Greg Romundt shares
"We are excited about our newest acquisition in Western Canada. Langford is one of the fastest growing communities in British Columbia with a robust rental market. The acquisition of this portfolio will provide Centurion opportunities to achieve economies of scale and improve operating efficiencies as we continue to expand our footprint across the entire Greater Victoria Area.”
Click
here to view the announcement.
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Centurion Apartment Real Estate Investment Trust ("REIT")
- The REIT NAV as at May 1, 2019, is $16.622, which represents a unit price appreciation of 2.93% since the start of 2019.
- The REIT's year-to-date return for 2019 was 4.71% on its Class A Units and 4.95% on its Class F Units.
- The REIT's trailing 12-month return for 2019 was 23.75% on its Class A Units and 24.65% on its Class F Units.
- The current annualized distribution yield for reinvested Class A Units is 5.15% and 5.86% for Class F Units.
- The REIT has acquired a multi-family property in Athens, Georgia (U.S.); and has another six properties under contract (five multi-family properties in Langford, British Columbia and one Canadian student housing residence).
- Diluted vacancy rate continues to remain low at 1.4% as at March 31, 2019.
- Rent-to-market-rent gap is 15.5% as at March 31, 2019, compared to 13.7% as at December 31, 2018.
Centurion Real Estate Opportunities Trust ("REOT")
- The REOT NAV as at May 1, 2019, is $ 11.652, which represents a unit price appreciation of 0.6% since the start of 2019.
- The REOT's year-to-date return for 2019 is 2.71% on its Class A Units and 3.01% on its Class F Units.
- The REOT's trailing 12-month return for 2019 was 7.02% on its Class A Units and 7.96% on its Class F Units.
- The current annualized distribution yield for reinvested Class A Units is 6.31% and 7.24% for Class F Units.
- REOT is enjoying exceptional deal flow and has several hundred million in loan term sheets out for consideration.
Centurion Financial Trust ("CFIT")
- The CFIT NAV as at May 1, 2019, is $ 10.377, which represents a unit price appreciation of 0.2% since the start of 2019.
- The CFIT's year-to-date return for 2019 is 2.52% on its Class A Units and 2.85% on its Class F Units.
- The CFIT's trailing 12-month return for 2019 was 7.50% on its Class A Units and 8.54% on its Class F Units.
- The current annualized distribution yield for reinvested Class A Units is 7.10% and 8.16% for Class F Units.
- The portfolio is split as at March 31, 2019, between its investment in real estate debt or mortgages (63%) and investments into non-real estate, corporate private debt (37%).
- CFIT completed a successful second advance on a previously committed financing debt in February.
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2018 Management's Decision and Analysis
The annual Management's Discussion and Analysis ("MD&A") is one of Centurion's communication vehicles to investors and advisors that integrates material information about the company's performance. View the 2018 MD&A for Centurion Apartment REIT, Centurion REOT, and CFIT below or visit our website's Investment Solutions section.
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Centurion named one of the Top Mortgage Workplaces for 2019 by Canadian Mortgage Professional
Centurion was named one of the Top Mortgage Workplaces for 2019 by the Canadian Mortgage Professional. The inaugural report uncovers the best places to work, as rated by thousands of mortgage professionals from across the nation. Click
here
to read the full report.
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Tapping Into Private Debt
-- An Interview with Centurion President and CEO Greg Romundt on Wealth Professional
In the Special Edition of Wealth Professional Magazine, Centurion President and CEO Greg Romundt explains the growth or private debt and shares the benefits of investing in this sector. Read the full interview
here
.
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Chris Lewthwaite
Senior Director, Corporate Finance
Chris Lewthwaite has over 20 years of experience in providing tailored capital solutions and advice to growing mid-market companies to facilitate growth, acquisitions, buyouts, and the realization of shareholder value. Over the course of his career, he has originated and underwritten senior/sub-debt, mezzanine capital and equity investments for over 100 companies across a broad range of industries.
Most recently, Chris served as VP Corporate Development with McIntosh Perry, where he led the development and execution of a strategic M&A plan to source and execute engineering firm acquisitions across Canada. From 2010 to 2017, he served as a Director with Roynat Equity Partners, completing a number of successful private equity investments and serving on several portfolio company boards. Prior to this, Chris worked at Roynat Capital, where he was focused on the origination and execution of numerous senior term debt, subordinated debt and mezzanine financings, while also managing a $100+ million portfolio.
Chris is a Chartered Financial Analyst and holds an MBA from the Schulich School of Business at York University and an Honours BA in Economics and Political Science from the University of Toronto.
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Ryan Kauder
Director, Investments
Ryan Kauder has over 10 years of experience within the investment and financial services industries, holding various positions with private investment firms and multi-national companies. Most recently, Ryan spent approximately six years with Timbercreek Asset Management, a real estate and alternative investment manager, where he was responsible for managing the execution and underwriting of various acquisitions, dispositions and mortgage investments across all real estate asset classes. Prior to his time at Timbercreek, Mr. Kauder spent approximately 3 years within the wealth management and banking industry, serving in Investment Advisory and Retail & Commercial Banking roles with the Royal Bank of Canada and Canaccord Wealth Management.
Ryan holds a Masters of Business Administration from University of Toronto’s Rotman School of Management as well as an Honours Business Administration Degree from Schulich School of Business at York University.
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For investor management inquiries, please contact or Investor Administration team:
Toll-Free: 1-833-733-5617
Tel: 416-733-5617
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