SPECIAL PROMOTIONAL FEATURE
REAL ESTATE
Designed for defence Avenue Living CIO Jason Jogia tells WP why the company’s real estate strategy is the ideal hedge against inflation WHEN IT comes to inflation, what exactly is in the cards for investors in 2022? It’s a tough question – and if the global events of the past couple of years have taught us anything, it’s that trying to make market predictions is no easy task. Yet according to Jason Jogia, chief investment officer at Avenue Living, asset owners and managers need to ensure their businesses can withstand the effects of inflation and rising interest rates on all fronts for the long haul. “What is actually inflating right now? The short answer is everything,” he says. “Labour availability is tightening, wages are going up, the cost of materials is rising, utility costs are growing, and property tax is increasing. You have really high levels of inflation globally right now, and if investors aren’t scrutinizing the composition of those portfolios, they could actually end up with an eroding profile of wealth.” So how can investors hedge against the risk of erosion? According to Jogia, the answer lies in real estate – an area that “has historically done very well in inflationary environments.” For Avenue Living, this affords the opportunity to potentially give investors the stability they’re seeking in such uncertain times. “We’re seeing a lot of investors allocate
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more of their portfolio to alternatives, such as real estate and real assets,” Jogia says. “And rather than having direct ownership – which requires you to be in the business of real estate – there is a prominent interest in real estate vehicles like Avenue Living’s Core Trust right now. It gives you exposure to real estate without having to be involved in the management of those assets.” The Core Trust is Avenue Living’s key product. It’s focused on acquiring multifamily Class B and C assets in the market of ‘workforce housing’ – properties targeted at essential workers, a demographic that covers approximately 40% of North America’s working population, many of whom have delayed homeownership for various reasons. The workforce housing segment is composed of people who are consistently employed, who “play a stable, significant role in the recovery of the North American economy,” Jogia says. Avenue Living’s tried-and-tested approach includes an active management model, which adds potential value for investors. Of particular benefit, Jogia says, “is the focus of the socioeconomic profile or the housing segment that we’ve chosen.” And there are several ways the Core Trust is a highly defensive investment vehicle. The short-term nature of multi-family leases,
combined with the generally stable resident base Avenue Living targets, adds a layer of defence to the company’s business model, giving it the ability to react to inflation as it develops, or interest rates as they rise, by adjusting rents based on current market rates. “The business is designed to be defensible against inflation,” Jogia says. “With the rise in wages, we’re able to increase rents marginally, continue to provide high-level service offerings and infuse capital into our properties – raising the standard of living for our residents and doing wonders to solidify resident satisfaction and retention. “Because Class B and C assets are more affordable, they’re generally better insulated than assets on the higher-priced end of the housing spectrum, giving us the opportunity
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