John McKinlay says residential REITs remain priority amid global market shifts
John McKinlay’s appointment as Centurion Asset Management CEO comes amid plunging markets and intense investor uncertainty.
And while his first week at the helm has been filled with unsettling headlines and a fluctuating financial landscape, McKinlay believes the company is in a strong position to reach its long-term goals by trusting their formula and adapting to market swings.
Centurion founder Greg Romundt will shift to the executive chair position, while Paul Chin has been recruited as their new CIO. McKinlay says the executive shuffle is part of a push to prioritize growth in their REIT investments.
It has been a turbulent few years in the real estate industry, with the chaos of the COVID pandemic cooling before US President Donald Trump’s return to the White House reintroduced a flurry of volatility and unpredictability into markets. McKinlay says that while there was plenty of lessons to take away from the pandemic years, the seemingly never-ending onslaught of new challenges to contend with has left the real estate industry exhausted. He suggests that sticking to a formula that has served Centurion for decades will lead the company through what will undoubtedly be another prolonged stretch of instability.
“The current market volatility will further stress test the real estate industry. And I know there's a lot of fatigue and in our industry in terms of, when is the tap going to go back on? When is there going to be sunlight?” McKinlay said. “But the correct thing is always to stick to your knitting. Do what's knowable.”
With increased global capital interested in the Canadian real estate market, McKinlay sees potential to expand Centurion’s operations, particularly within the family office, endowment, and institutional markets. The Canadian REIT market has also historically seen less volatility than its American and British counterparts, another aspect that McKinlay points to with enthusiasm.
He says the pandemic was an example where certain real estate classes – particularly retail, industrial and office – struggled immensely, though residential remained a profitable proposition. Centurion manages its own leasing and property management, a hands-on approach that McKinlay says will continue to produce enviable returns.
“What's knowable for us is that we are in the most resilient asset class; multi-family residential,” he said.
The turbulence of the 2020’s has been unique for its unrelenting roadblocks according to McKinlay, who says the pandemic taught valuable lessons on sticking to a core mission while finding adaptability within these goals.
“What's interesting about the last four or five years is that the hits keep coming, and a lot of these hits are not your typical economic downturns that there's a roadmap for them,” he said.
“COVID was a healthcare downturn that nobody had a script for. And there's a lot of lessons to learn from that, and there were a lot of opportunities.”
Raising capital in an increasingly volatile market is certain to be a challenge for McKinlay in his new role, though he says he remains confident the company can adapt to global trends.
“Over the last few years, there's been a lot of volatility in terms of the capital stack and where capital is coming from – that drives the engine,” he said. “One of the top priorities that I have is to identify and keep adapting to the new world order in terms of capital raising.”
Going into an upcoming federal election, McKinlay identified immigration and permitting as two areas that whichever incoming government should focus on. Prolonged permitting processes have been a frustration for the real estate industry, while rapid increases then decreases of federal immigration targets have created market uncertainty for investors.
McKinlay says these issues can be solvable, while remaining confident in his Centurion’s ability to pivot when necessary.
“Despite the muddiness, there will be windows along the way that we'll be able to take advantage of and in my opinion, we're well positioned to do so,” McKinlay said. “We’re medium to long term investors. We're adaptable.”
