Mark Kenney discusses regulatory needs, housing shortages, and the potential of multi-family REITs
In a roundtable discussion with Wealth Professional, CAPREIT CEO Mark Kenney shared insights in a fireside chat with Middlefield CEO Dean Orrico, exploring Canada’s housing dynamics and CAPREIT’s investment prospects.
Kenney wishes provincial governments would adopt a more welcoming stance toward businesses to invest in the housing sector. During the chat, Kenney discussed key issues facing the multifamily sector in Canada. CAPREIT is a top-10 holding in Middlefield’s real estate funds.
Middlefield Group, an independent equity income manager with over four decades of experience, actively manages its portfolios with a focus on leading real estate companies.
Multi-family REITs are particularly attractive due to their ability to increase revenues amid rising construction costs, high land prices, and a shortage of skilled labour in Canada.
Industry players and all levels of government accept that the demand for housing far outpaces supply. Canada needs to build four to five million new homes over the next seven years to bring equilibrium to the market.
Kenney emphasizes the importance of provincial regulations in providing stability and clarity for investors. He calls for measures to streamline regulatory processes and eliminate barriers to housing development.
Addressing the affordability crisis, Kenney acknowledges the challenges faced by Canadians, particularly younger generations, in accessing affordable housing.
Kenney highlights the need for a multifaceted approach to address affordability issues, including increasing supply and implementing effective demand-side measures.
He points out that Canada is witnessing significant population growth, primarily driven by immigration, without a thoughtful plan to accommodate the influx of people.
Kenney stresses the need for decisive policy responses to address the housing crisis, including both supply-side measures and constraints on demand.
Kenney critiques the foreign homebuyers ban, noting that it halted a longstanding source of investment in rental properties. He calls for a conversation about allowing the private sector to develop infrastructure more efficiently and at lower costs.
Kenney supports divesting older, lower-quality assets and reinvesting in newer assets to improve CAPREIT's portfolio performance.
Kenney advocates selling some of CAPREIT’s portfolio to the government for conversion into social housing, emphasizing the importance of acquiring existing buildings in economically distressed areas. He stresses the need for a comprehensive strategy to address the social housing deficit in Canada.
The REIT sector has experienced a decline, but Middlefield anticipates its recovery, given strong fundamentals in companies like CAPREIT. Kenney warns investors not to overlook the capital appreciation potential offered by REITs.
Orrico agrees, emphasizing that professional money managers are already positioning themselves for a strong rebound. Middlefield has strategically aligned itself to capitalize on segments like multi-family housing, anticipating a near-term revival in share prices.
