Empowering advisors with insights into the multifaceted world of apartment investments

David Kitai  00:00:06 

Hello and welcome to a very special episode of WPTV. My name is David Kitai, Senior Editor at Wealth Professional. This summer, we hosted the 10th Annual WP awards celebrating the best and brightest in the wealth management industry, from advisors to investment solution providers. Centurion Asset Management was one of those award winning investment providers taking home the WP award for alternative investment solutions provider of the year. Greg Romundt, President and CEO of Centurion Asset Management, also won CEO of the Year. Greg joins us today to talk about his award wins and his old strategies. Greg, congratulations and welcome to WPTV. 

Greg Romundt  00:00:40 

Thank you. It's great to be here. 

David Kitai  00:00:43 

So it's been a big year for you at Centurion. You've won these two awards. Can you tell me a little bit about what sets you apart and why you think Centurion was recognized with these owners?  

Greg Romundt  00:00:55 

Sure. I'll put that in to do two parts. First for the company, I think we work really hard to provide solutions to advisors and their clients to get true diversification in the portfolio. And part of that is helping them understand the business of apartments, you know, so why they would want to be involved? What drives its returns? The macro story of how apartments can help a hedge against inflation. And then we have this generally generationally large supply demand imbalance, which will take a very long time to address, and how we potentially fit into that solution and a client portfolio. As to why I think I was selected, I think there are a couple of reasons. Number one, as I work really hard personally to build empowered teams that perform, and I believe that only shows in our results, but also on our clients or interactions, not only residents, but our investors, advisors, and the people who borrow money and CO invest with us. So you know. And secondly, I think I have a reputation for speaking my mind and saying some things that they're sometimes uncomfortable or politically incorrect and but I think that need to be said. And I kind of, I've always believed that people appreciate that candor. 

David Kitai  00:02:11 

I think, No, those are, those are great reasons, but it's interesting. You bring up the Empowered teams because you were also shortlisted for another and you were named as an Excellence Awardee for it as well, which is Employer of Choice. So can you tell me a little bit about why you think you were nominated there, and what that means for you and your team?  

Greg Romundt  00:02:30 

Well, you know, we believe that a company is much more than a great idea or being at the right time or the right place. It's about people. You know, the best, most solid business ideas can fail because of poor execution. And every company of our size, you know, we're just almost 380 people, we're more than the sum of our parts when we all work together. And this means we need not only highly capable people, but ones that are happy and engaged. And as such, we spent years and thought about it systemically. How to, you know, focus on building a strong and inclusive culture which is attractive to people to come and which keep people here once they're here, and, you know, happy and executing. And to do so, we've set up structures organizationally to listen, to respond to that feedback, to monitor it and track our progress over time. We try and train and mentor people. We build career paths for them, so that, you know, not only do we help them advance in their career, but we hope that they'll advance their career here, as opposed to some someplace else, and so they'll stay for the long term. So I think it's this process of continuous improvement and intention to continuously improve, you know, which I think we're very dedicated to, because she never really arrived at a fixed destination in a business. It's all things are always changing. So we have to adapt to.  

David Kitai  00:03:58 

Absolutely and again, to segue very neatly into my next question. When we talk about constant change, we talk about constant evolution and that diligence required in there. You know, it has been an interesting year for alternatives. Can you outline some of the challenges that you folks have faced at centurion and how you've overcome them?  

Greg Romundt  00:04:20 

Well, you know, look, the recent change in the capital gains tax regime was was a challenge. I mean, this took a lot of people by surprise, and at a time when Canada requires literally trillions of dollars in capital to be invested in housing, energy, resilience, national security, reshoring, you know, AGI technology, we want to be part of the solution in delivering desperately need housing for Canadians. So anything that reduces capital availability to our industry is a severe disappointment, and it was something that really, really bothered me, and to this day, still, you know, politely. Irritates me. Secondly, you know, we've, we've spent years trying to educate people that real estate is not a homogenous product. So there's no such thing as the Canadian real estate market. And this is a term we, we've had used, you know, in the 20 years, 21 years, have been doing this is, there's the Canadian real estate market. And we said, you know, real estate diverse, not only by class, you know, office, retail, hotels, apartments, single family homes, but also quality, old versus new location that's private city, and even neighborhoods inside cities are not the same. So we're always helping people understand that condos aren't the same as apartments, and even rents respond differently. People hear about the office market, which admittedly is a mess, and I've been talking about this for a while, but assumes that means that all real estate will suffer like office and they don't. So it's constantly about educating people and the drivers of our business and how they're very different from other segments of real estate and the economy at large. So this is a an education challenge. But, you know, this is not unique to today. This is something we do continuously, right? 

David Kitai  00:06:13 

Absolutely. And you know, again, going into what you have done and what you continue to do, but, but looking at what you've done for advisors, I mean, what? How have your strategies served advisor than their clients in the past, even, even in recent years, and going back to through the whole history of Centurion? 

Greg Romundt  00:06:31 

Well, I do think we've been a solid, diverse buyer for client portfolios. We've generated strong, low volatility returns, local relations to other investments for the 15 years that the our main product, the real estate investment trust, has been available. You know, I've always believed that investors are their own worst enemies, and having something that produces good, low volatility returns allows them to sleep at night and remain invested. And being in market matters much more than timing the market. I mean, that's an old adage, but I think it's a very it's a very true one, and having low correlation to other investments also helps our advisors build solutions for their clients that are appropriate for their unique needs and circumstances. Further, I think we've been able to perform during low inflation, high inflation, through rate hikes, covid crashes, stock market and bond market volatility, a variety of market conditions that are challenges for advisors and their client investors. So I think, you know, another thing is, we're easy to understand as a business, right? Because everyone has seen what an apartment looks like, and, you know, gets what it is that we do, at least at a very simple level. It's not as simple as it seems. But, you know, I think people understand that. And a lot of investment products the core business, you know, like we're not a hedge fund or a black box. So it's much, much easier for people to understand and get comfort with. And I can pitch anyone on our the core reason why you should be with us in two minute, elevator pitch, right? 

David Kitai  00:08:05 

And elevator pitch for an apartment. It's somehow dovetails nicely. But when we're talking about multi residential, and I love that, you start with, there is no one Canadian real estate market, so I won't ask for a broad outlook, because stay in our lane. But we'll, let's, let's talk a little bit about about multi residential What is your outlook for the Canadian multi residential market right now? 

Greg Romundt  00:08:27 

Well, you know, I said for years that Canada must and will build more apartments in the next decade than we have built in all of the last two generations, because there's no other choice. You know, I and others have estimated the amount of housing required over the next decade will cost about 3 trillion and you know, that's both single family homes, condos, apartments, and even if that amount of money was available, it's not, we still don't have the labor to build it if we assume that a third of that total is apartments of about a trillion assuming we need about 40% equity to fund that, that's $400 billion which is 20 times the amount of total equity market capitalization of the entire publicly traded apartment REIT space. So this shortage of housing is so epic, and I can think of no other industry in Canada that has such a core demand and business case behind it. So I think the next decade for our industry will not only be exciting and extremely busy, but even more significantly, it's a national priority of urgency, which I think, you know, we're very well placed to contribute to in a positive way. And you know, we're not solely going to solve it, but I think we're part of the solution. 

David Kitai  00:09:51 

So as you work towards that solution and work to capture opportunity, what are you doing now that well in the form of either capital raising or initiatives or. Yeah, new ideas to capture some of the opportunities that are out there in the market? 

Greg Romundt  00:10:03 

Well, we're currently doing a major capital raise of about 200 million, whereas the manager I'm leaving waiving fees for two years, so we can offer a 2% discount, which is basically going to be non dilutive to unit holders, you know. So I'm basically gonna pick up cost of that. You know, the opportunities are coming. And I've been signaling this. I've been a little bit early, but a couple of months ago, I said, Look, when we still, when we see the first rate cut, we'll know that we're into the next cycle of the real estate market. And, you know, I've said all along, and I repeat it, that I want to be ready for it. I think the opportunities are, are going to be coming quickly. The segments we're most excited about is probably the new sector. You know, that's what needs a lot of capital, for for for development and for equity partnerships, which we're, we kind of specialize in. So I think there's going to be a lot of lot of things coming. And we've, we've seen a couple which we're starting to to nibble at. So yeah, pretty exciting time ahead. I think. 

David Kitai  00:11:17 

Okay, that's fantastic. So in all this excitement in this area of opportunity and an area of national need. You know, advisors are having conversations with their clients about these assets. How do you think advisors should be talking to their clients about alternatives in general, and Canadian multi residential in particular?  

Greg Romundt  00:11:35 

Well, you know, look, I, I know, for most investors, they saw what happened in the portfolio in 2022 and 2023 and those standard 60/40, portfolios, you know, well selected alternatives can help smooth out some of those bumps and provide access to other sources of return so that investors can sleep better at night and thus stay invested to meet their long term goals. Right? Again, it's a second time I said saying that, but I think it's really important you just stay, stay invested so and, but, you know, investors need guidance to do, to do these things, because there, there are so many differences in the products that are available and what's appropriate and what's going to fit, it's going to have the right, you know, risk and return, and some of them are just probably too complicated for some people, right? So, you know, I think advisors are really needed in that context to help investors just pick the right things for their portfolio. As to multi res, as I said before, I think departments, in my opinion, have the best business case of any business in Canada right now. Not only that, but I think we, what we do have is in short supply, and this will be the case for many years to come. So this is not a two year problem. This is a decade plus problem, but that investors can benefit from and be part of the solution by investing in this space, particularly in the new construction space, where we're most active.  

David Kitai  00:13:10 

Okay, that's great. That's a that's an excellent note to end on. So with that, all I will say, Greg is thank you so much for your time and for your insights, and congratulations again on your wins.  

Greg Romundt  00:13:19 

Thank you so much.  

David Kitai  00:13:21 

And thank you to all of our viewers for WPTV. I have been David Kitai, have a great rest of your day.