Almega Co. has unique origins, a charitable business plan and ambitions to be the top real estate, asset and property management company in the world.
“I know that sounds crazy now, but I’m young and ambitious and driven,” Almega president and chief executive officer Basem Hanna told RENX.
“Crazy” perhaps, but Hanna has steadily grown both Almega and other companies he’s been involved with. Almega is about to take its next major step, developing a $125-million apartment building along Sheppard Ave. W. in Toronto.
Hanna’s early real estate and investment knowledge after graduating from Western University’s Ivey Business School was acquired through spending two years each at First Capital Realty and The Rose Corporation before he founded Toronto-based Almega in 2011 – at the age of 26.
It was initially set up so a handful of professionals in the small Coptic Christian community of Egyptian immigrants Hanna is part of could aggregate capital and establish a footprint in real estate.
The investor pool has since expanded, but Hanna’s focus is still on attracting small investors as opposed to institutional financing.
“It’s a different approach and I hope that it works,” he said. “I’m not saying that I would never take institutional money, but my goal is to go the other way. It takes longer, but I think the juice is worth the squeeze.”
Almega is dedicated to acquiring and operating stabilized, income-producing commercial and residential properties in Canada and the United States.
The goal is to create a profitable and well-managed portfolio for both aspirational and well-seasoned investors.
Almega Property Management
Almega Property Management was formed early on to manage the company’s own investments as well as those of its investors.
“Our property management portfolio is a series of one-off units, including individual condo units, rental homes and anything a passive real estate investor would own,” said Hanna.
“We find that’s a completely underserved area of the market, in the sense that most of these people will buy a pre-construction condo or home with the intention of using it as a rental property and then realize they don’t want to manage it.”
Almega’s services include: rent collections and owner payments; moving facilitation and inspections; maintenance requests; resident screening and selection; owner representation; unit insurance; and resolving tenant disputes.
Almega didn’t initially offer property management services to third parties, but has seen this segment of its business grow substantially since it started actively promoting it in January.
Hanna said Almega has more than 200 units under active management in Toronto and is taking on 30 to 50 new ones a month, while leasing 20 to 30 units per month.
Almega’s first four funds
Almega’s first fund purchased three multifamily residential buildings and one industrial property.
The second fund acquired an assembly of three properties on Queen Street East in Toronto’s Beaches neighbourhood that were converted into a large daycare facility which was needed in the area.
Almega’s third fund bought a mixed-use retail and residential building at College Street and Ossington Avenue in Toronto.
It’s being converted to house a daycare facility on the second and third floors and a gym on the main floor. A medical services office tenant is targeted for the basement.
The fourth and most recent fund is dedicated to a new mandate Almega launched late last year to develop apartment buildings in Toronto and buy and reposition underperforming assets in the United States.
Almega’s American strategy
“We think that the U.S. is a great place to earn income,” said Hanna, who was involved with buying American properties for 15 cents on the dollar during the financial crisis of 2008 when he was with The Rose Corporation.
Hanna is now seeking opportunities in garden-style apartment buildings in Arizona and Florida, which have recently experienced major spikes in people contracting COVID-19, and thus could potentially offer some bargains.
“I think the U.S. is headed for a correction and I want to be ready to take advantage of it if it happens. If it doesn’t happen, it’s no big deal. There are limited expenses associated with doing due diligence and kicking tires on deals.”
New Toronto apartment and future prospects
An equity raise was completed in December for the Toronto apartment project that’s now going through the zoning process. Hanna is proposing a 270-unit apartment building with shared office space and a daycare facility at 824 Sheppard Ave. W., between Allen Road and Bathurst Street.
“We probably have, between our under-development assets and the properties that we manage, between $300 million and $400 million of real estate in our portfolio that we look after,” said Hanna. “The whole purpose of our asset management business is to produce yield.
“It’s not about earning multiples and selling out. I believe in holding assets for the long term and producing incremental cash yields for our investors, of which I’m one of the biggest.”
Almega is looking to acquire what Hanna calls “a trophy piece of land in downtown Toronto” that can yield between 600,000 and 800,000 square feet of future development. He puts the probability of success of acquiring the property at 60 per cent.
The company is also looking at a 220,000-square-foot development site in midtown Toronto which Hanna envisions becoming a similar project to 824 Sheppard.
Hanna’s other ventures
If you’re wondering where Hanna got the money to ramp up the size of Almega’s investments, let’s go back to that industrial property the company acquired with its first fund in 2013.
The original plan was to convert the 70,000-square-foot building into a self-storage facility, but Hanna became interested in the burgeoning legal cannabis market and instead used it to grow marijuana.
Hanna put his real estate career on hold from 2014 to 2017 to launch a company called TerrAscend, which has received licences to grow medical and recreational cannabis. It quickly grew to more than 100 employees. Hanna was president and CEO before the business and the building was sold for a very healthy premium.
“TerrAscend is probably one of the top-10 cannabis companies in the world right now and it’s something that I’m very proud of,” said Hanna, who remains a shareholder.
While Almega is once again Hanna’s primary focus, he started another company called TREC Brands which curates cannabis products. He chairs the company’s board.
“I’m still very intimately involved with the cannabis space, just because of the knowledge I have and the connections,” said Hanna. “People want to lean on me for my expertise and opinions.”
A friend of Hanna’s created a Toronto-based company called Ledn Inc. that offers Bitcoin-backed loans and Bitcoin savings accounts. Hanna has been an advisor since October 2018 and says Ledn has been growing month-over-month.
Almega has 14 employees and a few people on contract, and Hanna said it’s hiring one or two people a month.
“Our values are trust, respect, equality and compassion. We live those day-to-day. Every single employee of our business is an owner.”
In addition, both Almega and TREC Brands are donating 10 per cent of their profits to charities.
Almega employees choose where its money goes, while TREC Brands charities are chosen by its consumers via social media and emails. Money has thus far gone to homeless and women’s shelters, Black Lives Matter and other organizations.
Almega has also been putting property management fees into a COVID-19 relief fund since April to help struggling tenants in its units pay their rent.
“My life motto is to give more than you take,” said Hanna. “I’ve been broke for way more years than I’ve had money, and I still know what that hustle is like. I haven’t forgotten it.”