Eric Horie, Senior Vice President, Head of Origination, Canada, Trez Capital (Courtesy Trez Capital)

Many industries struggled with the uncertainty of the last few years. The pandemic and aftermath impacted all commercial real estate asset classes, but has also shown that innovative solutions in the market have made way for opportunities.

The pandemic put significant pressure on property types like hotel, retail and office. As the return-to-normal continues to trend strongly in the later half of 2021, these and other property types of asset classes, especially multi-family, single family and for industrial asset classes are showing strong metrics.

Trez Capital is a leading private real estate investment firm, dedicated to building a better future throughout North America, applying a process of creative solutions, rigour and due diligence to every loan. Trez Capital tracks trends and opportunities in order to bring borrower and developers’ visions to life while supporting the needs of those living and working in the end products.

A return to urban living and working

With vaccine uptake, both the Canadian and U.S., economies are set to continue to benefit from tailwinds through the rest of 2021 and into 2022. With full reopenings occurring in parts of the U.S. and beginning in Canada, there is a trend of heading back to the office at least a few days a week and a return to urban homes. The states where Trez Capital is active in providing debt and equity solutions made up 68.2% of net U.S. employment growth between 2010 and 2020 and future projections show this trend continuing.

Tenant demand in apartments is supported throughout North America with the improving economic conditions and new strength in the labour market. Renting has been a long-accepted trend in Europe, but people in North America typically opted for owning a home. An emerging trend is that many North Americans no longer view renting as a temporary stage, but instead as opting for flexibility. More than one-third of Americans live in rented housing and over 32% of Canadian homes are rentals. The traditional definition of family rentals is changing. An example of this change is a recent Trez Capital Canadian loan to finance the renovation and conversion of underutilized single family homes in southern Ontario into affordable duplex and triplex rental options that will support a growing community.

Migration trends

People are returning to city living and in-office work schedules, but are not necessarily returning to where they left off from. Migration during the pandemic accelerated trends, especially in the U.S., to warmer climates that offer business friendly environments and low taxation. The states where Trez Capital is active, including but not limited to; Texas, Arizona, Colorado, Utah, Florida, South Carolina and Georgia, make up 68.5% of net projected U.S. population growth from 2021 to 2026.

In Canada, migration and immigration are boosting the country’s population in three major cities: Toronto, Vancouver and Montreal with more than 60% of immigrants choosing these large cities to live in. Trends for 2022 show more immigration into Canada, which will continue to boost demand for multi-family, single family and for lease products. In Canada, immigrants are projected to make up 30% of Canada’s population by 2036, which will likely mean that the major cities will see exponential growth.

Demand for housing

The accelerated growth in the regions that Trez Capital operates in are seeing increased housing demand to unprecedented levels. Across Canada, demand for condominium apartments in the resale and new build sectors was up during the third quarter of 2021. Record-low mortgage rates and shifts in housing preferences, both in type and geography will support development across many locations in Canada and the U.S. in 2022 and beyond. As residential vacancy rates drop from highs during the pandemic, we are again seeing upward pressure on rental rates in many urban centres.

With loans up to $100 million and up to 36-month term for first and second mortgages, Trez Capital tracks trends and lends in areas with high growth projections in both employment and housing that drives the demand for multi-family and single family housing.

Since 2015, Trez Capital has financed the development and construction of nearly 80,000 homes across North America. Strong and growing communities also rely on other real estate classes such as industrial, self-storage, office and retail. Trez Capital has financed the development of over 20,000 acres, and of over 75 million square feet across all asset classes. In 2021 alone, Trez Capital is on track for nearly $4 billion in loan commitments, which will aid in building important communities across North America.

Leveraging trends

More investors are looking to add real estate as part of their investment portfolio. While mortgage funds have become more accessible to a broader range of clientele, that has not been the case for private equity real estate. Trez Capital Private Real Estate Fund Trust (TPREF) allows investors to access development real estate in their investment portfolios.

After 18 months of development, the Trez Capital Private Real Estate Fund Trust (TPREF) was successfully launched on August 31, 2021. TPREF allows investors to invest in an open-ended structure to increase their exposure to ground-up development and long-term asset management. This means direct ownership in income-producing properties. It is difficult to invest in development projects without taking concentrated risk and Trez Capital is offering Canadian investors an alternative.

About Trez Capital

Founded in 1997, Trez Capital is a diversified real estate investment firm and preeminent provider of commercial real estate debt financing solutions in Canada and the United States. Trez Capital offers private and institutional investors strategies to invest in a variety of opportunistic, fully secured mortgage investment funds, syndication and joint-ventures and provides property developers and owners with quick approvals on flexible short- to mid-term financing.

With offices across North America, Trez Corporate Group has over $3.9* billion CAD in assets under management and has funded over 1,600 transactions totalling more than $13.5 billion CAD since inception. For more information, visit www.trezcapital.com. (*Trez Corporate Group AUM includes assets held by all Trez related entities as well as $2.7 billion Manager AUM (Trez Capital Fund Management Limited Partnership)).

*TPREF is best suited for clients with a long-term horizon –typically five years or more, given the nature of the asset class and fund terms. Please consult the offering memorandum.

Sources: Government of Canada: Recent Immigrants in Metropolitan Areas: Canada—A Comparative Profile.  Based on the 2001 Census, Trez Capital commissioned research study by Residential Strategies Inc.