Milestone Apartment’s U.S. middle market story a TSX winner

Milestone Apartments REIT is one of the latest foreign real estate companies to head north and seek a public offering on a Canadian stock exchange MST.UN-T.
In March, the Dallas-based company raised $230 million in its initial public offering on the Toronto Stock Exchange as investors warmed to its story of a multi-family residential property owner operating in the U.S. heartland.
Currently the REIT owns 52 multi-family garden-style residential properties, comprising 16,944 units in 10 major metropolitan markets throughout the Southeast and Southwest United States, but it is positioning that portfolio as just a starting position.
Milestone is, above all else, a growth story.
“Strategically, we are poised for significant growth over the next several years,” said Robert Landin, CEO of Milestone Apartments REIT.
“Organic growth within the owned assets through rental appreciation and continued NOI growth as well as an active and aggressive – and prudent – growth strategy from an acquisition perspective.”
The Milestone CEO does not expect finding properties to add to its portfolio to be an issue. Part of that is based on the fact the U.S. multi-residential market is not just bigger than Canada's, but busier.
Last year in the U.S. approximately $70 billion worth of multi-res real estate changed hands, compared to just $5 billion in Canada.
Favourable trends
Landin says Milestone has a number of positive trends at its back that will provide a tailwind for the REIT over the coming years. Its core markets in which it is invested are benefiting from a recovering economy, with favourable demographic trends, rising employment and population growth.
“We are focused on the middle income market segment of the rental demand” which makes up about 60 per cent of the rental market in the U.S., he said.

Worlds apart
The garden-style residential complexes that Milestone specializes in simply do not exist in Canada. These assets typically range from 250 to 300 units in 10 to 15 buildings in two-storey walk-up properties contained on 20- to 30-acre sites.
Apartments typically have amenities such as in-unit washer-dryers and fireplaces.
“They all have clubhouses, business centres, swimming pools and various other amenities” such as tennis courts and dog parks, Landin said. “So these are communities, these are lifestyle communities.”
Cities have actually grown up around Milestone complexes.
“These complexes are high-quality living at affordable pricing for middle-market America,” he said. “Your X-ray technicians, your service workers, your nurse, your firefighters, your policemen have opportunities to live in the centre of town with a high quality of life.”
Milestone’s 52 properties are located in six U.S. states, with the largest concentration in Texas.
By city, it breaks down thusly: Nashville (4), Atlanta (3), Jacksonville, Fla. (3), Tampa (3), Dallas/Fort Worth (18), Austin (2), Houston (12), San Antonio (2), Phoenix (3), and Salt Lake City (2).
TSX a welcome home
Seeking a REIT listing on the TSX was an easy decision for Milestone, said Landin.
“The TSX rewards mid-cap issuers, which is what we are. The TSX is focused on cash flow orientation, dividend orientation growth stocks,” which is basically the definition of an apartment REIT.
The Canadian exchange, which has successfully made a comfortable public perch for REITs based in the U.S. as well as those that invest overseas, provides its own set of amenities, Landin noted.
“The TSX affords us access to capital (and) affords us analyst coverage in order to create a competitive, cost-efficient cost of capital which will subsequently allow us to grow the company through our acquisition model.”
Landin and a partner built up the current multi-residential portfolio over the past decade operating as a private real estate company.
“Ten years is a long time ago, lots has happened and we have been focused on the multi-family space for the majority of that and are excited and pleased with the opportunity to bring our infrastructure, our entrepreneurial approach and the strength of our operation to the public market.”
With the majority of Milestone’s shareholders and analyst coverage north of the border, Landin has found he has spent an increasing amount of time in Canada since the start of the REIT process.
“We’re up seeing investors, analysts, just being part of the real estate community.”



Paul is a writer, editor and media trainer based in Toronto with over 25 years of experience as a business reporter. He has written for Canada’s major news services on…

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Paul is a writer, editor and media trainer based in Toronto with over 25 years of experience as a business reporter. He has written for Canada’s major news services on…

Read more




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