Dave Barry and Aly Somani first met while playing squash 10 years ago, and that original friendly competition grew into both a friendship and the foundation for Richmond Asset Management.

The two men first partnered on the acquisition of a couple of duplexes on Richmond Street in Windsor, Ont., which is where the company name originated. 

The private equity firm’s co-founders and managing partners kept buying more duplexes, then commercial properties, and now their 30-property portfolio has just exceeded $100 million in value with the acquisition of two apartment buildings in Windsor.

For a Toronto-based company, that almost-exclusive focus on Windsor and area might be a unique investment strategy.

“Our thesis has always hinged on buying well below replacement value and driving positive value of the property in a market where we saw a lot of upside and that was underserved,” Barry told RENX. “The values that Aly and I both share are pride around providing safe, fresh and clean accommodation at an affordable price.”

The Windsor market

Somani attended the University of Windsor’s Faculty of Law in 2009 and became well acquainted with the local housing market -- which featured a high vacancy rate, low rents and a lot of properties for sale. 

Barry noted many of the rental accommodation options they saw in Windsor early on were older, in rough shape and poorly managed. They saw an opportunity to improve these properties and create an attractive environment where people would want to live or work.

So even though the two men were based in Toronto, they decided to focus their real estate acquisitions on Windsor and the surrounding area. They liked its growing population, post-secondary schools, recovering economy, reasonable cost of living and good quality of life. 

These are exciting times now in the city and surrounding environs.

The Gordie Howe Bridge connecting the city with Detroit is nearing completion. The NextStar Energy joint venture between LG Electronics and Stellantis to build a 4.23-million-square-foot electric vehicle battery plant should open soon, while other major investments have also been made in the industrial sector.

“While border crossings have been reduced, the Windsor-Detroit border handles one-third of all U.S. and Canadian commerce and it's the largest trade commerce corridor for North America,” Somani said.

“We saw an upside scenario with much lower competition and pretty attractive acquisition pricing,” Barry added.

While there are concerns about the potential impact United States-imposed tariffs and a trade war could have on Windsor, Somani believes the strong cross-border relationship between the auto industries will continue.

“The interest in our units that we have available remains really strong,” Barry said. “We've primarily got multifamily, but we also have a large amount of retail units, and retail businesses continue to be very keen on our properties and our spaces, and the vacancy in our units remains very low.” 

The company’s launch and growth

Buying these properties was still a sideline for Barry and Somani until last year when they decided to leave their full-time jobs -- Barry as senior vice-president with Liberty Mutual Canada and Somani as an equity partner in the business law group at Cassels Brock & Blackwell LLP -- and dedicate all their attention to the creation and management of Richmond Asset Management.

Sasha Renton has since been hired as an associate at the company, as Richmond Asset Management has grown rapidly since it launched with 17 properties worth $30 million.

Barry and Somani also co-founded Richmond Property Management with Klinton Prifti after working with several property managers in Windsor and finding they weren’t satisfied with the results. The company has eight full-time employees and also engages outside contractors.

“Klinton and the team have done an incredible job of keeping so many people happy to work with them, and I think it also speaks to our vacancy rates being so much lower than the market,” Barry said.

“Because of that amazing experience, we often have a lot of existing tenants refer new tenants because they love their Richmond Property Management property,” Somani added. “That's been an enormous differentiator.”

The latest addition

Richmond Asset Management now owns 460 residential rental units.

The company’s most recent acquisitions, which pushed its portfolio value to $102 million, are 2940 and 2950 Elsmere Ave. in Windsor. The two apartment buildings, with a combined 52 units, were purchased for $7.25 million.

The three-storey, walk-up apartments were built in the 1990s and have an equal split of one- and two-bedroom units. The units have balconies and laundry hook-ups. One of the buildings has underground parking while both have substantial above-ground parking.

“It's an attractive location in a desirable, quiet, amenity-rich neighbourhood in Windsor, and we see some opportunities to continue to improve the buildings and drive value,” Barry said.

That could include adding eight to 10 units at one of the properties, which is something the company has previously taken advantage of elsewhere to add value.

Financing and future acquisitions

Richmond has utilized both conventional and Canada Mortgage and Housing Corporation financing for its acquisitions. Both principals declined to comment on what other outside investment they receive.

The company is in negotiations to acquire more multifamily and retail properties in Windsor and the surrounding area. 

“We are also focused on looking at other markets where we see a similar value proposition and where we see an opportunity to drive value in an asset where there's population growth and the economy is getting stronger,” Barry concluded.