Investment Objective
Thrive Capital’s primary investment objective is to develop a best-in-class multi-residential property portfolio, able to command enhanced returns and appreciation for investors.
Investment Model
Thrive is involved as both the developer, as well as a major co-investor in all projects, and thus holds a captive interest in the long-term success of the property. Thrive is therefore accountable and incentivized to incorporate value-add decisions throughout the building process, as well as successful management of the asset post construction – optimizing long-term returns for investors.
Sound Investment
A significant advantage to consider in a ground-up multi-residential project is that the yield differential (cost) associated with building versus acquiring an existing apartment building is significant. When purchasing an existing asset, the lease rates are typically at their maximum and the seller captures all the value with sale at a very compressed cap rate. This makes it
difficult or impossible for the new buyer to raise rents and it may take several years to create value. Whereas, a new build typically costs 20-30% less than the cost to purchase an existing asset of similar quality. A dramatic value creation occurs immediately, once the project is leased and stabilized.
Thrive Advantage
New Construction Benefits
An approach to developing ground-up, high quality multi-residential buildings, has the distinguishing advantage of establishing a portfolio of newly constructed properties. New properties command higher occupancies, higher rents and operate with lower expenses than older properties due to modern amenities, technologies and efficient building systems. The result is significant investment returns.
In-house Expertise
Thrive Capital’s in-house development subsidiary, Thrive Properties, works side-by-side with the best general contractors in the Maritimes to deliver projects of superior quality, on schedule and on budget. Thrive Properties leverages our team of professionals to create value for investors in every aspect of the project build and post construction management of the asset.
Multi-Residential Demand Outstrips Supply
An increasing number of investors are investing in apartment buildings that appeal to the growing Baby Boomer crowd and professional Millennials. Quality apartments now enjoy a large pool of tenants to choose from because not only are Baby Boomers flocking to apartment living, those at the opposite end of the demographic spectrum, the twenty and thirty-something Millennials just starting their careers, are delaying homeownership in favour of renting an apartment for much longer periods of time.
Increase In Apartment Renters
Recent statistics show that older Canadians make up the fastest growing segment of apartment renters — and the trend is not slowing down. What used to be a lifestyle optimally suited for the young — millennials today — is increasingly attractive to boomers who are looking for a “hands-free” lifestyle without the stress of owning a home. Increasingly, Baby Boomers and other empty nesters are trading their single-family houses for the convenience of rental apartments, entering the multi-residence market in numbers far surpassing millennials.
Why Are Baby Boomers and Millennials Choosing to Rent?
There are several meaningful reasons why both baby boomers and millennials chose to rent at a significantly higher rate than their cohorts in previous generations, some of which include financial reasons, lifestyle flexibility, convenience and a sense of community.
Financial Reasons
Baby boomers often have little to no debt remaining on their homes. But the costs of operating their home keeps increasing in the form of property taxes, utility costs, municipal services – and overall general maintenance of a large property as it ages. All these costs of home ownership once added up, can easily exceed the cost of renting a new modern apartment with several amenities. It is also an opportune time for baby boomers to sell their homes and maximize returns with the current state of declining interest rates and increasing home prices. Baby boomers can then allocate the proceeds from the sale of their home into a high-quality investment portfolio, in which the proceeds generate a generous annual dividend they can enjoy in perpetuity throughout their retirement years.
A Younger Renter’s Position
On the other hand, younger renters find themselves in a very different position. Short of cash and burdened by student debt, young adults are biding time in apartments for longer periods and buying their first homes later in life. The delay reflects a trend that cuts to the heart of the financial challenges facing millennials: renters are struggling to save for down payments as wages have largely stagnated. Increasingly, too, they’re facing delays in some key landmarks of adulthood, from marriage and children to a stable career. Without a dramatic turn of events, it appears unlikely that millennial homeownership will catch up with previous generations anytime soon.
Flexibility
A greater majority of people are choosing to rent because it offers a more flexible lifestyle than home ownership. This is especially true of baby boomers and millennials, two of the fastest growing groups of renters.
Boomers
Boomers value mobility, with their children grown and out of the house, many have realized they no longer want or need a large suburban home. Instead, they’re opting to rent in urban environments that offer greater flexibility for travel and the option to leverage the equity in their homes. Many baby boomers also are working longer than their parents did. They still want to be close to their job and are not yet ready to retire to a new locale, but they are empty-nesters who want a vibrant, walkable lifestyle.
Millennials
For millennials just entering the workforce or in the process of building their careers, the ability to relocate is a major factor. Even if they are in a financial position to purchase a home, millennials may choose to rent in order to have the flexibility to take advantage of new job opportunities as they arise. Getting married and having children are goals millennials pursue, but not with the immediacy of previous generations. A significantly larger percentage of millennials are delaying marriage and taking time to discover what they want out of life. They admit to feeling less pressure to make a lifelong commitment to a particular lifestyle, which may play a role in the decision to postpone home purchasing.
Convenience
Similarly, we’re seeing residents choose renting over homeownership for the sake of convenience. For busy boomers who are ready to give up the yard work and other home-maintenance tasks, renting is an attractive alternative. If something breaks or goes wrong, all they have to do is pick up the phone and call the property manager to take care of it. The same goes for young professionals who covet their free time.
The Importance of Amenities
We are also witnessing an overall dramatic change in the quality of apartment buildings and services offered – with amenities such as package storage, fitness centers, social lounges, underground parking, and concierge services – all enhancing the resident experience. As communities compete for residents, newly developed apartment buildings that raise the bar in terms of luxury and creativity become sought after – further augmenting the rental lifestyle.
Sense Of Community
In addition to making residents’ lives easier, modern apartment amenities are designed to encourage socialization and create a sense of community. Whether it is hosting a cooking class or gathering together to watch a sporting event in a nicely appointed common lounge – these are the types of experiences that today’s renters are looking to incorporate into their lifestyles. This sense of community is important to boomers, who may be leaving a social network behind as they move away from the suburbs; as well as to millennials who are eager to make new connections personally and professionally, especially if they are new to the area. With shared common spaces and experiences, apartment living creates organic opportunities for residents to make these connections and build friendships.
Demand For The Foreseeable Future
Baby Boomers and Millennials are the two largest demographic groups keeping the apartment rental market strong well into the foreseeable future, which makes investing in multi-residential buildings a very sound investment opportunity. This trend is expected to remain strong for the next two decades, as the senior population becomes the fastest growing demographic sector in Canada. Investing in multi-residential buildings is one of the most sound decisions that any real estate investor can make.
Representative Multi-residential Investment Opportunities
West Royalty Suites
Premier living with an abundance of modern amenities in a community that is rich in history, culture, and nature. This community welcomes active living and is only minutes from downtown Charlottetown, surrounding beaches and world renown golf courses.
The Tides
Live and enjoy life to the fullest at The Tides. Enjoy unobstructed views of the The Petitcodiac River or walks along the extensive Riverfront nature trail. And if you enjoy a round of golf, The Moncton Golf and Country Club is literally at your back door. Observe the world renowned tidal bore daily, breathing new and exciting changes in the natural landscape of the River banks and marshes.
The Oak
The first building in an incredibly fast growing community that places an emphasis on pedestrians, nature and readily accessible services. From your doorstep, you can immediately connect to an extensive walking trail network, a brand new state of the art YMCA, and be within walking distance to a variety of schools.
Inquire About Our Multi-residential Investment Opportunities
One of our friendly team members will be happy to share more information and answer your questions.
Real estate cannot be lost or stolen…Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.
Franklin D. Roosevelt,U.S. President