TORONTO, October 24, 2016 – Cranson Capital Securities Inc. is pleased to announce the first closing of $7.7 million for the Central Condominium REIT (“the REIT”), a portfolio of brand new condominiums located in downtown Toronto. The REIT raised the capital from over a 150 investors to purchase a total of 60 units of Epic and Musee Condos located in the heart of the city. Investors received a great upside since the units were purchased at a significant discount to market due to the key relationship with Plazacorp. The REIT paid an aggregate price of $20.4 million for the combined units. They are currently worth $24 million, which equals to a 49% increase in the net asset value from the time of purchase.
Urbanation’s recent condominium rental report found that Toronto’s rental market is the hottest it has been in years with a year-over-year price increase of 10% in the resale market as of Q2. Additionally, as predicted, the rising demand due to increased jobs, high immigration and migration numbers as well as unaffordable housing in the GTA are expected to have lasting implications on Toronto’s rental market. This recent pressure on supply and the continuous increase in demand have contributed to vacancy rates under 2% in downtown Toronto and an increase in average rental rates by 9% year-over-year. Since the recent changes to the mortgage rules, the average condo spends 12 days on the market, with a 100% increase in the number of units rented above asking price.
The REIT is capitalizing on the current rising rental market and is able to lease the completed purchased units at an appreciated rate of $3.44/sqft. The REIT’s short term goal is to rent out the rest of the units and long term goal to raise additional capital to grow the portfolio by acquiring additional condominium units in the downtown core. Based on the current portfolio, increasing market trends and anticipated capital appreciation, the REIT is targeting 135.9% total return over a 5 year period.
“The Central REIT provides investors the opportunity to own rental properties in the appreciating Toronto condo market” commented Robert Jacobs, Director and Officer of the Central Condominium REIT, “without having the personal liability of a mortgage or the hassles of being a landlord. The REIT takes care of all the operational responsibilities. ” he added. Additionally, the REIT, unlike when buying a single condominium, is RRSP, TFSA and RRIF eligible. Investors will receive cash distributions from the REIT on a pro rata basis, based on the number of units held. We believe, with the expertise of both Robert Jacobs and Anthony Heller on the management team, and the housing market on our side, the REIT is going to surpass our expectations. We encourage investors to take advantage of the current housing market situation and invest now.
Plaza is one of Toronto’s most experienced residential condominium construction and development organizations with over 10,000 condominium suites either already completed or under construction. Since 1981, the Plaza philosophy of providing a high level of standard quality in every condominium built has made its name synonymous with lasting value. Plaza was among the first condominium developers and builders in Toronto to include such finishes as granite counters and floors, marble bathroom counters and floors, halogen lighting, under-mount sinks, porcelain tile, engineered hardwood floors and stainless steel appliances as standard features rather than costly upgrades. Plaza developments can be found in many of Toronto’s most desirable urban neighbourhoods including Yorkville, North Toronto, King West, Queen West, Lawrence Park, Liberty Village, St. Lawrence Market, Harbourfront, and Mt. Pleasant Village.
About Cranson Capital
Cranson Capital is a boutique investment banking firm which focuses on providing financial and advisory services to small to medium sized growth businesses. The business consists of two divisions; Cranson Capital Securities and Cranson Capital Solutions, both of which offer unique services to support our investors and entrepreneurs. Cranson Capital Securities is an Exempt Market Dealer that specializes in raising capital through private placements in real estate, growth companies and financial services. Cranson Capital Solutions is a corporate finance advisory firm which focuses on finding the right financing solutions for our entrepreneurs. For more information visit: www.cransoncapital.com