Why Did Canada’s Biggest Investor Just Spend $2.8B on High-End Student Housing?
That’s what’s happening now with the recent announcements that the Canada Pension Plan (CPP) is investing $2.8B in 2 separate transactions on high-end student housing in the UK.
The CPP is the largest investing body in Canada with around $270B in assets.
Since the CPP is funded by your tax dollars, you just invested in high-end student housing whether you realize it or not.
Hmmm….maybe there’s something to this high-end student housing thing?
Why not spend that money in Canada?
So why didn’t the CPP invest $2.8B into high-end student housing in Canada?
The reason why is simple: there is virtually no high-end student housing product in Canada.
That’s not to say we don’t need it. We need it desperately, and we are starting to build it, but the fact is the UK student housing market is much more mature than in Canada.
The UK has over 2 million students, whereas we have around 1 million – and growing every year.
In the UK, developers and institutional landlords have been building purpose built, high-end student rentals for decades.
We are only just starting to wake up to the realization that we have a massive shortage of high quality student accommodations across this country.
High end student rental buildings have really only started here in Canada in the last 10 years.
Also, keep in mind that the CPP’s $2.8B investment is for around 19,000 beds!
It would be impossible to buy 19,000 high end student rentals in Canada. Heck, you couldn’t even buy 1900 high end student rentals even if you had the cash.
Opportunity knocks
The lack of options in this asset class for institutional investors is very good news for the little guy like you and me.
Why?
Because Canada’s student housing market is not as mature as the UK’s, there is still an opportunity for the individual investor to take part in this market and enjoy very attractive returns.
Capital Hall condos in Ottawa is a perfect example.
Buying a unit at Capital Hall will allow you to enjoy very strong returns in this stable and growing segment of the real estate market.
Units at Capital Hall are projected to yield around 9-10% cash-on-cash and 16-19% when you take into account equity (mortgage principal pay down).
CPP and other institutional investors were fighting to get their hands on these UK student rentals with yields of around 5-6% per year.
But I don’t want to be a Student Landlord!
Truth is, no one wants to be a student landlord. Heck, no one really wants to be a landlord at all.
Landlording is not sexy!
But everyone wants to be an investor. Being an investor is fun and lucrative.
It’s all about making a good return without having to do much work.
Capital Hall allows you to be a hands-off investor and enjoy all the benefits of this asset class without any of the management headaches.
What’s interesting about the CPP’s acquisition of these properties in the UK is that they didn’t just acquire the buildings – they also bought the management teams.
They understand that the real secret to successfully investing in student rentals is the management.
Having the right management in place means that the CPP can focus on what they do best: investing, and let someone else worry about the hard part: landlording.
The beauty of Capital Hall condos is you get a 3 year rental guarantee PLUS 3 years of free professional property management included by the very experienced team at Ashcroft.
And beyond the 3 years, you can simply choose to continue to use Ashcroft’s management team, you’ll just start paying them a nominal fee of around 10% of the rent in exchange for even more years of headache-free investing with great returns.
CAPITAL HALL – OPEN HOUSE
I will be hosting an open house this weekend (saturday/sunday) at the Capital Hall presentation centre here in Toronto.
>>>RSVP to the open house by filling out the form below or call/text me at 416-371-2333 <<<
There will also be an open house hosted by my colleague this weekend in Ottawa if you are in the Ottawa area – just fill out the form below for more details.
I hope you found this article useful and maybe you even learned something!
Please share with a friend who you think could benefit from this information.
Hope to see you this weekend!
p.s. If you still don’t know what all the fuss about Capital Hall is about and you have 90 seconds to spare, check out this brand new video about Capital Hall condos which explains the entire opportunity in a concise format.
