Message from the CEO
Dear Unitholders,
Transitioning through the high-interest rate environment of the past two years, All Island Equity REIT’s (“All Island REIT”) Management remained conservative and patient with respect to increasing Assets Under
Management (“AUM”). Now that the Bank of Canada has implemented successive interest rate cuts, opportunities for accretive acquisitions are once again emerging for All Island REIT.
In 2025, Management will leverage All Island REIT’s position in desirable lifestyle communities by delivering a high-quality residential rental experience, to maximize value per Unit returns for our unitholders. While All
Island REIT continuously evaluates acquisition opportunities, Management is more intently focused on driving internal improvements and making exceptional capital allocation decisions. By maximizing value per
Unit through internal growth, All Island REIT will achieve AUM growth faster in the long run and be well-positioned to take advantage of opportunistic acquisitions over the coming years. In a time of political and
economic uncertainty, Management is focused on providing stability to our unitholders.
As a result of the operational efficiencies implemented, as well as increased revenue from strategic capital initiatives, the portfolio has increased in value during the year. The Board has determined it is prudent to
adjust the Net Asset Value per Unit to $17.74 as of December 31, 2024. This represents a 12.14% trailing twelve-month total return on Class F DRIP Units and a 10.16% annual return since inception.
Appraisal and Audit Update
Management received the 2024 third-party appraisals for the portfolio in late December, the results of which were positive. The third-party appraisals are currently being reviewed as part of the year-end audit.
Following the completion of the audit in March 2025, the Board will review adjusting the Net Asset Value per Unit to reflect final audited appraised values.
Acquisition Update
Leveraging a period in the market when buyers were scarce and interest rates were dropping, Management secured two properties under contract this fall. Located in the Comox Valley, both properties will increase
our presence in the Courtenay and Comox markets. This will allow All Island REIT to gain operational efficiencies through continued concentration of our portfolio within the Comox Valley.
The first property is a two-building, 92-suite, multi-family property in Courtenay that is scheduled to close in mid-January 2025. The second is a 74-suite, multi-family property in Comox, presently under due diligence review by Management that is scheduled to close in April 2025, provided conditions are waived.
Management is excited to have secured both properties under contract and is looking forward to adding both to the portfolio.
The Four Pillars of All Island REIT’s Capital Allocation Strategy
Management is taking tangible actions to add accretive value, capture efficiencies, and ensure a long-term, sustainable future for All Island REIT.
(1) Economic
- Advancing major capital expenditure projects on priority assets, while taking advantage of the Additional Rent Increase program, which allows Management to issue rent increases of 3% for three
years in addition to the maximum annual allowable rent increase (currently set at 3% for 2025). - Continuing to acquire leasehold suites in Victoria on advantageous terms, with four suites purchased in 2024
(2) Partners and People
- Building out an experienced management team
- Investing in technology to enhance analytics and operational efficiencies
- Developing meaningful, long-term, relationships with local partners, landowners, vendors, suppliers,
and trades
(3) Community
- Adhering to our core values of providing quality housing for our residents, including never ‘renovicting’ any members of the community
- Engaging with municipal governments, advising them on official community plans and solutions for homelessness to inform the future of our communities
- Supporting affordable housing initiatives presented, including securing five suites at rent levels of $870 or less for at least 10 years in our contracted 92-suite acquisition
- Knowledge sharing with non-profits and First Nations regarding real estate management and development to help create a healthier and more sustainable Island housing market
(4) Environment
- Prioritizing capital expenditures that improve energy efficiency, such as:
- Westwater building envelope replacement, including glazing to improve energy efficiency and
reduce heat loss - Glenshee heating system upgrade, including replacement of multiple inefficient gas-fired
furnaces with high-efficiency hydronic boilers. Hot water heating at the property is a landlord
expense and updating to a more efficient system will positively impact the income statement.
- Westwater building envelope replacement, including glazing to improve energy efficiency and
- Initiatives underway to identify additional opportunities to improve energy efficiency and utilize
governments grants and rebates - Capitalizing on the CMHC MLI Select program, which provides attractive terms for energy efficient
buildings
In the early part of 2025, Management is focused on growing the Trust’s footprint in the Comox Valley, where All Island REIT holds 27 properties. For the second half of 2025, Management will focus on internal growth and debt optimization. Management intends to leverage its expanding influence in our core markets to shelter All Island REIT from potentially unfavourable market forces, accelerate cash flow, and cement All
Island REIT as an industry leader in British Columbia.
References
Class F DRIP Units: Unitholders receive distributions in the form of additional units through the Distribution Reinvestment Plan (DRIP). See Offering Memorandum dated April 8, 2024 for more details.
Inception: AIE REIT was established in May 2017 with the acquisition of a $65 million portfolio in the Comox Valley, excluding two commercial properties that were sold shortly after completion.
Management: Management of All Island Equity REIT.
Net Asset Value (NAV): Aggregate value of the trust’s properties less the aggregate value of the trust’s liabilities, subject to valuation rules set and estimates made by the Trust from time to time.
Trust or AIE REIT: All Island Equity REIT, a Real Estate Investment Trust.