Lankin Investments has closed on two properties and more acquisitions are imminent as the Greater Toronto Area (GTA) company’s multifamily portfolio continues to steadily grow.
The recently created Lankin Apartment REIT acquired a newly built 177-unit purpose-built rental property at 2014 Sherwood Dr. in Sherwood Park, just outside of Edmonton, last month. It was purchased from Calgary-based investment management firm Ayrshire Group for $67.075 million and occupancy began early this year.
“It’s steel-frame construction, which is rare in Alberta,” Lankin co-founder, president and chief executive officer Kyle Pulis told RENX. “Traditionally, it’s wood.
“We thought the premium we were going to pay for that type of construction was going to be worth it. Maybe we get a little boost in rents and a little more longevity in the building overall.”
Newmarket and other acquisitions
Lankin also just closed on acquiring the 110-unit Huron Heights Apartments complex at 75-77 Huron Heights Dr. in Newmarket, Ont. for $33.45 million from CAPREIT.
Pulis said the advantage of buying rental buildings in smaller markets on the periphery of the Greater Toronto Area is that many of the communities have grown significantly in size but their apartment stock hasn’t increased nearly as much.
“By buying in these communities, you’re able to get Toronto-like rents at a lower price per door on acquisition,” Pulis explained. “There’s a lack of supply in these communities with demand pressures that are going to continue to grow, especially as affordability in the core GTA market increases.”
Though unable to reveal details yet, Pulis said Lankin is close to closing on about 100 units in Orangeville and about 250 in Brampton, two other northern GTA communities. Other acquisitions are in the due diligence phase.
While acquiring approximately $400 million in assets this year, Pulis is hopeful that Lankin will be able to make $1 billion in acquisitions next year.
Edmonton development
Lankin, which is based in the community of Woodbridge just north of Toronto, has also become involved in development.
It has two apartment buildings with a combined 201 units under construction at 835 Daniels Way SW in Edmonton. The goal is to start leasing the first phase next summer and the second phase by the end of 2025.
“Alberta is still where things are firing development-wise,” Pulis said. “The price to build per door there is $250,000 to $300,000 a unit.
“Here, you can’t dream of trying to build for even double that. The cost to build here is so much greater and it just doesn’t make sense right now.”
The company has more than 2,000 condominium and purpose-built rental units, valued at more than $1 billion, in its development pipeline. That includes a proposed 700-unit project in Brampton.
Pulis said Lankin is involved with rezonings and site plans and getting projects shovel-ready in anticipation of more favourable development conditions in Ontario a couple of years from now.
Evolution and growth
Lankin has more than 3,000 units valued at more than $1 billion under management, and those numbers are growing quickly.
The company has come a long way since Pulis co-founded it as Pulis Investments with his father in 2009. At that time it was buying duplexes and triplexes with investments from family members and friends.
As the firm grew and entered the multifamily market in 2012, it started attracting retail investors and raising capital through a few different vehicles. Pulis’ father retired in 2016 and encouraged him to continue the journey on his own.
“We started getting into ultra-high-net-worth capital sources and family offices, and then into the institutional space,” Pulis said. “We have some institutional partners that we work with and deploy capital on behalf of, or do asset management on their behalf.”
Different investment vehicles
Pulis Real Estate LP2 is an open-ended fund that has 17 properties with more than 1,000 units valued at more than $240 million under management as part of the company’s value-add strategy for older assets.
“Value-add is really capital-intensive and takes a lot of effort and critical thinking,” Pulis said. “Because of that, we can’t venture very far and we stick within the GTA so that we can maintain that physical touch on the assets.”
Lankin Apartment REIT is a new stabilized asset fund created to take advantage of the current market.
“With interest rates coming down and cap rates still fairly elevated, and a lot of large institutional pension funds and buyers kind of sticking to the sidelines, there’s an opportunity now to really take advantage of the depressed market,” Pulis noted.
“Our main focus is buying a lot of these stabilized assets that are coming off of value-add funds from some of the larger institutions that have been sitting on these funds for the last few years and they’re at the end of their investment cycle in closed-ended funds.
“We’re really focused on going around and meeting with these groups and buying a lot of these stabilized assets that are now just sitting in a cash-flowing state, with a lot of the cap ex having been already completed by the previous owners.”
Lankin’s longer-term growth steps could include moving into the industrial asset class as well as into the United States, Pulis said.
Company name change
The company, which has more than 50 employees and includes the affiliated Lankin Living property management division, changed its name from Pulis to Lankin two years ago.
“I wanted something that was a lot more inclusive and something that everyone could feel a part of and have ownership in,” Pulis said. “It’s hard to do that when it’s someone else’s last name.”
The name was inspired by an abandoned 44-townhome site the company acquired for a discounted price on Lankin Boulevard in Orillia, Ont. in 2013. Pulis was the project manager and lived in it for 18 months as extensive renovations occurred and “everything that could have gone wrong went wrong.”
Perseverance made the project a success, so the Lankin name was chosen in honour of overcoming challenges and finding solutions even when things look bleak.
