Pro REIT (TSX:PRV.UN) owns a diversified portfolio of commercial properties across Canada. Established in March 2013, the real estate investment trust (REIT) is mainly focused on strong secondary markets in Québec, Atlantic Canada and Ontario, with selective exposure in Western Canada. The REIT’s markets consist of stable economies, which exhibit strong real estate fundamentals. Many of the target markets comprise fragmented ownership. Management believes that commercial real estate in these markets represents compelling valuations relative to similar properties in other Canadian geographies.
Attractive target markets
As of December 31, 2020, the REIT owned 91 commercial properties comprising over 4.5 million square feet of gross leasable area (GLA). The REIT grew the company’s portfolio of properties from $6.1 million in early 2013 to over $618 million at December 31, 2020. The REIT is led by an experienced senior management team, with knowledge and relationships in the REIT’s target markets. The management team has, in aggregate, over 50 years of experience in acquiring, managing and financing Canadian real estate, totalling approximately $4.2 billion of commercial real estate transactions.
Extensive management experience
The REIT’s management team has an extensive network of relationships and contacts in the Canadian real estate industry, with particular experience within the REIT’s target markets, which assists in the REIT’s growth. The REIT’s executive officers have extensive relationships with a broad network of real estate industry owners and service professionals across Canada, and leverage these relationships to source accretive high-quality acquisitions. The REIT seeks to maintain strong and effective governance, with a majority of independent trustees who have substantial experience in the Canadian commercial real estate and capital markets.
Maximizing long-term unit value
Given the management team’s experience in the Québec, Atlantic Canada, Alberta and Ontario markets, it possesses a unique and valuable set of skills and relationships that can be leveraged to the benefit of the REIT. The objectives of the REIT are to provide unitholders with stable and growing cash distributions from investments in real estate properties in Canada on a tax efficient basis and to expand the asset base of the REIT and enhance the value of the REIT’s assets to maximize long-term unit value.
The REIT grows and diversifies the company’s portfolio in order to reduce the REIT’s exposure to any particular property, location, tenant or industry. The REIT identifies potential acquisitions using investment criteria that focus on the security of cash flow, potential for increased rents, potential for capital appreciation, potential for operating efficiencies and ability to finance on attractive terms. The REIT’s acquisition strategy is dynamic, enabling the REIT to adapt to changes in the economy, the real estate industry and capital markets conditions.
Management believes there are opportunities to enhance the value of the REIT’s portfolio by optimizing performance through a number of internal and external growth initiatives designed to increase the REIT’s cash flow from operations. The REIT’s portfolio is diversified by asset class among office properties, retail properties, industrial properties and commercial mixed-use properties. This diversification significantly reduces risk and should lead to outperformance in the long term.