AP Capital REIT
As an exempt market issuer, AP Capital requires all Canadian investors to invest through an approved Investment Dealer or Exempt Market Dealer (EMD). Dealing representatives from these firms assist in completing the subscription agreements and discuss the suitability of AP Capital for each investor’s overall portfolio.
AP Capital MIC accepts new investors monthly (1st business day of each month). With Investment Dealer (IIROC) or EMD assistance, open investors complete the Subscription Agreement after reviewing the most recent Offering Memorandum. Registered investors have a few extra steps as funds must come via approved trustees.
Q: What is a REIT?
A: REIT is an abbreviation for Real Estate Investment Trust. A REIT raises capital from investors and uses this capital to purchase and manage real estate. A REIT typically focuses on a specific real estate asset class; for example residential apartment buildings, student housing, commercial office, industrial, hotels, or commercial retail (to name a few).
Q: Which asset class does AP Capital focus on and why?
A: AP Capital owns and operates primarily commercial retail and some commercial office. AP Capital sees great potential in specific types of well located assets in this class. The challenges of dealing with residential tenants and the concentration risk of industrial are key reasons why AP does not focus on these classes.
Q: Why invest in a REIT vs owning and managing these assets yourself?
A: AP Capital REIT purchases assets in the price range of $10-$30M. Typically these are priced too high for individual investors and yet can be sources of stable income and upside potential.
Q: Why invest in a private REIT over a publicly traded REIT?
A: The primary difference between these two options is liquidity and price volatility. These are the trade offs that all investors must consider. While publicly traded REITs offer investors liquidity, they do so with the risk of price volatility. Public markets can change quickly, and often, for reasons unrelated to a company’s financial performance. Private companies are valued on their financial performance and are not directly impacted by external factors that often greatly impact public markets and company valuations. When considering a private REIT be sure to understand the liquidity of your investment as this is the primary difference between public vs private. AP Capital REIT is a private Real Estate Investment Trust.
Q: How does AP Capital REIT, as a private company, raise capital?
A: As a private company that is widely held, AP Capital REIT utilizes an Offering Memorandum (OM) to raise capital. The OM is an extensive document that details every element of the business that AP operates. The OM also includes audited statements which gives investors a detailed view into the financial performance of the fund.
Q: How can I monitor the ongoing status of the assets in the fund?
A: AP Capital updates its Fast Facts monthly. You can find them below this FAQ section or click here for Fast Facts.
Q: How does AP Capital work from a returns stand point?
A: The fund manages its portfolio of real estate assets (collects lease payments from tenants, pays expenses, mortgage payments etc) and 100% of net income is distributed to investors. The fund’s General Partner (management of AP Capital) has a performance participation on returns greater than $60/unit. Full details are outlined in the AP Capital REIT Offering Memorandum (OM). Investors must receive and read the OM prior to investing.
Q: Who audits AP Capital REIT?
A: MNP LLP
Q: If I wish to speak to MNP in regards to AP Capital, may I?
Q: Does AP Capital REIT have independent representation on its board?
A: AP Capital introduced its Independent Advisory Board in the summer of 2016. The members of this board are completely independent and provide corporate governance oversight. The members have seats on the fund’s audit committee and provide ongoing risk and performance analysis.
Q: If I wish to speak to the Advisory Board members, may I?
Q: Will AP Capital REIT enter into joint ventures with investors?
A: Yes, AP Capital will consider joint venture opportunities in some instances with other (typically large) investors on specific property opportunities. The firm is mindful to every class of investor and acts equitably to all.
Q: If I invest open/cash, how are returns taxed?
A: As REITs in Canada make distributions to unitholders, these distributions are classified in one, two, three, or four ways on the T3 tax slip issued by the REIT. The percent allocation to each of the four changes year to year based on several factors. Auditors ultimately set these allocations. The four are categorized as:
- Other income – taxed at your marginal rate, just like interest income (e.g. the MIC is Interest Income)
- Capital gains – taxed at half your marginal rate.
- Foreign non-business income – also taxed at your full marginal rate
- Reduction in adjusted cost base (also known as Return of Capital/ROC) – When you receive ROC, you are not taxed immediately on the amount. Rather, you subtract the ROC from the adjusted cost base of your units. This gives rise to a larger capital gain, or smaller capital loss, when you ultimately sell your units. Because of the tax deferral, ROC is considered tax-efficient income.
Q: Where are the current assets located?
A: For details visit the Fund’s Fast Facts which are updated every month.
Q: How does AP Capital REIT consider “Capitalization Rates” or “Cap Rates” when purchasing next assets?
A: The AP Capital acquisition team focuses on properties that are in the capitalization rate range of 6.5 to 7 cap. “Capitalization rate” or “cap rate”, is the ratio of net operating income to property asset value.
Q: I have a lot more questions, who should I talk to?
A: Don’t hesitate to give us a call or send us an email to learn more. Our contact details can be found here.
|Date||January 15, 2020|
|Currently Subscribed||28.43M Units|
|Total Assets (Audited Dec 31, 2018)||$77.67M (CAD)|
|Net Asset Value per unit (NAV/Unit)||$861.39 (CAD)|
|Number of Investors (Unitholders)||852|
|Investors choosing cash distribution||44.42%|
|Investors choosing Dividend Reinvestment Plan (DRIP)||55.58%|
|Investors with Open/Cash investment||85.0%|
|Investors with Registered (e.g. RRSP, TFSA) investment||15.0%|
|Number of Assets in Fund||3|
|Weighted Average Occupancy of Assets||91.57%|
|Number of Tenants (all assets)||75|
|Gross Leasable squ/ft||361,655|
|Morrison Centre (Fort McMurray, AB)|
|Total Square Feet||50,870|
|Number of Tenants||23|
|Greenway Park Plaza (Phoenix, AZ)|
|Total Square Feet||212,870|
|Number of Tenants||33|
|Location/Map||Greenway Park Plaza|
|Cobblestone Village (Tempe, AZ)|
|Total Square Feet||97, 915|
|Number of Tenants||19|