Vancouver Commercial Real Estate Podcast

Who is Ravi Mann?

I’ve been around development my whole life; my father started our family-owned development company, Isle of Mann, 30 years ago. I did a finance degree at UBC and began working at CBRE as an analyst. I then worked for a national investment team, which was a great opportunity for me to refine my skills. From there, I decided to come back into my family’s development business, bringing with me the larger context I had learned. That was five years ago and what a ride it has been!

Was the plan to always be in real estate?

It honestly never occurred to me to do anything else besides real estate! Growing up, I always saw that our primary industry in Vancouver was real estate. The thought of being in anything other than that was so foreign to me.

What is a REIT?

A REIT is like a mutual fund. With a mutual fund, instead of paying for an individual share, you can buy into a trust that owns a basket of equities, stocks and bonds. This allows you to diversify your portfolio instead of just buying into one thing. A real estate investment trust, more commonly known as a REIT, is the real estate equivalent of a mutual fund.

REIT managers will bring together many investors and use those funds to purchase properties. When someone buys into the REIT, they are diversified across different property types, locations, etc. Every REIT has a different strategy and we’re excited to bring a unique opportunity to the market that turns the traditional REIT model on its head.

What is PROPetual? How is the PROPetual REIT different from traditional REITs?

PROPetual is the first nationwide pure play land development REIT. Meaning, we are the first and only REIT that operates purely in land development, specifically within Surrey and Langley. Other REITs dabble in development but we differ from that model focusing solely on development.

Developments are not liquid; you have to put money in for a defined number of years before you get that nice balloon payment. Most traditional REITs will pay out regularly, and only invest in development opportunities once they have cash flow established from their other assets.

Why is PROPetual focused on land development?

Land development is typically not accessible to the general public. With the PROPetual REIT model, we’re changing that. Developers are not investment managers so typically finance a project by going to one or two big investors. But the problem with that is development becomes an elitist investment vehicle. PROPetual is trying to allow the general public to participate in the conversation around land development and land appreciation.

So many people shrug off any news they hear about land development or land appreciation because it doesn’t apply to them. For the first time in history, those people will have an investment vehicle open to them.

REITs are RRSP, RESP and TFSA eligible. This REIT also has a low barrier to entry, as the minimum investment is $5000. This allows people to utilize what they’ve earmarked for long term savings and generate returns.

Who came up with the land development REIT?

When we started down this path, we didn’t think we were inventing something brand new. We hoped there would be a template to replicate.

We saw the returns we were generating from our development projects at Isle of Mann and compared those to the generic returns you find in mutual funds. As a company that likes to put our money where our mouth is, we’re invested in our own developments. We’re confident in our ability to do our due diligence on those properties. So how can we invest our TFSAs or RRSPs into these projects that we believe in?

That led us to the REIT structure where we quickly realized there was no such thing as a land development REIT. We then talked about the minimum investment and decided to democratize investment in real estate development. It’s not fair to do these projects and not have a mechanism for our own staff, friends or family to participate in.

The more we started talking to people about what we were creating, the more we realized the gap there was in the market. To generate the type of returns that land development can generate while also having the security of triple-A quality real estate is an area that is ripe for growth.

This project has been five years in the making and it has taken a village. We put the right partners in place that allowed us to take a proper stab at this. On the cusp of launch, we decided to separate ourselves from Isle of Mann and brand appropriately, which is how PROPetual was born.

Is the PROPetual REIT diversified? Do REITs and investment strategies need to be diversified?

Isle of Mann Property Group has been highly diversified throughout its 30 year history, always open to any opportunities where the numbers work. That has given us expertise across a wide variety of asset classes.

Everyone knows that the Canadian real estate market is a tale of two cities. We don’t have the robust secondary and tertiary cities like they do in the States. It’s Metro Vancouver and GTA that, year over year, trend upward. If you’re a long standing player in Surrey and Langley, the two highest growing markets in Greater Vancouver, why would you want to leave?

It comes down to strategy. If someone wants a highly diversified strategy when it comes to markets, PROPetual is not for them. But if someone believes in the quality of Metro Vancouver real estate and believes we’re undersupplied in real estate, I think they’d be hard pressed to find a more secure investment than Isle of Mann has been able to generate over their 30 years.

What kind of returns can people expect from the PROPetual REIT program?

We’re targeting 15-20% annualized return. We offer 8% preferred return and then there’s a waterfall profit sharing structure. In our informational webinars, we showcased a recent Isle of Mann property and ran it through the PROPetual model. We were able to prove how the investments flush out to 18.45%.

And this was a project that did not catch the recent price increases in the market; our last unit was sold in October 2020. We sold that unit for $700,000 and it transacted last month for $1.2 million. So that 18.45% return could become 20% or more very quickly.

PROPetual is only purchasing projects once the entitlement risk has been taken off the table. I believe in this model so strongly and I am excited to see what it can do in our current market.

How can I get involved with the PROPetual REIT?

To get involved, all you have to do is head to propetualreit.com and click the “Invest Now” button. That will take you to our funding partner who makes it very easy to get started. Their job is to make sure this is the right investment for you and, if it is, ensure it’s easy for you to get involved.

What projects will the PROPetual REIT be invested in?

Every development in the Isle of Mann pipeline, about 25 projects in total, will be made available for sale to PROPetual REIT. We can purchase a partial interest into any of our projects.

We’re treating real estate development investment differently than usual. We’re trading based off of the proven track record of success by Isle of Mann. Our target returns are the same regardless of property type. An investment in PROPetual REIT gives you access to our entire portfolio.

What advice do you have for someone wanting to get involved in real estate?

Never stop learning. The moment you think you know everything, that’s the moment you’ll start seeing deterioration in your career. The mentality of wanting to learn more and know more has led to so much growth in a short period of time. Always be a student and always be learning. It’s a competitive industry out there, so god speed.

Find out more: propetualreit.com