A real estate investment company that has bought dozens of older apartment buildings in recent years says it has become “a great Canadian growth story,” while some of its tenants say they live in a different reality.
Equiton’s strategy is to buy buildings where existing tenants pay below-market rents and renovate the units when those tenants move out so they can rent them at higher rates, generating profits for its more than 8,000 investors, said its vice president Lavelle Lindo. Lindo shared business insights in an interview with a wealth management firm published online in 2023.
“It presents us with a very, very, very good opportunity,” Lindo said. “There is a lot of growth, a lot of development and a lot of good expectations for the years to come.”
Equiton currently owns 30 buildings in Ontario cities such as Toronto, Ottawa, Kitchener, Burlington, Brantford and London and is having a “solid” financial year, according to its June report. After paying operating expenses, it grossed about $13 million last quarter, a 48 percent increase compared to the same period last year. The fund had an investment return of almost 14 percent in 2022.
The model, a real estate investment trust, is not unique to Canada. But tenants at one of Equiton’s apartment buildings in Hamilton say the company is making those profits at their expense.
‘We really care’: company
Equiton purchased and began managing a high-rise at 125 Wellington St. N. in 2021. Five tenants of the building told CBC Hamilton that deteriorating living conditions and rent increases above the guidelines have brought them closer to homelessness.
“They’re making tons and tons of money off of us,” said Chris Erie, who has lived in the building for more than a decade and says he relies on the food bank to make his $800 monthly rent payments.
“If I lost this apartment, I wouldn’t be able to pay rent in this economy. I don’t have a couch to surf on. I’d be in a tent. I worry about that all the time: What’s going to happen next year?”
Private real estate investment trusts have flourished under current Ontario rules that allow landlords to raise rents between leases, incentivizing them to push out existing tenants, said Steve Pomeroy, executive counsel for the Canadian Housing Evidence Collaborative in McMaster University.
While not all of these companies are “predatory,” Equiton stands out for some of the strategies it appears to use at 125 Wellington and demonstrates why there needs to be better protections for tenants, Pomeroy said.
“They’re actually pretty transparent about how bad they are,” Pomeroy said, pointing out the contrast between their profit margins and tenants’ living conditions. “They seem to be very proud of [their actions]”.
Equiton denied using predatory strategies, in a statement to CBC Hamilton.
“If residents respect each other and pay their rent, we will be happy to have them as long as they want,” said spokeswoman Kathy Gjamovska.
“We really care about our residents.”
2023 Bylaw Blitz Found Broken Pipes and Bug Infestations
The same month that Lindo talked about Equiton’s “secret sauce” for making money, Hamilton’s charter carried out a sweeping bombing raid on 125 Wellington of 258 of its 364 units.
Officers issued four warrants covering 20 property standards violations, said Monica Ciriello, director of licensing and bylaw services.
The city ordered Equiton to repair walls, plumbing, bathroom countertops, bathtubs, ceilings, doorknobs, closet doors, windows, a trash chute and a broken glass firebox. He also ordered the company to address cockroach, mouse and bedbug infestations.
More than six months later, Equiton has made most of the repairs, but two orders remain to be resolved, including pest issues, Ciriello said.
Erie said that since the bombing conditions have improved in his unit. After waiting seven months, a hole in their bathroom ceiling caused by water damage was repaired. But Erie, who is a member of the tenant advocacy group ACORN, continues to hear from tenants with mice, broken walls and appliances.
Walking through the building with Erie earlier this month, CBC Hamilton saw water damage, holes in the walls, exposed pipes and trash in the hallways and two dead mice on the path outside, a couple of meters from the building.
Tenant Lulu Xi said that after dealing with flooding in her kitchen for two years and a broken toilet for six months, Equiton has fixed the plumbing problems. But she is seeking to recover costs at the Landlord and Tenant Board (LTB), including mouse traps she bought herself when Equiton failed to address an infestation, and heaters when temperatures dropped in her unit last winter. .
“I just want them to fix things,” Xi said.
Equiton said it has spent more than $5 million improving the building, including $100,000 on pest control.
“At Equiton Living, we remain dedicated to providing a safe, enjoyable and well-maintained living environment for all of our residents,” Gjamovska said. “We appreciate the trust our residents and their families place in us, and we will continue to work tirelessly to address their needs and concerns.”
“People feel stuck”
Tenants have also faced higher-than-norm rent increases, including a 4.58 per cent one pending at the LTB. Landlords can increase rent once a year by an amount set by the province to cover inflation, which typically does not exceed 2.5 per cent. Any amount greater than that amount, the owner must justify and obtain approval from the LTB.
Shelly Morris, a tenant who is a college student and receives welfare, said if the latest increase above the guidelines is approved, her rent will have increased more than 10 percent since Equiton took over and she will have to pay about $100 further. one month.
“We are an inch away from being homeless under this system that exists,” Morris said of herself and other tenants.
The building is in the county. Cameron Kroetsch’s pupil. He has visited residents and said there is a general state of disrepair as Equiton “continually tries to raise the rent as high as possible in this building year after year after year.”
“The prevailing feeling is that people feel trapped, trapped in a situation where the state of their unit is in bad shape and they can’t afford to leave,” he said.
The council approved a series of measures this summer, including requiring landlords to register their apartment buildings and be subject to routine inspections, as well as bolstering a fund to help tenants fight evictions.
“This type of protection for residents to ensure their homes are safe and healthy is designed to catch up with the housing market that has exploded over the last five to 10 years in Hamilton,” Kroetsch said.
Pomeroy said the province needs to step up rent control measures by restricting how much landlords can increase rent between vacancies. Otherwise, he warned, investment firms will continue to use apartment buildings to “massively increase” their income at the expense of tenants.