Centurion CEO Romundt Sees Generational Opportunity in Real Estate

Canada is projected to require nearly 500,000 new homes annually until 2030 to address the ongoing supply-demand imbalance—almost double the country’s historical construction levels. Even if immigration were halted today, the housing shortage would remain substantial.

This shortage is a massive opportunity for Centurion Asset Management Inc. (Centurion) and its investors through the Centurion Apartment Real Estate Investment Trust (REIT), an income-producing vehicle that invests in multi-residential apartments and student housing. “This is not a short-term trend like selling masks during COVID,” declared Greg Romundt, company President and CEO. “This is something that will create a tailwind that will be with us for years to come.”

To Romundt, Centurion’s Apartment REIT is the right solution at the right time. “Given the affordability crunch, home ownership is out of reach for many,” he said. “ People may cut back on vacations or shopping, but they will always need a place to rent—a roof over their head is non-negotiable.”

Centurion currently owns 159 apartment buildings in 45 cities across Canada and the United States, most concentrated in suburban and exurban areas outside of high-priced markets like Toronto and Vancouver. They include areas like Mississauga, Scarborough, Cambridge, Waterloo, Surrey and Victoria - communities  that offer more affordable housing options, which make them accessible to a great number of Canadians.  

Centurion’s portfolio of apartments and student housing is valued at nearly $7.6 billion, with a targeted annual return of 7% to 12%. Historically, however, its Class A apartment REIT has delivered an impressive annualized return of 12.60% since inception.

Investing in private REITs like Centurion Apartment REIT offers several key advantages, including:

• Access to income-producing real estate without the responsibility of property management

• Monthly cash distributions

• Tax efficiency

• Long-term growth potential

• Low correlation to major equity markets

“Centurion’s Apartment REIT can be an excellent portfolio diversifier,” Romundt noted. “Over the past two and a half years during the interest rate-hiking cycle, while stocks and bonds have struggled, rental income has remained strong. With Canada’s ongoing housing crisis, rental growth is likely to stay robust for the foreseeable future.”

Another way Centurion distinguishes itself from other companies in this space is through its focus on the construction of new apartments, an important strategic initiative that started over a decade ago.

“One of the challenges of buying older apartments, which we still do on occasion, is the cost to renovate them” Romundt said. “Dollar for dollar new buildings are cheaper to maintain because you don’t have to replace the roof for 25 years. You don’t need to do the underground garage or the balconies for 25 years.””

Romundt has been engaged in financial markets since 1991, and real estate since 1997. This vast experience has affected his thinking on how he manages money and risk. “I don't believe in growth at any cost. It must be measured and prudent. You grow when there are market opportunities to do so responsibly, when the returns exceed the risks. I've personally learned that the hardest thing to do as a leader is to sit on your hands  and wait, even when it's the right thing to do.”

That was the case during the recent rate hiking campaign by the Bank of Canada. High interest rates have made it very difficult to get apartments into production when 60 to 80% of the capital you need for construction is borrowed. So, Centurion quietly built a war chest waiting for the right opportunity. According to Romundt, that time is now. As rates begin their descent, he believes we're at the beginning of the next real estate cycle, particularly when it comes to the rental apartment space. “I believe there's a generational opportunity to not only contribute to solving the national housing crisis, but to earn attractive returns doing so. So, we're getting ready to shift from defense to offense.”

In addition to developing and operating rental properties across the country, Centurion is also playing an essential role as a financer of new apartments, a role that Romundt believes can make a significant impact. “One of the things that's needed to build the millions of homes that we require in Canada over the next decade is capital. We help in two ways. One, we finance new developments, and second, we buy those buildings when they're built. This in turn allows developers to recycle their capital into other projects.”

It’s a formula that has helped Centurion deliver for both investors and residents, something that is underscored by the many industry awards that the company has won this past year alone, including the Alternative Investment Provider of the Year and CEO of the Year awards.

“I think we have the opportunity to help solve one of Canada's greatest problems today,” Romundt said. “Yes, I want to make people money, that's my job, but to be able to do it in a way that contributes, I think is tremendously exciting.”

If Romundt has it right, he can expect to feel that excitement for many years to come.

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For more information on Centurion Asset Management, visit their website at https://centurion.ca/invest