Real Estate: Saint John is undervalued as a market, says CEO of Taurean Global Properties

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Dave MacLean
Telegraph-Journal

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SAINT JOHN - An Alberta-based property management company is set to break into the New Brunswick market and it's looking for local investors to grab a share of what it calls an undervalued market.

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Doug Thiessen

Taurean Global Properties, which has holdings that includes properties in Winnipeg and Windsor, Ont., is hosting an investment seminar Wednesday night in Saint John to outline plans for its move into the province.

The session gets underway at 7 p.m. at the Fort Howe Hotel.

"Saint John is undervalued as a market," Taurean CEO Doug Thiessen said in a recent interview. "For multi-family property, there's a fair amount of inventory for sale at really reasonable prices and we can see that there's going to be quite a lot of demand "¦ over the next five years. And we don't see where the increase of inventory is going to come from.

"Looking at that and looking at all the prospects for growth in New Brunswick and at the incredible value of the properties that are there, you have a situation where you have a low price and very good cash flow - because the rents are reasonable - so you have the classic squeeze. All of a sudden you have a lot of demand and you have no supply."

Thiessen said the situation is similar to what he experienced in Alberta a number of years ago. He said the market conditions will likely dictate higher rents.

"It's going to be tough on people in New Brunswick who are used to lower rents," he said. "It's a similar situation to what Alberta was like in the early part of this decade.

"I was with another partnership before I formed this one and we bought a lot properties in smaller towns. We would raise the rents to what we considered would be the market and people were angry at us. They said 'You can't do that ... people won't pay that in this town.' But our response always ended up being 'Then why are our buildings full?'

"They make you out to be the evil person, but you're just doing what you need to for your business."

Thiessen said that the search isn't limited to the Port City and that other Taurean partners have already purchased 70 units in the province. He said his company is looking for properties that will generate a solid return on investment.

"It's simple arithmetic. We don't really think so much in terms of what the building value will be down the road, because the market will decide that," he said. "The metric that we use is 'What kind of a yield can we get on our invested dollar?' And if we hit our objectives in terms of cash-flow yield, then the market will take care of itself.

Thiessen said Taurean hopes to raise $5 million in its first limited partnership in New Brunswick.

"That will allow us to purchase - using a prudent amount of leverage - somewhere in the neighbourhood of $12 million to $15 million of property," he said. "Saint John is perfect for this, it's under the radar. Nobody is thinking about it yet.

"We love to buy where other (investors) aren't there yet. I made my money in Alberta, in little towns where nobody was poking around," he said. "New Brunswick isn't going to be under the radar for much longer."