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Richard Crenian on CRE Growth Opportunities

https://linktr.ee/richardcrenian

Richard Crenian, a well-known leader in the commercial real estate market, is a visionary who has a unique ability to transform low-income properties into higher-generating income opportunities by combining research and improvements with demographics.

Toronto, ON – Aug. 25, 2023 – PRLog — Multi-tenant commercial real estate refers to properties that host multiple tenants within one building or complex. Designed specifically to accommodate and lease space to multiple businesses, organizations or individuals; tenants in multi-tenant real estate could include retail stores, offices, restaurants, medical clinics, co-working spaces and more.

Key characteristics of multi-tenant commercial real estate properties:

Diverse Tenants: Your property hosts tenants from various industries or sectors, providing more customers and clients for your area. This diversity can help draw potential tenants.

Shared Facilities: Some amenities or facilities may be shared among tenants, such as parking areas, common lobbies, elevators, restrooms and common areas.

Lease Agreements: Each tenant typically enters into an individual lease agreement with their property owner or management company, detailing duration, rent amounts and any special conditions applicable.

Property Management: Real estate properties typically employ a management team to oversee daily operations, maintenance, and tenant relations.

Location: Commercial properties designed for multi-tenants should be placed in areas with heavy foot traffic and good accessibility to attract tenants and customers alike.

Rental Income: Property owners generating rental income from multiple tenants often experience more stable and secure income streams compared to single-tenant properties.

Tenant Mix: When carefully balanced, tenant mixes can foster synergy among businesses that will attract more people to the property and benefit all tenants involved.

Commercial real estate properties with multiple tenants include shopping centers, office buildings, strip malls, industrial parks and mixed-use developments. Such properties offer multiple tenants the benefit of spreading risk among themselves through different areas, so vacancies in one area may be offset by income from elsewhere. Unfortunately, they also present challenges related to managing different tenant needs, maintaining common areas and creating positive tenant experiences. Investors of multi-tenant commercial real estate strive to establish properties that attract and retain tenants, thus optimizing rental income and property value.

Founded in 2001 by Richard Crenian, ReDev Properties is a leading real estate investment management firm with an exceptional track record of successfully owning, developing and managing over $2.5 billion in real estate properties across Canada.

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Multi-tenant commercial real estate properties possess several key characteristics

  • Diverse Tenants: Multi-tenant properties draw tenants from various industries or sectors, which not only broadens their customer and client base but also increases the property’s appeal to prospective tenants.
  • Shared Amenities: Shared amenities such as parking spots, lobbies, elevators, restrooms and common areas between tenants are an efficient cost-cutting measure and add comfort and convenience for each of them.
  • Lease Agreements: Each tenant typically signs their own individual lease agreement with the property owner or management company. These documents outline details such as length of occupancy, rent amounts and any specific conditions or obligations related to living there.
  • Property Management: Property managers often employ dedicated teams to oversee daily operations, maintenance needs and tenant relations for an uninterrupted run of the property.
  • Location: Multi-tenant commercial properties should be located in areas with heavy foot traffic and easy accessibility, to attract both tenants and customers alike.
  • Rental Income: Property owners utilizing multiple tenants as tenants generate rental income that provides more stable and dependable streams compared to single tenant properties.
  • Tenant Mix: Strategic tenant placement can increase synergies among businesses, drawing more visitors into your property and benefiting all tenants involved.
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What Is Multi Tenant Commercial Real estate?

Multi-tenant commercial real estate refers to properties that host multiple tenants within one building or complex. Designed specifically to accommodate and lease space to multiple businesses, organizations or individuals; tenants in multi-tenant real estate could include retail stores, offices, restaurants, medical clinics, co-working spaces and more.

Key characteristics of multi-tenant commercial real estate properties:

Diverse Tenants: Your property hosts tenants from various industries or sectors, providing more customers and clients for your area. This diversity can help draw potential tenants.

Shared Facilities: Some amenities or facilities may be shared among tenants, such as parking areas, common lobbies, elevators, restrooms and common areas.

Lease Agreements: Each tenant typically enters into an individual lease agreement with their property owner or management company, detailing duration, rent amounts and any special conditions applicable.

Property Management: Real estate properties typically employ a management team to oversee daily operations, maintenance, and tenant relations.

Location: Commercial properties designed for multi-tenants should be placed in areas with heavy foot traffic and good accessibility to attract tenants and customers alike.

Rental Income: Property owners generating rental income from multiple tenants often experience more stable and secure income streams compared to single-tenant properties.

Tenant Mix: When carefully balanced, tenant mixes can foster synergy among businesses that will attract more people to the property and benefit all tenants involved.

Commercial real estate properties with multiple tenants include shopping centers, office buildings, strip malls, industrial parks and mixed-use developments. Such properties offer multiple tenants the benefit of spreading risk among themselves through different areas, so vacancies in one area may be offset by income from elsewhere. Unfortunately, they also present challenges related to managing different tenant needs, maintaining common areas and creating positive tenant experiences. Investors of multi-tenant commercial real estate strive to establish properties that attract and retain tenants, thus optimizing rental income and property value.

Founded in 2001 by Richard Crenian, ReDev Properties is a leading real estate investment management firm with an exceptional track record of successfully owning, developing and managing over $2.5 billion in real estate properties across Canada.

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CRE Market – What Questions I Need to Ask?

Investment in commercial real estate can be an attractive means of creating passive income and long-term wealth creation, but it must also be undertaken carefully with great consideration given to risks and consideration of all possible outcomes. Before diving in to commercial real estate investments, take time to educate yourself about the industry. Learn about different types of commercial properties (office buildings, retail spaces and industrial properties), the local real estate market trends as well as risks involved with investing in this field.

Outline Your Objectives and Goals – Clarify your investment objectives and goals. Set out what return you want to attain, how long it will take, and the level of risk you are willing to accept. Having specific goals will enable you to make better investment decisions. Surround yourself with professionals experienced in commercial real estate such as real estate agents, property managers, attorneys and accountants who can offer invaluable guidance throughout the process. They can offer invaluable advice and provide needed support throughout its entirety. Search for Property that Meets Your Investment Goals. Conduct extensive research to locate commercial properties that align with your investment goals. When doing this, take into account factors like location, demographics, potential for growth and condition of each property you come across. Perform Due Diligence! Once you locate an ideal property, conduct thorough due diligence by inspecting it, reviewing financial statements and tenant lease agreements as well as analyzing potential risks and rewards. This step is critical in order to avoid making costly errors.

Decide the optimal financing solutions for your investment in commercial real estate. As it typically requires significant capital, various sources may need to be explored such as traditional bank loans, private lenders or partnerships between investors. Negotiation skills are of vital importance in commercial real estate transactions, so it’s vital that you aim for the best price and terms when purchasing property. Proper management is key to maintaining and increasing the value of a property. If you lack experience managing properties on your own, hiring professional management services might be the way forward.

Diversifying your investment portfolio can be beneficial in mitigating risk and increasing returns, providing diversification from different types of properties and locations that help lower risks while expanding returns. Stay abreast of changes to both local and national real estate markets. Economic fluctuations and trends may have an impactful influence on commercial properties’ performance.

Be Patient and Long-Term Focused: Commercial real estate investment is a long-term endeavor; therefore it may take time before significant returns start coming through, so remain committed to your strategy until significant returns appear.

Exit Strategy – Before investing, devise a clear exit strategy. Whether selling the property at some point in time or refinancing to take advantage of equity gains, knowing when and how you will exit is integral for maximum returns on your investments.

Always bear in mind the inherent risks involved with investing in commercial real estate, so it is crucial to remain well-informed and make well-considered decisions. Seeking advice from experienced CRE professionals may provide additional insight and increase the chance of success.

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Commercial Rent Trends in Canada: What to Expect for the Balance of 2023

Staying updated with real estate market happenings isn’t an easy task, especially at a time when things are changing day to day. Similar to the residential market, the commercial market is currently going through major shifts that will impact the rest of the year.

For your convenience, we’ve rounded up some of the most important commercial and retail rent trends in 2023.

Changing prices

In the wild world of commercial real estate, a major trend has emerged that has left both buyers and sellers scratching their heads: pricing discrepancies. Owners are demanding top dollar for their properties, while buyers and tenants are hesitant to pay the steep prices. This trend is particularly pronounced in sales, but it’s also affecting leasing.

The trend is due to many factors, including interest rate increases, high inflation, and global geopolitical uncertainty. This uncertainty is causing everyone to be cautious, prolonging the process of determining the true value of a property.

Not all segments of commercial real estate are experiencing the same pricing problem, however. Industrial properties remain hot commodities, with near-zero vacancy rates driving up competition and prices in Toronto and Vancouver. Meanwhile, office properties are still in flux as companies struggle to determine their post-pandemic office needs. As a result, there has been an uptick in office subleases hitting the market.

Earlier (in December), Shopify caused a stir when it announced that it wouldn’t be using its new 348,000-square-foot office space in downtown Toronto and would instead be subleasing it. This could be a trend we expect to see more of in the future, although its prevalence will vary across industries. Despite this, some large companies like Deloitte and Google have recently expanded their Canadian office space.

On the retail front, the segment has made significant strides since pandemic measures have eased and in-store shopping has resumed. However, investors are still trying to find ways to compete with the rise of e-commerce and entice shoppers back to physical stores.

Which areas are affected the most?

According to CBRE’s Canada Retail Rent Survey, rent prices in the Western provinces saw the most extensive increase, as all cities located west of Winnipeg reported at least two rent hikes. The cities of Saskatoon and Vancouver were the most affected, with six of their key urban areas experiencing a rise in rental rates.

Demand for high-tech properties

Another trend we can currently see in the commercial property market is a shift towards high-tech features, such as property technology, that prioritize environmental sustainability, social responsibility, and cybersecurity. In the realm of office spaces, companies are looking for setups that can cater to remote workers and accommodate desk hoteling.

Staying competitive in this fast-changing landscape requires adapting to evolving market conditions and client needs, but rather than being intimidated by the idea of constant change, you should approach it as an opportunity for growth. In fact, times of uncertainty often provide the best lessons and potential opportunities.

Differences between investors

In the market, we now see a clear divide between those who have ample capital and those who don’t. While some investors are strategically waiting for the right opportunity, others are struggling to move their projects forward due to rising interest rates and tighter borrowing requirements.

However, financial hurdles, such as mounting construction and labour costs, are posing a challenge for all developers. This is something that should be taken into account for the rest of the year.

But don’t let this discourage you. To overcome these obstacles, it’s important to think outside the box and get creative with your financing and project costs. This could mean offering more free rent, providing more tenant inducements, or even lowering rent escalations to entice tenants. In short, those who can adapt and be inventive will be the ones who succeed in the real estate industry, as history has shown.

Although Canada is still facing economic challenges, the retail industry and its members are optimistic as they head into the new year – this is another key finding of the Canada Retail Rent Survey.

2023 – a promising year for the multi-suite residential rental sector

At the beginning of the year, Morguard released its Canadian Economic Outlook and Market Fundamentals report for 2023. According to it, things are looking optimistic for the multi-suite residential rental sector. That doesn’t come as a surprise since the market remained steadfastly confident throughout 2021 and 2022, despite the heightened risks.

Richard Crenian

Founder & President, ReDev Properties

Richard Crenian is the Founder and President of ReDev Properties. Ltd, a private real estate asset management company with its head office in Toronto. ReDev Properties is engaged in the development, acquisition, ownership and management of retail and mixed-use income properties predominantly located in Western Canada and Ontario. To learn more about Richard please visit www.richardcrenian.ca

Media

Commercial Rent Trends in Canada (2023 Updated)

Staying updated with real estate market happenings isn’t an easy task, especially at a time when things are changing day to day. Similar to the residential market, the commercial market is currently going through major shifts that will impact the rest of the year. For your convenience, we’ve rounded up some of the most important commercial and retail rent trends in 2023.

Changing prices

In the wild world of commercial real estate, a major trend has emerged that has left both buyers and sellers scratching their heads: pricing discrepancies. Owners are demanding top dollar for their properties, while buyers and tenants are hesitant to pay the steep prices. This trend is particularly pronounced in sales, but it’s also affecting leasing.

The trend is due to many factors, including interest rate increases, high inflation, and global geopolitical uncertainty. This uncertainty is causing everyone to be cautious, prolonging the process of determining the true value of a property.

Not all segments of commercial real estate are experiencing the same pricing problem, however. Industrial properties remain hot commodities, with near-zero vacancy rates driving up competition and prices in Toronto and Vancouver. Meanwhile, office properties are still in flux as companies struggle to determine their post-pandemic office needs. As a result, there has been an uptick in office subleases hitting the market.

Earlier (in December), Shopify caused a stir when it announced that it wouldn’t be using its new 348,000-square-foot office space in downtown Toronto and would instead be subleasing it. This could be a trend we expect to see more of in the future, although its prevalence will vary across industries. Despite this, some large companies like Deloitte and Google have recently expanded their Canadian office space.

On the retail front, the segment has made significant strides since pandemic measures have eased and in-store shopping has resumed. However, investors are still trying to find ways to compete with the rise of e-commerce and entice shoppers back to physical stores.

Which areas are affected the most?

According to CBRE’s Canada Retail Rent Survey, rent prices in the Western provinces saw the most extensive increase, as all cities located west of Winnipeg reported at least two rent hikes. The cities of Saskatoon and Vancouver were the most affected, with six of their key urban areas experiencing a rise in rental rates.

Demand for high-tech properties

Another trend we can currently see in the commercial property market is a shift towards high-tech features, such as property technology, that prioritize environmental sustainability, social responsibility, and cybersecurity. In the realm of office spaces, companies are looking for setups that can cater to remote workers and accommodate desk hoteling.

Staying competitive in this fast-changing landscape requires adapting to evolving market conditions and client needs, but rather than being intimidated by the idea of constant change, you should approach it as an opportunity for growth. In fact, times of uncertainty often provide the best lessons and potential opportunities.

Differences between investors

In the market, we now see a clear divide between those who have ample capital and those who don’t. While some investors are strategically waiting for the right opportunity, others are struggling to move their projects forward due to rising interest rates and tighter borrowing requirements.

However, financial hurdles, such as mounting construction and labour costs, are posing a challenge for all developers. This is something that should be taken into account for the rest of the year.

But don’t let this discourage you. To overcome these obstacles, it’s important to think outside the box and get creative with your financing and project costs. This could mean offering more free rent, providing more tenant inducements, or even lowering rent escalations to entice tenants. In short, those who can adapt and be inventive will be the ones who succeed in the real estate industry, as history has shown.

Although Canada is still facing economic challenges, the retail industry and its members are optimistic as they head into the new year – this is another key finding of the Canada Retail Rent Survey.

2023 – a promising year for the multi-suite residential rental sector

At the beginning of the year, Morguard released its Canadian Economic Outlook and Market Fundamentals report for 2023. According to it, things are looking optimistic for the multi-suite residential rental sector. That doesn’t come as a surprise since the market remained steadfastly confident throughout 2021 and 2022, despite the heightened risks. With many changes in the commercial real estate market, 2023 is bound to be an interesting year. The surprise may come shortly. Will the Bank of Canada raise interest rates in Q2 to slow inflation? Bond prices have seemingly already priced this in. Follow Richard Crenian’s blog to stay updated with all the latest news. 

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Why Rent Prices Are Expected To Increase Even More

Due to inflation and other factors, experts predict the already-dramatic rent prices are going to surge even more 

Over the past few months, the Canadian housing market has overgone significant changes. Primarily influenced by the Bank of Canada’s decisions to raise its interest rates, the number of sales as well as home prices have been declining all over the country. While some parts of the market have slowed down, others have heated up! 

Throughout Canada, rent prices have seen quite a large increase, and the trend is unlikely to disappear soon. Here’s why rents are predicted to skyrocket in the upcoming year and how you can make use of this opportunity to your benefit.

Rents have grown in all parts of the country

The sharply rising rental prices can be felt throughout Canada. This shows in reports too. According to data, in the time period between August 2021 and August 2022, rent prices increased by 11%.

When assessing the reasons for these changes, it’s hard to put the finger on just one thing. Rents have grown at such a dramatic rate because of a number of factors. Here are a couple of examples.

Inflation

The biggest influence on the growing rent prices, of course, is inflation. Nearly everything on the market has become more expensive, and rents seem to follow the trend. To better understand how inflation has impacted the state of the market, you must consider the demand and supply. 

In order to combat the inflation, the Bank of Canada had to up its interest rates, which then, consequently, increased mortgage rates. 

When a mortgage is less affordable, it becomes more challenging for people to purchase a property. If fewer people are buying homes, it means more of them are becoming tenants. This, of course, puts added pressure on the rental market. Due to great demand (also increased by a surge in immigration), the prices inevitably grow.

Demand for luxury

Despite the high inflation, the need for luxury doesn’t disappear. People are still willing to pay more to enjoy luxurious apartments and houses. If they need perfection, they’ll find a way to have it. Since single-family homes are still expensive, many individuals opt to rent a property instead, which furthers the strain on the rental market.

Increased Migration

Over the last few years, Canada has experienced a significant surge in immigrants. In efforts to spur financial growth, the government has brought in workers from all across the globe. The only problem is the lack of housing. There are not enough homes to provide them with (or even Canadians). 

When there’s a lack of homes, it only makes sense the rates for available properties rise. Trying to find a solution, we now see efforts to develop homes, but overcoming the shortage will take years.

Not Enough Construction

The market never stops. As we already mentioned, new homes are being built, but that’s not enough to satisfy the growing demand, especially in the country’s urban areas. Statistics show that tenants take up over 4.5 million houses in Canada, and the need for more remains. Even if rent prices go up, the availability rate drops down. This means building new homes is essential.

However, the development industry has experienced its troubles too. Due to the pandemic and shortages in labour, many projects were delayed. Now, the higher construction manufacturing costs make it challenging to fulfil the existing plans.

How To Make The Most Of The Current Situation

While the rising prices can seem scary, they provide an opportunity too. If you have the means, now would be an excellent time to invest in rental properties. According to the Global Property Guide, you can earn a gross rental return of around 3%-5% by renting out a property. 

As we already discussed, the demand is unlikely to reduce. In fact, the need for housing will most likely increase, which means you’re guaranteed to make money from your investment.

However, before deciding, keep in mind owning residential real estate requires effort. It’s an active investment, which means you’ll need to have a hands-on approach. Of course, there is a solution. If you don’t have the time to be an active landlord, you can always use the services of a property manager.

When searching for a rental property, you should look for a place that’s low maintenance and can still be sold for a reasonable price (even in this market).

End notes

The rapid escalation in rents is experienced just about everywhere in Canada. Perhaps the most striking example is Atlantic Canada, which has seen rents rise at the pace of 32.2 per cent. 

Due to a lack of balance in supply and demand, the prices could grow even more. But there’s no good without the bad. If you’ve been waiting on the sidelines to join Canada’s rental market, this is your golden chance! Investing in rental properties will be a smart decision you won’t regret.

Richard Crenian

Founder & President, ReDev Properties

Richard Crenian is the Founder and President of ReDev Properties. Ltd, a private real estate asset management company with its head office in Toronto. ReDev Properties is engaged in the development, acquisition, ownership and management of retail and mixed-use income properties predominantly located in Western Canada and Ontario. To learn more about Richard please visit www.richardcrenian.ca

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Should I Buy Urban or Suburban Land when I am investing Today?

When it comes to cities like Toronto, is it wise to buy land? It can be a very effective formula if you can buy it with cash flow. Basically, you are using the land to generate sufficient residual income, such as parking, and using that income to offset your mortgage interest and payments.

Make sure there will be local development within 5-10 years, such as high rises, so be patient, think long term, and make sure you can cover your payments with the cash flow from that land. Think long and thing opportunities!

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CAPREIT Is Now A Good Time To Invest In Hamilton’s Real Estate?continues To Trim Its Portfolio And Sells Stake In Three Ottawa Apartment Sites

In efforts to spruce up its real estate portfolio, CAPREIT has said farewells to three Ottawa apartment sites in a $136 million deal

Canadian apartment REIT is continuing its efforts to remove aging ‘non-strategic’ assets from its real estate portfolio. Last week, it announced the sale of 50% non-managing interest in three condo properties in Ottawa, which consist of 1,150 units. For the apartments, CAPREIT would receive $136 million. According to the real estate company, the deal was set as the firm is shifting its focus and evaluating its existing portfolio.

Why is CAPREIT Upgrading Its Portfolio?

Curious to learn which sites were involved in the massive deal? According to news reports, the properties sold are the Wellington Towers at 1265 Wellington St, the Riverview Place Apartments at 180 Lees Ave, and the Alta Vista Towers at 1545 Alta Vista Dr. Reportedly, the properties built between 1969 and 1981 were requiring ongoing capital expenditure to improve their growth profiles. That is what prompted the company to sell them.

The company’s CEO, Mark Kenney, explains that the real estate firm is looking to turn its A-class portfolio into an A-plus. As per reports, the cap rate is in the mid-three per cent range. News sites have also noted that CAPREIT transferred $38.7 in existing mortgages to the new owner of the sites. 

Who the buyer is, however, isn’t publicly disclosed. Experts in the industry have revealed that all three properties CAPREIT had shared with Ottawa-based Paramount Properties, which is the responsible property manager.

The recent deal, however, isn’t surprising. CAPREIT has been publicly open about the intention of modernizing and upgrading its portfolio for more than a year. With their new strategy, the company would concentrate its efforts on selling more affordable, value-add properties. 

As the CEO noted, these types of sites usually get higher pricing compared to traditional core assets. In the current situation, the private market is more aggressive. This provides an opportunity for CAPREIT to buy back their shares with an impressive discount, invest in new construction rental, or even pay down debt.

How New-construction Assets Can Be Beneficial

So what does the future hold for CAPREIT? As Kenny notes, we shouldn’t expect their strategy to change any time soon. The company is expected to trim its portfolio even more. In the near future, CAPREIT plans to sell other non-core properties for the same reasons it sold the three Ottawa apartment sites. There are many risks involved with older properties, and, as the CEO explains, there’s also added pressure from government regulation.

Among the biggest current challenges are the rent controls in numerous Canadian provinces. Unfortunately, it makes keeping up with inflationary costs almost impossible. Building revenues aren’t enough to cover the expenses. By selling the more affordable value-add properties, CAPREIT is trying to de-risk the investment.

Of course, selling existing assets and buying back shares will allow CAPREIT to venture into new areas. With this strategy, the trust well can focus on new construction investments. The company’s CEO emphasizes that the new direction would allow CAPREIT to contribute to Canada’s housing crisis. 

New properties are a good thing for owners – they provide an opportunity for them to continue charging market rents. Investing in these kinds of properties means there’s less control to worry about in provinces like Ontario.

CAPREIT’s upcoming plans

When it comes to future plans, CAPREIT’s CEO revealed that the company isn’t planning to concentrate its efforts on developing its own projects. Instead, the firm will be looking into other investment options. Currently, CAPREIT’s main intention is to sell entitled land opportunities, not build on them. The company hopes to provide Canada with new rental accommodations.

About CAPREIT

The reason why CAPREIT’s plans matter is the fact it’s Canada’s largest publicly traded apartment REIT. It is estimated that the company owns around 65 000 residential apartment suites, townhomes and housing communities all around the country. What’s more, the real estate firm also has sites in the Netherlands.

End notes

Capreit’s decision to sell a stake in its three Ottawa apartment sites is one of the most impressive deals we’ve seen recently. This is yet another example that showcases that even though we are in a shifting market, it doesn’t mean all hope should be lost. 

Whenever the market is changing, new opportunities arise – you just have to be open to seeing them. We’re excited to follow CAPREIT’s journey. Hopefully, it will bring more life to the market and provide more rental accommodations, especially because real estate experts predict that multi-family rental properties will remain strong in 2023. 

Although home prices have declined in most areas of the country, rent prices are only expected to grow. The biggest increase will be seen in Vancouver and Toronto – Canada’s most expensive markets.

Richard Crenian

Founder & President, ReDev Properties

Richard Crenian is the Founder and President of ReDev Properties. Ltd, a private real estate asset management company with its head office in Toronto. ReDev Properties is engaged in the development, acquisition, ownership and management of retail and mixed-use income properties predominantly located in Western Canada and Ontario. To learn more about Richard please visit www.richardcrenian.ca