Toronto Under Construction – Episode 66  with Colin Baryliuk Chief Investment Officer at KingSett Capital

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The Toronto Under Construction Podcast is excited to welcome Colin Baryliuk, the Chief Investment Officer at KingSett Capital to episode 66. Colin joined KingSett in 2008 and leads the investments team, which sources, underwrites and structures investment transactions for KingSett’s various Fund strategies.  Robert Baron, president of Toronto Under Construction sponsor BCGi Baron Consulting Group Executive Search, also joins the podcast today.

Colin Baryliuk

Prior to joining KingSett Capital, Colin held senior roles at BMO Capital Markets and Royal Lepage Advisors, where he obtained a broad range of investment experience in all asset classes of real estate throughout North America. Colin holds a Bachelor of Science degree in Economics from the University of Victoria. Colin kicks off the episode sharing details about what led him to pursue his degree and his career path to KingSett. Tune in at 3:08.

As the guys discuss Colin’s role at KingSett, Robert asks about KingSett’s seven different funds and asks Colin to share how KingSett plays in the capital stack of housing development. Tune in 8:51 to learn more about KingSett’s funds, specifically when it comes to residential development. Ben then asks Colin how KingSett’s investment decision-making and underwriting process has evolved in response to the shift and softer market for most real estate assets. Colin says, “we’re responding to the market, I think that’s the best way to describe it.” Tune in at 12:54 for his insights on adapting to the shifting real estate landscape, including his thoughts on purpose built rental, condos and the importance of having an exit strategy. The guys get into a discussion about some of the difference between condo and rental and things that developers need to consider when building either product. Ben asks Colin whether they are trying to diversify different opportunities within the funds to reduce the risk of strong correlations between the deals, and if they do, how do they do it so as to not put their capital at risk. Tune in at 23:16 where Colin discusses some of the funds, their asset classes, their geographical locations and how they choose which developers to work with.

Robert mentions that one of the things he observes with new projects, whether they are condo or rental, the price problem is always solved by shrinking the unit size. The guys discuss pricing, unit size, ways to have innovation and flexibility and most importantly margins and risk. “For a very long time, people have been overlooking the risk that went along with development, because interest rates were zero, and now here we are,” says Colin. Tune in at 28:38 for the discussion.

Robert Baron

Switching gears to discuss lending, Robert asks Colin whether the higher interest rates are a net positive or negative for KingSett’s overall portfolio. Tune in at 36:27 for Colin’s response where he says “imbalances breed opportunity, and what I think we do particularly well is find the opportunity.”

As the guys discuss what has happened in real estate over the last 10-15 years Ben mentions that 2024 has been the worst for sales since 2009. He mentions that we’re seeing almost the exact same thing in terms of being undersupplied as we did 10 years ago in 2017, setting us up for prices to increase in 2027. Ben asks Colin if he can let us in on the KingSett war room, and when his team is anticipating the market will come back, and whether or not they are having these conversations. Tune in at 39:17 for Colin’s thoughts and insights. “The one thing that Canada continues to have going for it, is it is a good place to live relative to the rest of the world, and continues to have a ton of immigration….having that much population growth, you need more of everything….It’s hard for me to bet against that,” says Colin at 50:01.

Ben switches topics stating that Kingsett has bet big on transit-friendly locations, including sites on Bloor in areas which had previously experienced limited development activity, including the Dovercourt and Lansdowne area. Ben mentions, KingSett has recently completed an assembly in the Weston area, a part of the city that developers would not have touched with a 10-foot pole 15 years ago. Despite all the acquisitions in the area of late, Ben mentions that no one has moved yet, and asks Colin what’s holding things back? Tune in at 54:41 for Colin’s response saying “I think transit had a lot to do it. Like all of our grand transit plans, it definitely has taken longer to build,” he says, citing that Weston station for the UP Express is just being completed.

Flipping back to rental, Robert mentions that purpose built rental was expensive to build back in the “golden age of the apartment”, and says they were only built because of government incentives. He asks Colin whether there is any evidence of programs that can make it happen. Colin discusses the HST announcement, saying it had a big impact right to the bottom line of the performa, he also mentions the CMHC programs are working and that he thinks we will see more. Tune in at 58:02.

Continuing the discussion on affordability, Ben reads that KingSett made the following announcement in 2021, reading “KingSett’s affordable housing fund is pleased to announce this joint venture at 705 Warden Ave in Scarborough with our partner Greenwin. Located on Warden subway station this rental project will have 250 affordable apartments in addition to 325 market units”. Ben mentions that he doesn’t live too far from this site, and says that the fact that the proposal has a maximum height of 19-storeys is criminal. Ben says there should be three towers of 35- to 40-storeys on this site, and at least twice as many units. He asks Colin, why do we continue to underzone these key sites? Tune in at 1:05:17 for Colin’s response where he says “taller isn’t always better.”

Wrapping up the episode with Rapid Fire, Ben and Robert ask Colin questions like, “In your opinion is missing-middle housing a viable investment in Toronto?” “Should developers sue buyers that don’t close on their units?” “Are there any new names in Toronto real estate we should watch for, someone you met that you were impressed with?” “Will the new changes to the capital gains tax negatively impact housing investment?” and more!

Tune in now to episode 66 of the Toronto Under Construction podcast!

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