Equiton’s strategic shift toward institutional investment

Equiton, a leading Canadian private equity real estate firm, is in the midst of a strategic shift toward institutional investments that it believes will tap into the growing global appetite for Canadian real estate among diverse pools of capital available worldwide. Equiton’s transition reflects a mature understanding of market dynamics and growth opportunities beyond the limited retail sphere.

At the forefront of this transition is Aaron Pittman, Equiton’s head of institutional investments. Pittman’s career has seen him help guide the evolution of several firms from largely retail-oriented shops to the institutional world. “It can be a challenging, years-long process,” says Pittman. “Not all firms will have the patience to follow through on institutional strategy, but for those that do, the results are transformational.” 

Pittman outlines the stark dichotomy between the retail and institutional investment spaces, highlighting the global scale and vast potential of the latter.

Dynamic expertise leading to optimal solutions

Pittman’s career spans over two decades on the institutional side of the business. His unique path through various roles within the sector has equipped him with a comprehensive understanding of institutional asset-gathering. This breadth of experience allows him to act as a “translator” among specialized teams and functions, facilitating effective communication and strategy implementation.

Pittman’s approach to career progression deviated from the more traditional siloed ladder; rather, he sought exposure across all facets of the institutional business, valuing the diversity of perspectives over a linear climb.

“I consciously pursued a varied experience – ranging from business development/investor relations to client servicing, consultant relations, and content management. This wide-ranging exposure allowed me to serve as a link among highly specialized teams, facilitating communication between participants who often speak ‘different languages’,” Pittman says.

“The diversity of my roles over the past 20-plus years may have been somewhat atypical, often earning me the moniker ‘Swiss Army knife,’ largely attributable to my broad perspective. This versatility has proven particularly beneficial in my role at Equiton, where the ability to wear multiple hats and possess wide-ranging expertise is essential.”

Pittman’s breadth of expertise empowers institutional investors with tailored strategies and comprehensive insights, facilitating informed decision-making and optimal portfolio performance.

Institutional investment goals

Since its inception in 2015, Equiton has shown tremendous growth in the Canadian real estate investment landscape. With a strategic focus on private real estate, the firm has not only expanded its operational footprint but has also significantly strengthened its investment portfolio, echoing a commitment to delivering tangible value to its stakeholders.

As the head of institutional investments, Pittman says aligning capital raise activities and business development strategies with the evolving needs of institutional investors is crucial.

“Institutional investors are at the top of the sophistication curve, a trajectory that is continuously expanding. To stay relevant and become a suitable partner for large institutional capital pools, adopting an outside-looking-in perspective is essential,” emphasizes Pittman.

“This approach is necessary because many managers lose sight of the fact that their contribution is merely a segment of the plan sponsor’s entire ecosystem. We become a component of a larger mechanism. Keeping pace with the ever-changing landscape requires a mindset driven by intellectual curiosity.”

Equiton’s role in addressing supply issues

Pittman highlights that Canada is currently facing a generation-spanning housing crisis. In recent years, Canada has distinguished itself on the global stage with population growth that far outpaces even its fastest-growing G7 peers. This dynamic, coupled with an entrenched shortfall of housing supply, has reshaped Canada as one of the least-affordable housing markets in the world. It could be several decades before supply catches up to surging demand, says Pittman, making housing a critical issue for all Canadians.

In the face of these challenges, Equiton takes a proactive stance as a leader in the real estate sector, contributing positively by increasing supply – developing multi-family residences and bringing new inventory to market. Pittman notes that this important effort is expected to grow easier with Canadian governments at all levels focusing political will on encouraging the development of new housing stock; however, he emphasizes that addressing the housing crisis will ultimately require the active collaboration of private-sector entities like Equiton. 

“Recent policy changes are a welcome start, but more needs to be done to reduce unnecessary development charges, shorten timelines, and get shovels in the ground,” says Pittman. “Canada must let home builders do what they do best: build homes.”

Partnership with Concordia University

Equiton’s commitment to its investors and expanding Canadians’ knowledge of real estate has led to an exciting new collaboration with the John Molson School of Business at Concordia University. This partnership will foster innovative research into the landscape of real estate investment in Canada.

“This partnership represents a fusion of the best of both worlds: Equiton’s investment prowess and Concordia’s academic expertise in the development of large language models and machine learning. This collaboration allows us to explore new territories uniquely. It’s an approach I believe may be unprecedented in our industry,” Pittman says.

“The research is being conducted by Dr. Erkan Yönder and his team. We’ve seen some of the early work he’s done and are absolutely delighted, and looking forward to coming insights. So far, we’ve only scratched the surface of what we can achieve from this relationship, and we’ve already begun the preliminary planning to broaden and deepen the research.

“The integration of artificial intelligence with academic models removes emotion from the equation. While perspectives can be clouded by unconscious biases, particularly in real estate, our focus is to minimize emotional influence. At Equiton, we like to say our approach to real estate investing is passion without emotion. We prioritize due diligence and are willing to walk away from investments when financials don’t make sense.”

Such initiatives not only bolster Equiton’s strategic capabilities but also signify a forward-thinking approach to addressing the complex dynamics of real estate markets.

The outlook at Equiton

Institutional investors are increasingly setting their sights on best-in-class assets characterized by supply and demand fundamentals and durable cash flows. These criteria form the bedrock of investment strategies that aim to mitigate risk while ensuring steady, predictable returns.

Equiton, with its strategically diversified portfolio spanning 17 key regions, carefully selects properties that align with these criteria, ensuring they are positioned for long-term growth and resilience.

Equiton’s focus on managing properties in vibrant, growth-oriented regions ensures that its portfolio is attractive for its current cash flow generation, offering peace of mind to investors looking for alternative investment horizons.

The firm is not only strategic but client-focused, Pittman adds. “True customer focus requires a detachment from your own goals with a singular focus on an exploration of a solution for the client. A clear and open two-way dialogue always results in the most meaningful solution fostering long-term partnerships, and long-term thinking underpins our approach.”