2023 is off to a strong start at Skyline. As of January 1, Class F Units for all Skyline Funds are available for purchase through Fundserv (a Canada-wide platform that allows investors access to investments through brokers). This was approved by investor vote late last year and presents an opportunity to access a wider pool of capital, enabling us to capitalize on further accretive opportunities as each Fund continues to grow in scale.
High inflation, rising interest rates, and economists’ predictions of a looming recession continue to be top of mind. Recently, the Central Bank increased mortgage interest rates by another 0.25%, to a high of 4.50%1. However, more recently, there has been discussion of a softer economic landing than originally anticipated, which indicates that we may be rounding a corner in 2023.
Our Fund strategies have ensured that we are equipped to capitalize on most market conditions and existing opportunities. We have always prioritized mitigating any potential risk from inflation and interest rates. Among the components of the Fund strategies, and especially relevant today, is the laddering of mortgage maturity dates (in the case of Skyline’s REIT investments) with an aim to spread our interest rate exposure in future years, when rates may not be as favourable. As the government was increasing the money supply over the past two years, we anticipated inflation would follow and therefore focused on forward fixing many of our existing mortgages at historic lows and for long terms, minimizing that exposure for precisely this time and situation.
Simply put, we mitigate the risks we cannot control while capitalizing on opportunities that present themselves. This fundamental strategy has resulted in our Funds weathering multiple periods of economic uncertainty and demonstrating historical stability and growth since their inception.
Skyline looks to build on its strong growth from 2022, and we expect to raise more capital in 2023 than in any previous year. Our Funds continue their core acquisition strategies, buying in strong markets where value can be surfaced, stable cash flow exists, and economies of scale can be leveraged. As we have experienced many times over our history, being ready to move in a market when others are on the sidelines provides the potential for significant growth without the competition that comes with a frothy market.
We will continue to monitor market trends closely in 2023. While inflation requires attention, it can also present an opportunity. During these inflationary times, investors will want to own physical assets that will benefit from inflation through increased revenues and an appreciation in value. With well-established, well-positioned, and strong income-producing assets held within each of our Funds, we will continue to execute on our strategy and be opportunistic.
On behalf of Skyline’s leadership team, we look forward to sharing another year of growth and opportunity with you.
Co-Founder & Chief Executive Officer
Skyline Group of Companies