PROJECT 387 EDISON LONGFORM CASE STUDY

INTRODUCTION

387 Edison is one of those rare projects where the opportunity wasn’t hidden — it was ignored.
Most people walked through the building and said, “Yeah, it’s decent. Nothing special.”
But when I walked it, I saw leverage. I saw inefficiencies. I saw one untouched unit that could change the financials.
And I saw a path to turn a “good” building into a exceptional investment.

This is the story of how we turned a stabilized, “nothing to do here” property into a complete home run with full capital returned in under eight months.

PROBLEM

On paper, the building looked simple:

  • 16 units

  • Concrete construction

  • Mostly renovated 10–12 years prior

  • Reasonable maintenance

  • Engineered hardwood floors

  • Good structure

But the issues were below the surface:

1. One unit was completely outdated

The old caretaker suite hadn’t been touched in 40 years.
The tenant had been there for decades.
The rent was way under value.

2. The windows were poorly done

They were cheap insert windows — not full-frame replacements — leading to:

  • Air leaks

  • Moisture issues

  • Higher energy costs

  • Tenant complaints

3. The boiler and hot water system were at the end of their life

  1. This meant:

    • Inefficiency

    • Higher utility expenses

    • Near-term capital risk.

4. The roof required repairs

Nothing catastrophic, but not something you want hanging over your head

5. Market value was already priced in

On the surface, there wasn’t a clear “value-add story.”

Most investors want the obvious.
This one required foresight.

The Opportunity Others Missed

Most buyers walked away because they couldn’t see where the upside would come from.

But upside always comes from one of three places:

  1. Income increase

  2. Expense reduction

  3. Financing optimization

This building had all three waiting to be unlocked.

And the key was the one unrenovated unit — the caretaker suite.

That suite alone allowed us to:

  • Increase rents

  • Pull the average rent up

  • Improve the building’s NOI

  • Create a financial story that made sense

  • Force appreciation

Then, when we combined that with reducing expenses through efficiency improvements, the numbers jumped again.

And that led to the biggest lever of all:

CMHC financing.

Strategy

1. Secure the building off-market

We were brought this opportunity through a realtor who was also a partner in the building.
Because of that relationship, we had:

  • Early access

  • Clear understanding of the history

  • A chance to structure the deal before it hit crowded hands

This alone gave us an edge.

2. Identify the NOI drivers

We walked the entire building and pinpointed:

  • Where rents could legally be increased

  • Which renovations qualified for above-guideline increases

  • How much expense reduction was possible through modernization

  • How CMHC would view the improvements.

3. Renovate the caretaker suite

This was the most obvious value-add:

  • Full interior modernization

  • Increased rent

  • Stabilized tenant profile

It transformed one weak unit into one of the strongest.

4. Replace the boiler, windows, HWTs

We made the building more efficient with:

  • A brand new boiler system

  • Full modern hot water tanks

  • High-efficiency windows (proper replacements)

This triggered:

  • Lower utilities

  • Lower cap-rate risk

  • Better CMHC scoring

  • Better tenant satisfaction.

5. Work with Efficiency Manitoba

We leveraged grants and rebates because the improvements directly affected:

  • Energy consumption

  • Mechanical efficiency

  • Environmental performance

These rebates put money back in our own pocket.

6. Structure the financing

This was the magic.

We secured a 95% loan-to-value CMHC-insured mortgage on:

  • The purchase

  • The improvements

  • The future stabilized value

That allowed us to:

  • Defer the bulk of capital investment

  • Complete renovations

  • Trigger a draw on completion

  • Recover the money quickly

  • Create a high-leverage, low-risk position.

7. Build a refinance-without-refinancing strategy

Instead of waiting a year for a refinance, we:

  • Completed the renovations

  • Submitted the improvement reports

  • Triggered the CMHC future-value funding

  • Received the renovation capital back almost immediately

No refinancing.
No delays.
No extra legal fees.

This is the type of strategy most investors don’t know exists.

RESULTS

Building stabilized at a much higher valuation

The combination of renovations, rent increases, and efficiency upgrades boosted:

  • Cashflow

  • Appraisal value

  • Long-term resale potential

A prime long-term asset

387 Edison is now:

  • Fully modernized

  • Tenant-stable

  • Energy efficient

  • Properly financed

  • Fully compliant

And we hold it with none of the original investment left in the deal.

Infinite return territory.

Full capital returned in under 6–8 months

Every dollar of invested capital was pulled back out through:

  • CMHC improvement draws

  • Efficiency Manitoba rebates

  • NOI increases

Lower ongoing costs

The new boiler, windows, and HWTs significantly reduced:

  • Gas usage

  • Electrical loads

  • Repair bills

This increased NOI even with the same rents.

387 Edison proves an important point:

You don’t need a distressed building to create a home run.
You need experience, execution, and the ability to see what others ignore.

This is what Arete was built to do — take “average” properties and turn them into powerful long-term assets.

CLOSING