Neo-realty investment firm MYRE Capital has launched its latest structured debt investment opportunity in Hyderabad for accredited investors. In a statement, Myre Capital said the investments will be in the form of high-yield Lease Contract Discounting secured by hard collaterals and lease rental receivables from blue chip tenants like Claranet and iLenSys in Gachibowli, Hyderabad.
According to the statement, the minimum investment size for this opportunity is Rs 15 lakh with a 13% target Internal Rate of Return (IRR).
MYRE Capital aims to raise Rs 19.15 crore for this opportunity and the operator for this property is Skootr Global Private Ltd., which already manages over 6 lakh sq. ft. in India.
This product has been launched under MYRE’s new Lease-Contract Discounting Investment vertical to offer first-of-its-kind alternative real estate investment opportunities. The statement said that MYRE aims to scale this new vertical to Rs 350 crore in FY23.
The new vertical has been structured based on an adaptation of the ‘Lease Rental Discounting’ model in which the tenure of the investments is kept below the lock-in period for the subtenants so that the returns of the investors are secured.
Also Read: How can young investors make money from real estate?
The monthly rentals are collected in an Escrow account with first disbursement to the investors. With a 13% target IRR, this framework presents a compelling risk-return proposition, providing accredited investors with unprecedented access to differentiated opportunities in the commercial real estate sector.
MYRE Capital will operate the vertical offline for now with exclusive opportunities. The platform intends to transition this vertical to online over the next quarter.
MYRE has already seen immense traction from potential accredited investors for the new product. The opportunities in the LRD (Lease Rental Discounting) vertical will offer non-dilutive growth capital to managed leasing operators against contracts with future rental receivables and other repayment guarantee mechanisms. The operator uses capital to finance the CAPEX like fitted-out offices that are secured by long term contracts with MNC & blue chip tenants. The sub-tenants’ monthly lease rental services the growth capital offered by investors.
“ Our aim is to provide complete transparency and security to our investors therefore the entire principal and interest will be repaid to investors within the lock-in period of the lease contract. We see immense appetite and potential of growth for neo-realty products in India and we aim to scale this vertical to INR 350 crores by the end of next year. We are working on bringing multiple products to the table in the real estate sector for our investors to diversify their portfolio” said Aryaman Vir, Founder & CEO, MYRE Capital.
Also Read: Square Yards fractional real estate investment platform to offer upto 14%-15% return
To further safeguard the investor’s interest and mitigate risks, MYRE Capital is requiring operators to also provide an overarching guarantee. This means that if on the 12th of any given month, due to any reason whatsoever the funds in the escrow are not sufficient to cover the principal + interest payment to investors, the operator has an obligation to cover the difference by the 15th of the month, the company said in the statement.
Fernando Echeverri, an expert in commercial real estate at the Great Properties International Realty office in Key Biscayne, is a former banker, trained in Finance at the University of Miami, with a postgraduate degree in Management from Harvard. He has 15 years of experience in real estate in the region, and he has earned Certified Commercial Investment Member certification. This makes him a true analyst and strategist certified in this complex field of investment.
In a chat with Islander News, Echeverri talked about this achievement and how commercial real estate differs from residential.
FE: In the field of commercial real estate, this Certified Commercial Investment Member (CCIM) designation is arguably one of the most characteristic. Less than 10 percent of the people who do commercial real estate have this type of certification, which requires academic preparation that mixes finance with real estate.
IN: Is there a complexity in commercial real estate that makes it very different from residential real estate?
FE: Commercial real estate has many aspects that require analysis, to advise an investor in a field that is varied, since it can be land, commercial warehouses or warehouses, retailers, multifamily, hotels and properties. All types. You are going to give advice that has to do with an investment, but with the difference that when you are in the commercial area you are also going to have some tools that help you improve your return; things that you do not have in the residential area.
In the commercial field, the cap rate you are having matters a lot. If you want to invest in a property, you are not interested in how much it is showing at that moment. We want to know what it is going to generate in the life of that business. How much you are going to get, and if you are going to transform that property. Real estate is mixed in with the financial issue. Many of the exercises we do are valuing the property, using the initial investment, the annual flows and the exit strategy. That makes you see the investment more comprehensively. You have to understand what is financially interesting and what is not.
IN: Does financing in the commercial sector work like in residential real estate?
FE: No, because in the commercial field financing depends more on the asset than on the person. If you are going to buy a multi-family property or a retail property, they will value what the property and the business generates more than the finances of the person. They may ask you for a personal guarantee, but they want to see that the business can work well.
IN: What is most in demand when investing in commercial real estate?
FE: It would be a multi-family property. The small or medium investor who is just starting out is looking for a multifamily, with four, six, eight apartments. Perhaps then a warehouse, in places like Doral, where there is less inventory because real estate investment funds have bought many and are advancing more in the industry, and now even in houses as well.
Pounded by increasing inflation and slowing growth, major economies – including the US and the UK – are staring at recession. As traditional financial instruments – be it fixed-return instruments like bonds or market-linked instruments like shares – get affected by the economic downturns, the overall portfolio return of an investor may also get hit hard.
So, to protect their portfolio from the ill effects of the probable global recession, investors need to search for the investment options that don’t get affected or get least affected by economic downturns.
Here are two of such investment options:
Gold
Gold acts as a hedge during economic and market downturn as investors take refuge by shifting their investments from the traditional financial instruments to the safety of the precious metal.
While investments may be done in physical gold – like gold jewellery, gold bars, coins etc – it’s advised to invest in paper or digital gold – like gold ETF, gold funds, Sovereign Gold Bond (SGB), digital gold, etc.
This is because an investor needs to spend money in hiring lockers, taking insurance etc in keeping physical gold safe in their custody. Moreover, at the time of reselling gold jewelleries, investors need to forego the amount paid for making charges, taxes at the time of buying.
On the other hand, apart from paying no money on safety of gold, people investing in instruments like SGB also get interest on the amount invested.
Commercial Real Estate
Another recession-proof investment avenue is commercial real estate (CRE), which generally remain stable during economic downturns and also provide high return.
However, investments in real estate – especially in CRE – need huge amounts of money and such investments are also quite illiquid. Moreover, the quality of CRE is also vital to get high returns.
To overcome such issues, it’s better to invest through options like Real Estate Investment Trusts (REITS), Infrastructure Investment Trusts (InvITs), fractional investments etc. This is because apart from investing in small amounts, the quality of assets will also be taken care of by the professional investment managers of such organisations.
Investing in real estate and buying property is regarded as the best mode of investment because of assured, reliable, infallible profits and higher returns. Being a tangible asset, it also provides long-term security and the benefit of regular cash flow through rentals. The value of real estate always goes up over time, and rents also tend to increase over time, generating higher cash flow. The longer you hold onto your property, the more money you will make when it’s time to sell, and with a good investment, one can turn an enormous profit.
Real estate is broadly of two types – Residential and commercial real rstate. Residential real estate comprises residential buildings, housing complexes, apartments, flat systems etc., where people reside and live in. Commercial real estate, on the other hand, consists of properties for commercial and official purposes as well as buildings for public use such as offices, garages, hotels, industries, malls, multiplexes, shopping centers, community parks etc.
So, let’s look at some of the reasons why Indians might be wanting to choose commercial real estate rather than residential real estate.
Higher returns
Commercial properties provide good rental returns over long periods of time. Prices will take some time to rise because the housing market has yet to recover from the pandemic. In commercial real estate, Grade-A office properties are already yielding high returns due to their high demand. The expected return on residential properties is around 3-4%, while the expected return on commercial properties is around 8-10%. The Indian property market had a great season in Q2 2022, with solid annual and quarterly growth in leasing activity for most segments. According to Financial Express, the country’s commercial real estate market is expected to grow at a CAGR of around 13% between FY 2022 and FY 2027.
Also Read: Top 5 investment options to secure the future of your children
Increasing demand
Most people prefer to return to work due to larger family sizes, smaller homes, inconsistent internet speeds, and vulnerable digital platforms. Furthermore, the emergence of new businesses registered year on year is increasing demand for commercial properties. Since the lockdown, approximately 16,000 new companies have been registered, according to the Central Registration Centre. In addition to start-ups, multinational corporations are looking to India as a hub for Data Center Offices and large commercial spaces, particularly in Tier 1 cities.
Constant and quick cash flow
The lease period for commercial properties can differ from 2 to 10 years. There are several benefits to having such long lease periods. For starters, regular rentals ensure a consistent cash flow. Secondly, you will no longer have to worry about finding tenants every few months. Due to short lease periods, residential properties suffer from erratic cash flows. The lease is generally for 11 months only.
Easier maintenance and upkeep
While residential properties invest heavily in attractive lifestyle amenities such as swimming pools and kid’s play areas, commercial properties focus on amenities that can improve work capabilities and create a healthy, positive work environment. As a result, because commercial properties have fewer larger-than-life amenities than residential properties, the maintenance cost is lower. Additionally, unlike in residential real estate, where the landlord is always responsible for property upkeep, the tenant bears the burden of maintenance in commercial real estate.
The triple-net lease is another advantage. This is a kind of lease agreement in which the renter is responsible for all the ongoing construction and living expenses such as maintenance, taxes, and insurance. At the end of the day, real estate remains one of the strongest and most promising investment options, and with the pandemic gradually receding, this market is rebounding in most major cities.
(By Ankit Aggarwal, MD, Devika Group)
Disclaimer: This is the author’s personal opinion. Readers are advised to consult their financial planner before making any investment.
SAN JOSE — A big chunk of a retail center in San Jose has been bought in a deal that suggests investors still hunger for South Bay real estate despite economic uncertainties that the coronavirus unleashed.
A portion of Edenvale Shopping Center on Monterey Road in south San Jose has been bought by a group linked to Burlingame-based business executive Marc Korody, according to documents filed on Nov. 21 with the Santa Clara County Recorder’s Office.
A 2.2-acre section of the shopping center was bought for $11.1 million, the county records show.
The just-bought property has addresses ranging from 5302 through 5320 Monterey Highway in San Jose, according to public real estate documents.
It’s possible that the property could be redeveloped as a housing or mixed-use project at some point, according to David Taxin, a partner with Meacham/Oppenheimer, a commercial real estate firm.
Taxin noted that this section of Monterey Road is dotted with a hodgepodge of zoning designations.
Among the merchants in the retail section that was purchased: Mercado California, a grocery store; Number One Cleaner dry cleaners; Trine’s Cafe, a restaurant; My Cellular Plus cell phone store; Lauderland laundromat; Birrieria El Primo restaurant; and Delizias Bakery.
Notable enterprises whose properties were not bought and not included in the transaction: Christ the King Catholic church, AutoZone auto parts store and Taco Mania restaurant.
“San Jose shopping centers are always in demand,” Taxin said. “There’s always a lack of them on the market no matter what the economy is like.”
SANTA CLARA — Texas Instruments is eyeing a deal to lease a big chunk of office space in Santa Clara, a deal that shows the South Bay commercial property market remains attractive amid widening economic uncertainties.
The stalwart of the semiconductor sector has struck a deal to lease a big portion of Great America Commons, an office campus in Santa Clara, according to several real estate industry sources with direct knowledge of the transaction.
Texas Instruments agreed to rent about 210,000 square feet in the two-building office campus in Santa Clara, the sources said.
Great America Commons is located at 4555 and 4655 Great America Parkway, near the corner of Patrick Henry Drive, according to a brochure to market the property that was circulated by Cushman & Wakefield, a commercial real estate firm.
The two-building office complex totals about 635,000 square feet, the marketing flyer states. Cushman & Wakefield brokers Brandon Bain, Nick Lazzarini and Erik Hallgrimson are attempting to find tenants for the property, the brochure shows.
Texas Instruments has leased four floors in Great America Commons, the real estate industry sources said.
The semiconductor maker at present occupies a large campus in Santa Clara, several miles away near the border with Sunnyvale. This campus is on Kifer Road near Semiconductor Drive. The company is expected to relocate from the existing Kifer Road site.
The new offices that Texas Instruments has agreed to lease are located next to California’s Great America amusement park and are a short distance from Levi’s Stadium. They also are relatively close to U.S. Highway 101 and State Route 237.
Opinions expressed by Entrepreneur contributors are their own.
Even if you are inexperienced in commercial real estate, it is one of the most reliable investments you can make to build a significant net worth over time. However, you can lose your shirt if you don’t know what you’re doing.
I have had a successful career as a CRE professional, but I’ve also learned from my mistakes over the years. I’ve outlined five essential tips that will help you avoid the same critical errors and take advantage of the wealth-building potential of commercial real estate ownership.
Related: How to Start Investing in Rental Properties — Your Step-by-Step Guide
4 ways commercial real estate can make you money
Many commercial real estate deals involve passive investors. As a passive investor, you don’t need a real estate license or law degree. The key is to have the highest level of confidence possible in the asset, the market, and the people you’re in business with. Always team up with a proven professional who knows the local market dynamics until you learn how to identify, structure and finance a deal on your own. You should also have a good real estate attorney to ensure your contracts are comprehensive and compliant, protecting you from any unpleasant surprises.
The average returns generated from smart, well-structured commercial real estate deals typically outpace every other investment class over time. There are four essential ways that commercial real estate generates monetary value and builds net worth:
- Cash flow: The cash flow of each property is calculated by the property’s rental revenue, minus operating and maintenance expenses (net operating income), capital expenditures and debt service payments.
- Debt paydown: Debt such as mortgages or private financing allows the buyer to invest less cash in the asset, which may enhance ROI. “Leveraged cash flow” reflects the property’s income as the debt service is being paid down. Once the debt is retired, the property generates unleveraged cash flow for a greater return over the ownership period.
- Asset appreciation: While cash flow can supply a stable return for investors, asset appreciation can also boost the value and income generated. Appreciation can be the result of market forces when local price valuations increase, or by an increase in the net operating income of the property, achieved by reducing expenses, expanding revenue opportunities on site, or both.
- Depreciation for tax purposes: The U.S. tax code provides depreciation tax credits while the actual market value of the asset may appreciate over time. This is why the wealthiest investors prefer commercial real estate as a tax shelter strategy.
Related: 5 Ways to Start a Lucrative Real Estate Side Hustle
What to do for a successful real estate investment
I transacted my first commercial real estate deal when I was 18 years old. But I had a partner and mentor without whom I would not have been successful. I’ve been hooked on CRE ever since. There is no other business than has the same power to impact net worth as profoundly or reliably over time.
In addition to working with partners you trust, here are five things I’ve identified that every new investor must do to be successful in commercial real estate investment and ownership:
- Buy where demand is already strong — preferably close to home. I recommend properties that are no more than 30 minutes from a vibrant and growing employment base. Properties that are within a reasonably close distance to your home location are much easier to keep tabs on. Don’t rely on a property manager in another city to care about your investment as much as you do.
- Make sure your team’s market knowledge is comprehensive and the due diligence is thorough. Due diligence on any particular property typically covers three categories: financial performance, existing leases and contracts, and the physical asset itself. Make sure your professional partner has impeccable knowledge about local trends for different commercial real estate asset types (Retail, Office, Industrial, Multifamily), how standards for each have changed with shifting demand, and how that demand is driving market behavior.
- Don’t be dazzled by shiny objects. Expensive, Class A property can be costly to maintain. Sometimes there is more opportunity in non-shiny assets, such as industrial properties that require far less upkeep. Depending on the economic cycle, there may be more ROI (and lower risk) in the less attractive warehouse, workshop, distribution or storage property than in buildings with high-end interior design, materials and amenities.
- Buy based on current performance and leasing rates, not projections. Don’t be swayed by optimistic pro forma numbers. Look only at income projections based on current market conditions, not the future. Nothing is guaranteed, but past and current market demand can provide a baseline to evaluate asset value and income potential.
- Keep leverage low and cash reserves high. I prefer no more than 50% leverage but as much as 75% can be acceptable in the right market for the right property. I also recommend having enough cash in reserve for 12 months of debt service if cash flow is interrupted or delayed due to prolonged vacancies, governmental interventions or other reasons. Keep a separate cash reserve for routine as well as unexpected maintenance and repairs. Be prepared to cover damages, equipment failures, or costs related to extreme weather and other “unscheduled” events.
Related: 5 Reasons Every Entrepreneur Should Invest in Real Estate
Location and local market dynamics will always be key factors in the success of any commercial real estate property and your investment in it. In the Triangle area of Raleigh, Durham and Chapel Hill, N.C., where our company is located, commercial real estate valuations have rebounded to surpass pre-pandemic levels and are expected to remain well insulated against any potential economic downturn.
Commercial real estate has two gears — fast forward and fast reverse. When done intelligently, there isn’t a more secure investment. A bad deal, however, can be financially devastating. Unless you’re an experienced CRE investor or developer, don’t do it alone. With the right partner, the right deal can change your life and create generational wealth for you and your family.
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By: Eddy Goldberg | 116 Reads | |
One good way to keep current with commercial real estate trends is Trepp’s Quarterly Data Review. The 28-page Fall Review (Q3) edition contains 9 articles, listed below with brief descriptions of each directly from the report. To read or download the full articles, click here.
- Choppy 3rd Quarter Leaves Uncertainty for Economy, Commercial Real Estate
Inflation, rising U.S. Treasury rates, and a U.K. budget proposal that called for unfunded tax cuts highlighted a chaotic third quarter. The fourth quarter may prove just as tumultuous.
- CMBS Delinquency Volume Continues to Decline, But Not Evenly
The volume of loans that are more than 30 days late with their payments dropped in September to $17.86 billion, nearly 38% less than a year ago and nearly 60% less than December 2020.
- CMBS Loans with Low Coverage Face Greater Risk of Loss as Rates Climb
At least 160 office and retail loans securitized through CMBS conduit deals mature through the end of 2023 and have DSCRs of less than 1.0x. They’ll likely suffer losses.
- KKR Tops Ranking of CMBS Conduit B-Piece Buyers, Risk Retainers Through September
KKR Real Estate Credit Opportunity bought the B-pieces of four CMBS conduit deals totaling $3.49 billion through September. It also took down the most junior classes of two conduit deals.
- CMBS Special Servicing Volume Increases for Second Month in a Row
The volume had inched up in September to $30.33 billion, from $29.91 billion the previous month, according to Trepp. But it remains down sharply from $52.95 billion at the end of 2020.
- CMBS Loan Resolutions Suffer 47.32% of Losses
A total of 10,947 CMBS loans with a balance of $125.86 billion have been resolved with losses since 2010. They’ve suffered $59.56 billion of losses, for a 47.32% loss severity.
- CMBS Issuance in 3Q Plunges 35% to $13.3 Billion
A total of $13.3 billion of deals priced during the third quarter, down from the $21.68 billion that priced a year earlier. So far this year, issuance was $63.28 billion, 6.7% lower than last year’s volume.
- Life Cos.’ Commercial Mortgage Returns Stay in Negative Territory
Commercial mortgages held by life insurance companies generated a negative 3.55% return during the second quarter, putting the Trepp LifeComps Total Return Index at a negative 8.26% return for the year.
- Apartment Property Cash Flow Increased Unevenly in 2021
Apartment properties backing CMBS loans saw a 1.76% overall increase in net cash flow between 2021 and 2020. But that increase was minimized by the cash-flow declines in a handful of states with large urban areas.
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SEAM Certification™, a first-of-its-kind measure of corporate real estate social sustainability, will provide guidance, resources, and certification for achieving positive social impact in the built environment
ATLANTA, Nov. 15, 2022 /PRNewswire/ — SEAM, Inc., a 501(c)(3) nonprofit organization led by commercial real estate industry leaders Rainey Shane and Alex Demestihas, has announced the world’s first social impact certification, accreditation, and membership program. SEAM Certification™ will provide a roadmap for developers, property owners, and occupiers to maximize opportunities for positive social impact through the built environment.
“SEAM addresses a critical gap in understanding and metrics surrounding the social impact of commercial real estate,” said SEAM, Inc. co-founder Rainey Shane, a 15-year veteran of the commercial real estate and nonprofit industries. “With SEAM Certification, organizations can differentiate themselves and their developments by meeting rigorous international standards for positive social impact in their communities and beyond.”
“Most importantly, SEAM offers a direct path to a more just and prosperous real estate industry over time” added Demestihas, co-founder of SEAM, Inc., also a 15-year veteran of the commercial real estate industry specializing in large corporate headquarters.
As a complement to green building certification programs like LEED, SEAM, Inc. sets the bar for social equity in commercial real estate through project certification, professional accreditation, and membership in a community of like-minded professionals.
The SEAM Standard™ focuses on a series of key objectives that support the UN Sustainable Development Goals. Following internationally recognized standards and reporting frameworks, SEAM, Inc.’s reporting framework can plug directly into an organization’s ESG, DEI and CSR strategies, providing a more accurate and compelling picture of the impact of their development across the entire supply chain.
“At Interface, we continue to take bold steps to drive sustainability standards in the built space, prompting those around us to rethink their own business practices with all aspects of sustainability at the forefront,” said Christine Needles, Executive Director of DEI at Interface. “As both a founding sponsor and pilot project partner, the SEAM Certification provides us the opportunity to further inform our own social impact framework, as well as that of our customers. This is a powerful tool for increasing understanding, and we look forward to the continued collaboration with SEAM.”
Founded in 2018, SEAM, Inc. has spent the last two years piloting SEAM Certification on projects in the U.S., Canada, and Australia. Seattle-based Urban Visions was the first organization to register a SEAM Certification pilot project with their development, The Jack.
“A certification that solely focuses on social equity within the built environment is long overdue, and we are excited to support SEAM efforts on our projects and their continued success,” said Todd Lee, Executive Vice President at Urban Visions. “Urban Visions is honored to be completing the very first SEAM Certified building in the United States. The Jack, a 175,000 SF, 8-level building in historic Pioneer Square District in Seattle, will open mid-2023 and will have a SEAM Operations and Maintenance Certification. As a SEAM pilot partner, we have enjoyed the collaboration and constant learning from Rainey Shane and her team.”
Ahead of a formal launch of all programs in early 2023, SEAM, Inc. is accepting early adopter pilot project enrollments for SEAM Certification and upcoming SEAM Accredited Professional education programs. Individuals and organizations can currently become members or Founding Sponsors as part of the group of initiators supporting the organization’s launch. Current Founding Sponsors include JLL, Interface, HITT Contracting, Jamestown, L.P., and Leapley Construction.
To learn more, visit www.seamcertification.org.
About SEAM Certification™ boilerplate
SEAM Inc. is a US 501(c)(3) nonprofit created to help businesses make a positive social impact on the world through their commercial real estate footprint. SEAM stands for social equity assessment method. This is a third-party standard for real estate projects that certifies an organization’s actions toward social sustainability as measured against internationally accepted criteria. Through SEAM, organizations can leverage commercial real estate to make authentic, measurable gains in social responsibility beyond health and wellness to encompass matters like justice and equity. To learn more about SEAM Certification™, apply to be a pilot project, become a Founding Sponsor, member, or add yourself to the waitlist for the SEAM AP program, go to www.seamcertification.org.
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Damage at the wharf in Stanley Bridge, PEI, on Sept. 25.Brian McInnis /The Canadian Press
As world leaders, diplomats and scientists continue to gather in Sharm El-Sheikh, Egypt, to debate climate change this week the people of Canada’s smallest province are already coping with the climate emergency’s damage.
Prince Edward Island is still shaking off the effects of Hurricane Fiona, which hit the island and its neighbouring Atlantic provinces with ferocious force on Sept. 23. Damage was extensive across Eastern Canada; on PEI, 95 per cent of the population was without power two days after the big storm.
The Insurance Bureau of Canada says that much damage to residential property was in high-risk areas and flood plains where insurance was not available. “As a result, the overwhelming majority [of the costs] for this disaster will be borne by government,” the bureau says. The provincial government announced some storm relief funds on Sept. 30 and proposed a record $1.1-billion, five-year capital budget on Nov. 2, focusing on infrastructure and climate change.
Insurable damage to PEI’s buildings and infrastructure has been estimated at $220-million. “The cost is still being compiled, but early indications point to close to half a billion dollars in damage,” says Vicki Tse, communications officer for PEI’s Emergency Measures Organization.
“There are holes in the roofs on hotels in Charlottetown. It’s hard enough to find someone who can fix the roof on your house, harder to get someone who can go up 10 storeys to do repairs.”
— Jacqueline Desroches, commercial sales and leasing, Colliers International in Charlottetown
Individual islanders were asked to pile up all their debris for pickup by provincial crews before Oct. 31. After that, pickup resumes in the spring, because crews need to get ready for winter, Ms. Tse says.
“Cleanup efforts can be expected to go well into 2023, and this will be supported by additional resources from other provinces,” she added.
One challenge is acquiring the concrete, steel and other building materials needed to rebuild as the resources go beyond what the province itself produces.
Getting these to the island is an obstacle, but the logistics are being managed, says Jacqueline Desroches, commercial sales and leasing representative at Colliers International in Charlottetown.
“Materials come by truck, via ferries and over the Confederation Bridge [which connects PEI and New Brunswick],” she says. “Both were out for a few days, but damage was relatively minimal and they’re up and running. There’s still a holdover of supply chain problems that started during the pandemic, but we’ve gotten used to those.”
Another of the biggest challenges to restoring PEI’s infrastructure after Fiona is finding people to do the work. “There are holes in the roofs on hotels in Charlottetown, for example. It’s hard enough to find someone who can fix the roof on your house, harder to get someone who can go up 10 storeys to do repairs,” Ms. Desroches says.
The biggest concern though, is that Fiona is a harbinger for a future filled with bigger, fiercer and more frequent storms. “This [storm damage] is a direct line to climate change,” said Dominic LeBlanc, federal minister of Intergovernmental Affairs and Infrastructure.
Climate change has loomed in the background as a long-term threat to Prince Edward Island for years, but Fiona has brought home the immediate severity of the threat.
On Nov. 2, PEI Premier Dennis King tabled the province’s capital budget, proposing to spend a record $1-billion focusing on infrastructure investment over the next five years, including $308-million in the coming year.
The five-year plan includes specific climate-related measures, such as $10-million to bolster eroding shorelines and boost defences against extreme weather, and funding to make the island’s school bus fleet fully electric by 2030.
Protecting PEI’s shoreline infrastructure is a long-term need. A provincial climate change risk assessment released in October, 2021, predicts that, “nearly all Islanders are likely to be directly or indirectly affected by coastal erosion in the future.”
It’s also an urgent need, as the province needs to get ready for next year’s tourists.
“The damage is unprecedented,” says Doug Dumais, community engagement assistant for Charlottetown. The $220-million toll compares with the record $500-million in revenues from tourism in 2019, before COVID-19.
As Canada’s smallest province – the Greater Toronto Area is 1.25 times as large in area – PEI arguably has more at stake than other locations in repairing and recovering its buildings and infrastructure as fast as it can. The island’s economy depends almost entirely on agriculture, fisheries and tourism, all of which got hit hard by the storm.
“Fall is usually a big month for golf on Prince Edward Island, and the courses were forced to close in October. If you’re a resort operator and you’re hosting a golf tourist package, you didn’t have anybody come,” Ms. Desroches said.
Getting ready for tourists is complicated by the needs of residents, she added. “The storm hit multi-unit apartment buildings hard, because the residential vacancy rate on Prince Edward Island is near zero and there were few places for displaced residents to go,” Ms. Desroches says.
As the island province continues to repair and rebuild, leaders meeting in Sharm El-Sheikh for the 27th Conference of the Parties (COP27) to the United Nations Framework Convention on Climate Change (UNFCCC) are seeing if they can ratchet up measures to prevent more widespread disasters.
The outcome of their talks is uncertain; the world is already on track to miss the earlier-agreed upon target of keeping global temperatures from rising beyond 1.5 degrees Celsius compared with preindustrial levels, and the consequences for islands like PEI that are barely above sea level will be severe.
“Some of the impacts of climate change could disrupt daily life and livelihoods on PEI,” the province’s climate report warned last year, predicting widespread damage and in some cases, some people having to relocate as the coastline surrenders to the sea. It has taken only a year for the prediction – and the cleanup – to materialize.