We know that the business model of REITs requires an escalation of rents.
Please realize that I'm a human rights lawyer. This is what I've learned over time, so bear that in mind.
As I understand it, the way it works is that real estate investment trusts rely on investors. They're often institutional investors like pension funds, insurance companies and that kind of thing. If you're an investor, you want to know that you're going to get a good return on your investment. REITs generally will provide somewhere around....
Let's say 8% is expected. The way the REIT guarantees a good return on your investment is they show how they're going to generate income. The way they generate income is through rent. They need to show a progression. That means a certain amount of tenant turnover, because it's generally necessary, based on provincial and territorial law, to get tenants out in order to raise rents. The only other way is above-guideline rent increases, which they do as well. They'll do these modest renovations, which are often not the kind of thorough renovations that I think Michel and the CMHC would like to see. They're more what we call “Ikea renovations”. They're modest and not always necessary. Then they use that to apply for above-guideline rent increases.
You have to understand that it's really part of the business model. It's not that they're just being mean; it's their business. The business is to create profits for their investors, and pension funds need a good return on their investment, so that's how it's structured.