The Globe and Mail - 19.10.2019

CapitalDirectIIncomeTrust

CAPITAL DIRECT I INCOME TRUST:

• Investing In Canadian Residential Mortgages


• Portfolio Weighted Average Loan to Value of 53.6% as of
  December 31, 2018


• Geographically Diversified Primarily Within 90 km of Major Urban
  Areas of British Columbia, Alberta & Ontario


• D.R.I.P. Available - Distribution Reinvestment Plan


• Historic Complete Portfolio Available Online

TFSA

RESP,RRSP

&RRIF

Eligible

*Annual return is based on 2018 income produced by Class A Units of the Trust.

**Ten - Year Historical Return as of December 31, 2018, is based on the income produced by the Class A Units of the Trust after any voluntary

reduction in Management fees or Income Participation.

Past performance is not an indication of future returns. All subscriptions for the purchase of units are made pursuant to available exemptions.

Investors should read the offering memorandum, especially the risk factors relating to the securities offered, before making an investment decision.

Capital Direct I Income Trust 305-555 W. 8th Avenue, Vancouver, BC, V5Z 1C6.

Capital Direct cd logo and trademark used under permission from Capital Direct Lending Corp.

AREYOUHAPPY

WITHYOUR

7.70%

10 Year Historical Annual Return

RETURNS?

770%

**

7.29%

1 Year Return

*

Call1-800-625-7747

for a free copy of our offering memorandum

or speak to your financial advisor

For more information, please visit our website at

http://www.incometrustone.com

SATURDAY,OCTOBER19,2019 | THEGLOBEANDMAILO REPORTONBUSINESS| B5

Unemployment has swollen from
4.2 per cent a year ago to nearly 5
per cent today; jobs have de-
clined in every month since May.
Consumer spending, a key driver
during the economic boom, has
gone into a skid. The province’s
biggest export markets are slow-
ing. Its forest-products sector –
historically B.C.’s economic staple

• is struggling mightily, with
  slumping export demand, high
  costs and a growing list of mill
  closings.
  At the root of this malaise is
  the shifting fate of what has be-
  come B.C.’s dominant industry:
  real estate. An unprecedented
  boom in the housing market not
  only was the catalyst for B.C.’s ec-
  onomic surge in recent years, but
  it created an economy increasing-
  ly dependent on a single sector
  for its well-being. Now, as the air
  leaks out of the housing balloon –
  the benchmark price in Greater
  Vancouver is down more than 7
  per cent in the past 12 months,
  with some Lower Mainland mu-
  nicipalities down more than 10
  per cent – the whole economy is
  caught in the impact.
  Last year, the real estate servic-
  es sector directly accounted for 17
  per cent of B.C.’s gross domestic
  product; if you add in residential
  construction, it was 21 per cent.
  What’s more, the sector directly
  accounted for 27 per cent of GDP
  growth over the past four years
  (2015-18).
  That’s not quite Alberta terri-
  tory – where the oil and gas sector
  (including extraction, oil and gas
  services and petroleum manufac-
  turing) made up 29 per cent of
  GDP last year – but it certainly in-
  dicates how big a deal the sector is
  for B.C.
  For the province’s voters, the
  primary concern is the hangover
  left from years of a red-hot mar-
  ket and runaway prices: They are
  trying to keep their heads above
  water in some of the most expen-
  sive communities in the country
  to buy a house. Even with this
  year’s downturn, the Real Estate
  Board of Greater Vancouver’s
  benchmark price for a typical
  home in the Lower Mainland re-
  gion – where about 60 per cent of
  B.C.’s population lives – was
  $938,500 last month, up 60 per
  cent from five years ago. The aver-
  age for a detached single-family
  house was a soul-crushing $1.2-
  million. The people in this region,
  encompassing Vancouver and a
  cluster of some of the closest
  races in the election campaign,
  have the highest average house-

hold-debt-to-income ratio in the

country.

An online poll by Vancouver-

based Research Co. found that

housing was the top election is-

sue among B.C. respondents, top-

ping the environment. An Ipsos

poll published last week indicat-

ed that housing is a much higher

priority for voters in B.C. than

anywhere else in the country,

while the issue of affordability in

general ranks a very close second

to climate change among B.C.

concerns.

In a campaign in which many

important economic issues have

received short shrift – the parties

have shown little interest in talk-

ing about trade policy, for in-

stance, or industrial competitive-

ness – affordability was one thing

that all parties locked into early

and often. They clearly recog-

nized it as a hot-button issue in

the election’s key battlegrounds,

not only in B.C., but in Southern

Ontario, too. The competing Con-

servative and Liberal proposals

for billions in income tax cuts can

be viewed through the lens of af-

fordability in general – providing

relief for middle-class voters who

are feeling the financial strains of

high costs and heavy debts,

which in much of B.C. are tilted

heavily toward mortgages. And it

was no accident that the Liberal

Party’s first major platform reveal

of the campaign was its plan on

housing affordability – and that it

chose a townhouse development

in B.C.’s capital of Victoria to

make the announcement.

But while affordability is un-

questionably a major concern for

B.C. voters, it’s inescapable that

the housing frenzy that created

those unaffordable prices was al-

so the primary reason for the

province’s economic success in

recent years.

One of the great dilemmas for

B.C. is that any measures that aid

affordability by reining in the

housing market also, by exten-

sion, apply the brakes to the prov-

ince’s economy. (Indeed, that is

what B.C. has already seen from

the effects of provincial foreign-

buyer taxes and tougher federal

mortgage-qualification require-

ments, which combined to re-

strain the province’s housing

market over the past two years.)

Andrey Pavlov, a finance pro-

fessor at Simon Fraser University

in the Vancouver suburb of Bur-

naby, says that most of the pro-

posals in the federal parties’ elec-

tion platforms focus on the de-

mand side of the housing equa-

tion – such as taxes on foreign

buyers and incentives for first-

time homeowners – where these

unappealing trade-offs reside.

“We shouldn’t be reducing de-

mand, we should be increasing

supply,” he says.

Prof. Pavlov is among the pro-

ponents of creating incentives to

dramatically expand housing

supplies as a means to alleviate

price pressures while also sus-

taining strong activity in the con-

struction and real estate sectors.

Understandably, many of

those proponents are in the real

estate development industry;

nevertheless, the concept does

make a certain amount of sense

as a longer-term economic solu-

tion to B.C.’s real estate dilemma.

“There’s no reason for it to be a

trade-off at all. We can have both

• we can have the housing sector
  be a great supporter of the econo-
  my and a great employer, and at
  the same time have affordable
  housing. The way we do it is in-
  crease supply.”
  But beyond a vague pledge
  from the Conservatives to free up
  surplus federal properties for
  possible residential redevelop-
  ment, he sees little in the party
  platforms that even pays lip ser-

vice to the supply side.

“In my view, that’s very mis-

guided.”

In the bigger picture, perhaps

this slowdown could represent an

opportunity for the B.C. economy

to start rotating away from its

problematic over-dependence on

housing and focus on reinvigorat-

ing other sectors. For example,

economists say that construction

of LNG facilities – the beginnings

of an entirely new export indus-

try for the province – will help

make up for a moderating in

housing market activity in the

next couple of years. Strong pop-

ulation growth, owing to some of

Canada’s highest levels of immi-

gration, offer the province oppor-

tunities to leverage that influx of

skills in such areas as exports,

technology and value-added

manufacturing.

But in this, the election cam-

paign has fallen conspicuously

short. There has been shockingly

little discussion on the country’s

competitiveness, and innovation

needs to position our industries

for future growth – something

particularly important to an ex-

port-heavy economy such as

B.C.’s.

A poll by the Business Council

of British Columbia, released last

week, showed that the biggest is-

sue for the province’s large pri-

vate-sector employers was the

need for a major overhaul of Can-

ada’s taxation system. The notion

of a more competitive tax struc-

ture was high on the political

agenda as recently as last year,

when U.S. President Donald

Trump brought in his sweeping

tax cuts. Yet, it wasn’t even on the

radar screen in the campaign.

The second-most pressing con-

cern in the survey – improving

Canada’s innovation and produc-

tivity – has similarly had little vis-

ibility in the campaign. The third

priority of B.C.’s business leaders

was increased infrastructure in-

vestment – something one of the

two leading parties vying to form

the nextgovernment, the Conser-

vatives, has actually vowed to cut.

“I think there’s a real discon-

nect between what the people

running for office feel the voters

want to talk about and hear

about, and the thinking of leaders

in the corporate boardroom. I

think they’re really on different

pages at the moment,” says Jock

Finlayson, the Business Council’s

executive vice-president and

chief policy officer. “They’re talk-

ing about almost everything oth-

er than how we grow the eco-

nomic pie. It’s a little bit puz-

zling.”

B.C.:Housingistopelectionissueforresidents,accordingtoonlinepoll

FROMB1

AsoldsignisseenoutsideahouseinVancouver.Therealestateservicessector,includingresidential

construction,accountsfor21percentofB.C.’sGDPgrowthlastyear.DARRYLDYCK/THEGLOBEANDMAIL

Inacampaigninwhich

manyimportant

economicissueshave

receivedshortshrift...

affordabilitywasone

thingthatallparties

locked into early and

often.

The gift:$67,000

The cause:The Chief Harry St. Denis Awards

The reason:To fund scholarships for Indigenous students

A

fter co-winning the prestigious Booker Prize on
Monday in London, Margaret Atwood and British
author Bernardine Evaristo were immediately
asked how they planned to spend the prize money.
Ms. Evaristo, who won for her bookGirl, Woman, Other,
told a news conference after the awards ceremony that she
would use her £25,000 share ($42,500) to pay down her
mortgage. Ms. Atwood, who won forThe Testaments,was
asked if she had something more exciting in mind for her
£25,000.
“I’m kind of really annoyingly virtuous,” she said. “I’m
going to put it into one [of] my virtuous things that I do
because I’m now so old that there’s no point in spending it
on clothing and stuff like that.”
Ms. Atwood, 79, said she will
donate the money to a scholar-
ship fund she helped set up in
May for Indigenous students
studying environmental science.
The fund is named after Ms.
Atwood’s friend Harry St. Denis,
a long-time chief of the Wolf
Lake First Nation who died last
year. Mr. St. Denis was a passion-
ate advocate for Indigenous title
rights and environmental pro-
tection. The fund will cover two
Harry St. Denis Awards – one for
a student at a technical college
and one for a university under-
graduate.
Its aim is to “nurture the tal-
ents of young Indigenous leaders
to serve in the protection of lands, waterways and species at
risk on their territories.”
Ms. Atwood was already matching all donations to the
fund up to $25,000, bringing her total contribution to more
than $67,000.
The acclaimed author, who won the Booker Prize once
before in 2000, also made a pitch to the assembled media.
“You can bung some money into it,” she said with a
smile.

[email protected]

Fundingscholarships

forIndigenousstudents

ThedonorMargaretAtwood

PAULWALDIE

GIVINGBACK

I’mkindofreally

annoyinglyvirtuous.

I’mgoingtoputit

intoone[of]my

virtuousthingsthatI

dobecauseI’mnow

sooldthatthere’s
nopointinspending

itonclothingand

stufflikethat.

MARGARETATWOOD
BOOKERPRIZEWINNER