How can an apartment REIT add value to unit holders? One approach is to upgrade properties and reposition them in the market, that is, increasing rent cashflow and increasing the associated property value. Property values can be expressed as a multiple of the free cash flow (i.e., the capitalization rate ('cap rate') is the ratio of free cash flow to asset value).
Skyline Apartment REIT provides and example for a Hamilton property where extensive units upgrades have increased the rent by up to $500 per month or $6000 per year. The investment per unit is in the order of $25,000. Given a cap rate of 6 %, the increase in cash flow results in an increase in unit value of 16 times that (i.e., the inverse of the cap rate) or $96,000. Subtract the upgrade investment and that is an increased value of $71,000 for the unit holder.
Centurion Apartment REIT has also highlighted this approach for building unit holder value. Skyline indicates that they will reassess unit values at least yearly to reflect increases in property and overall unit value. Of course in a large portfolio these upgrades can take time as turnover occurs over many years.
PS - Mark Twain is quoted to have said "Buy land, they're not making it any more". He could have added "Then polish it up and reap the rewards".