Investors can gain exposure to one of the largest alternative asset classes without the volatility of direct property ownership or requiring a large sum of money for a downpayment.
Suitability
Single-family and multi-family real estate debt investments offer diversification from public markets with lower volatility, while preserving capital and providing a stable and strong distribution. These investments are suitable for individuals with medium to long-term investment horizons seeking stable income returns and/or incremental growth of capital through income reinvestment.
Why invest in
Institutional Grade Real Estate Private Debt?
Opportunity
The single-family residential market is dominated by major banks and CMHC-insured lending.
The former is restricted by OSFI guidelines notably with respect to income qualification and resulting debt service ratios.
CMHC-insured lending is restricted by similar income/debt service ratios as well as loan amounts <$1m.
The result is a segment of the market that is outside these parameters, but still have demonstrated ability to service the loan.
This opens up opportunities for alternative lenders and creates a yield opportunity outside the confines of OSFI-regulated and CMHC-insured lending.
Groups that can effectively underwrite the value of underlying collateral property and go beyond rigid and prescriptive debt service coverage analysis can access attractive risk-reward opportunities in real estate lending.
Defensive Nature
In an elevated interest rate environment, questions remain as to how commercial and multi-residential real estate valuations will respond to higher interest rates.
Capitalization rates, or the income yields on direct real estate ownership, are in many cases below 6%; conventional mortgages can provide that same current yield with additional downside protection, being higher priority than equity in the capital stack.
Supply and Demand
Population growth and immigration are increasing the supply/demand imbalance in the Canadian housing market which creates upward pressure on the value of real estate and reduces the risk of debt investments in the residential space.
This creates an opportunity for investors to generate strong, risk-adjusted returns with indirect access to participate in the real estate market – the largest alternative asset class in Canada.
Supply and Demand
Lending experts with institutional presence and experience since 1974. Leveraging the infrastructure and expertise in place to serve its institutional investor clients – which include four of the “Big 6” banks, government entities, and global investment managers – for their Canadian commercial and single family residential real estate debt needs.
Liquidity
Monthly redemptions with a minimum of 15 days’ notice before the last business day of the month for amounts under $1 million (60 days’ notice for amounts over $1 million). Redemptions are subject to a 1% retraction penalty if redeemed before the first anniversary.
Potential Returns
6-8% Target net return with a 14 year track record; 300 bps over the 2 year government bond.
Taxation
Income and growth generated may be sheltered in registered accounts. For non-registered accounts, income is generally in the form of Interest Income.
