Newly Capitalized Funds and REITs See U.S. Residential Land, Apartments and Retail Ripe for Investment
While the U.S. presidential election has Americans weighing whether to re-elect its president or change course, their Canadian investment neighbors have already decided where they see the U.S. commercial real estate recovery headed: Up.
At least five new Toronto-based REITs and funds have started or completed initial public offerings in Canada in the last six weeks, raising nearly $350 million to invest in U.S. commercial real estate.
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The Canada-based funds include: Slate U.S. Opportunity (# 2) Realty Trust is raising $50 million; Timbercreek U.S. Multi-Residential Opportunity Fund #1 raised $38.5 million; U.S. Housing Recovery Fund is raising $100 million; and U.S. Agency Mortgage-Backed REIT Advantaged Fund raised $32.7 million.
Those four offerings follow on the initial success of Toronto-based Tricon Capital, which raised $125 million in September for its new U.S. distressed residential real estate fund, Tricon XI LP.
Slate Properties Inc.'s Slate U.S. Opportunity (# 2) Realty Trust expects to close its offering Nov. 19.
The investment objectives of the REIT are to acquire, own and lease a portfolio of diversified properties with a focus on anchored retail properties. It will be targeting secondary markets such as "Pittsburgh, Columbus, Charlotte, etc." with sustainable population and employment in well-developed submarkets with limited risk of new development.
Since 2005, Slate Properties has acquired 43 commercial real estate assets across North America with a total value of about $1 billion.
Timbercreek U.S. Multi-Residential Opportunity Fund #1 is teaming up with Elco Landmark, a Jupiter, FL-based private equity multifamily residential real estate company, to deploy its newly raised capital.
Timbercreek and its affiliates currently manage $3 billion in real estate related assets. Elco Landmark currently operates about 18,000 units across the Southeastern United States.
Timbercreek is initially targeting apartment properties with a minimum of 200 units, that are less than 35 years old and located in metropolitan statistical areas with a population base more than 500,000 people.
"We are extremely pleased to provide Canadian investors with an opportunity to capitalize on what we believe are mispriced and under-managed multi-residential properties in the southeastern United States," said Blair Tamblyn, CEO of Timbercreek U.S. "The timing for deploying capital in this market and strategy could not be better, and we are pleased to be working with who we feel is the best partner to execute on this strategy."
U.S. Housing Recovery Fund plans to target opportunities in the anticipated recovery in the U.S. housing sector. The net proceeds of its offering will be invested in a portfolio of equity securities of 30 companies operating in the U.S. housing sector, including homebuilders, building products, home improvement and houseware and appliances.
Connor, Clark & Lunn Capital Markets Inc. is the fund's portfolio manager and will be responsible for implementing its investment strategies.
Separately, Connor, Clark & Lunn also closed its initial public offering of U.S. Agency Mortgage-Backed REIT Advantaged Fund. The Fund's investment objectives are provide low-cost exposure to a portfolio comprised of the 10 largest (by market capitalization) publically traded U.S. Agency Mortgage REITS.
Since raising money in September, Tricon Capital Group has acquired more than 2,500 acres around Dallas and Houston, spending more than $138 million. Tricon XI LP seeks to "capitalize on 'once in a generation' investment opportunities in distressed U.S. residential real estate that have arisen out of the 2007-10 credit crisis and related economic recession," according its filing.
The fund will provide financing to real estate developers for the acquisition, repositioning and potential development of distressed properties.
"This fund marks the continuation of an investment strategy which began with Tricon IX in 2008 and we continue to see a strong pipeline of investment opportunities in all of our target markets," said David Berman, Tricon's chairman and CEO. "I believe that our timing could not be better to both acquire distressed assets and participate in the eventual recovery of the U.S. economy and housing market."
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