The Commercial Real Estate Fund will focus on core real estate in the major in Eastern Canada (Toronto, Ottawa, Montreal, Quebec City and Halifax)with a targeted fund size of between $500 million to $1 billion (CAD) of Equity, depending on capital availability.
RECan’s goal is to deploy capital in 2021 and 2022, while the target for 2021 is at least $100 million (CAD).
For diversification purposes, the portfolio, when completed, should contain a minimum of 10 properties in at least three distinct geographic markets, along with a mix of asset types including downtown and well-located suburban offices, industrial and mixed-use properties, and the possibility of a small exposure to grocery-anchored retail properties. The target minimum asset is set on a value of $10 million to $20 million (CAD), depending on asset type.
To increase the scale and enhance the return the Fund will finance the portfolio with non-recourse mortgages (recourse to property only) with an overall leverage target of 50% LTV (loan to value). The cash distribution will be provided annually to the investors. A cash reserve and/or a credit facility will be established to help fund required leasehold investments and/or capital projects.
The Fund will not contain any development risk, as the earliest investment will be at substantial completion and lease-up, with preference for a minimum of one to three years of operating history.