The RECan Canadian Commercial Real Estate Fund will focus on core-quality commercial real estate (industrial/logistics, office, retail) in the major markets in Eastern Canada (Toronto, Southwestern Ontario, Ottawa, Montreal, Quebec City and Halifax) with a targeted fund size of between $500 million to $700 million (CAD) of Equity.
RECan’s goal is to deploy capital in 2023 and 2024, with a target for 2023 of at least $200 million (CAD) of equity deployed.
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 (25%-50%), industrial and mixed-use properties (40%-50%), and a small exposure to grocery-anchored retail properties (10%-25%). The targeted minimum asset value is $20 million (CAD).
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.