Strategic financing and green bond issuance fuel major expansion for Canadian real estate fund
The RBC Canadian Core Real Estate Fund has closed one of Canada’s biggest property deals this year, acquiring partial ownership in 40 assets valued at approximately $860 million.
The acquisition, completed in partnership with British Columbia Investment Management Corporation (BCI) and its subsidiary, QuadReal Property Group, bolsters the fund’s portfolio amid a challenging economic landscape.
The transaction, one of the fund’s biggest moves since its launch in 2019, involved the purchase of a partial stake in 40 properties and the sale of its interest in five other assets, generating $175 million. This has brought the fund’s total assets to over $5 billion in gross value, while its net asset value has climbed beyond $4 billion.
To finance the acquisition, the fund issued its second unsecured debenture, a $250 million green bond rated A (low) by DBRS. Additionally, over $500 million was raised in new subscriptions.
Jennifer Schillaci, head of real estate equity and mortgage investments at RBC GAM, highlighted how the fund’s solid capital position enabled it to leverage current market conditions to its advantage.
"The rise in interest rates and economic uncertainty over the last two years has presented challenges to the Canadian real estate market but has also created numerous opportunities for investors who are well capitalized," Schillaci said in a Press release.
The $250 million raised from the green bond is earmarked for acquiring additional environmentally sustainable assets for the fund. The proceeds from this green bond will help fund further acquisitions of eligible green projects, contributing to the fund's sustainability-focused portfolio.
Although the fund doesn’t follow a specific ESG-centred investment strategy, RBC said it considers ESG factors in its investment decisions.
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"Against the challenging backdrop created by high interest rates, the fund was able to exceed its subscription targets, complete its second green bond offering, and close one of the largest real estate transactions in the country in 2024,” Schillaci added.
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