Equity firm eyes big profits in Canadian commercial real estate downturn
Another private equity firm is betting big on the troubled commercial real estate market.
Crestpoint Real Estate Investments, a Canadian commercial real estate investment manager, has launched a fund to capitalize on various opportunistic real estate investments.
"Since Crestpoint's inception in 2010, some of our best investments have been in periods characterized by the market volatility and dislocation we see today," Crestpoint CEO Kevin Leon said in a media release. "We believe it's a compelling investment environment.”
The Crestpoint Opportunistic Real Estate Strategy fund aims to generate a gross annualized return of 15% to 18% over its eight-year term.
The fund is designed for institutional investors seeking higher returns than traditional core real estate investments. It will focus on generating returns primarily through capital appreciation, achieved by strategic acquisitions and active asset management.
“We expect to use multiple strategies to create and capture value, including repositioning undermanaged assets, recapitalizing properties with weak balance sheets and renovating existing buildings to higher standards," Leon said.
Read more: Investors bet big on commercial real estate comeback
The fund has already secured its first investment: a 0.4-acre development site in Vancouver's West End. In partnership with Anthem Properties Group Ltd., Crestpoint plans to construct a 32-storey rental building with 300 units.
Crestpoint aims to hold additional closings for the fund in the coming months.
"This new strategy leverages our management expertise and deep relationships within Canada's real estate investment community, strengths that have enabled us to successfully complete over $3 billion in value-add and opportunistic investments over the last 13 years," said Max Rosenfeld, executive vice president and head of asset management.
Crestpoint Real Estate Investments Ltd. manages over $10 billion in commercial real estate assets and is part of Connor, Clark & Lunn Financial Group, which oversees more than C$133 billion in assets across various investment products.
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