Fiera Real Estate senior vice-president and fund manager David Pappin. (Courtesy Fiera Real Estate)
Fiera Real Estate has completed the divestiture of its closed-ended GPM Real Property (11) Limited Partnership fund for $249 million after a series of asset sales which began in 2019.
“We’re very pleased with the results and that we were able to move that portfolio out at the valuations we did,” Fiera Real Estate senior vice-president and fund manager David Pappin told RENX. “I think our investors are extremely happy. That’s the key.”
The fund was the 11th in a series of 12 closed-ended investment funds focused on small to mid-sized industrial assets across Canada which have raised $857 million. The previous 10 have also all been sold.
Twelve institutional investors provided an initial equity base of $148.5 million for the fund in 2008. A three-year acquisition period followed and netted 36 assets. The fund’s value grew by about 73 per cent during the ensuing nine-year investment holding period.
The fund’s total net return to investors of 10.9 per cent exceeded the initial investment target return of seven to nine per cent.
Pappin said the fund’s portfolio was primarily comprised of industrial assets in Quebec, Ontario, Alberta and British Columbia.
There were some single-tenant properties, while most were multi-tenanted. They varied in size from 12,000 to more than 150,000 square feet.
Opportune time to sell
Fiera Real Estate executives decided midway through last year the time was right to start considering its divestment strategies for the fund.
“We were seeing continued rental growth and we were seeing continued cap rate compression,” said Pappin.
“We just decided that we wanted to move forward on a real strategic approach and get out in front of it and capitalize on the valuations that we were enjoying in the marketplace and the liquidity we were enjoying in the marketplace.”
The properties in the portfolio could have been sold as a large single block, in smaller clusters or individually.
Pappin said a considerable amount of market reconnaissance was done before a decision was made on what approach to take.
When all was said and done, some properties were sold individually, some were divested in small portfolios, and the largest block was nine Alberta assets.
Institutional investors, private capital investment syndicates and end-users were among the purchasers.
Pappin said interest in the Ontario and Quebec portfolios was very strong. While interest wasn’t as deep in Alberta, he confirmed there were multiple bidders for each asset.
No major COVID-19 impact
The divestiture was completed in April. All of the deals were either closed or under contract before the COVID-19-related economic shutdown, so it had no impact on the process.
Fiera Real Estate employees are working from home due to COVID-19 and Pappin said the business continues to operate well. He noted some tenants are having greater challenges than others when it comes to rent payments.
“Some tenants are open, some tenants are closed, some tenants are considered essential businesses and some are not,” said Pappin, who added the pandemic hasn’t affected Fiera Real Estate’s overall business strategy.
“We’re all hopeful that this is a moment in time. The focus at the moment is to get through this pandemic and service our investors and service our tenants as best as we possibly can.”
Fiera Real Estate Small Cap Industrial Fund
Fiera Real Estate continues to offer investment exposure to the Canadian industrial and logistics sector through the open-ended Fiera Real Estate Small Cap Industrial Fund.
The fund’s portfolio — 61 single-tenant and multi-tenant assets encompassing approximately three million square feet in Atlantic Canada, Quebec, Ontario and Alberta — provided a total return of more than 16 per cent for the 12 months ended March 31.
While Pappin said the goal is to grow the fund over time, he acknowledged certain assets may be sold.
“You can prune portfolios as you grow them and maintain allocations, and take advantage of opportunities in the market when they present themselves.”
Fiera Capital Corporation and Fiera Real Estate
Fiera Real Estate is wholly owned by Fiera Capital Corporation (FSZ-T), a multi-product investment-management firm with more than $169.7 billion of assets under management.
Fiera Real Estate is a global real estate investment management platform serving investors in Canada and the United Kingdom.
It has offices in Toronto, Montreal and Halifax and was managing more than $6 billion of office, industrial, retail and multi-family assets through its investment funds and accounts at the end of 2019.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
