RBC real estate fund, with BCI partnership at core, exceeds targets in first equity tranche

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Vancouver rooftop view with urban architectures at sunset. © Songquan Deng /123RF Stock PhotosA new Canadian core real estate fund has attracted more than $1.25 billion in equity commitments in its first subscription tranche, materially exceeding targets.

RBC Global Asset Management’s Canadian core real estate fund was announced in March 2019, along with the British Columbia Investment Management Corp. and QuadReal Property Group.

The fund brings together more than 40 of the BCI’s existing Canadian real estate assets in one portfolio.

“All of these assets that comprise the portfolio are today 100 per cent owned by the BCI and managed by QuadReal on behalf of the BCI,” said Michael Kitt, head of real estate equity investments at RBC Global Asset Management, in an interview with Benefits Canada in March. “So the portfolio will be constructed over a three-year period and, at the end of the three years, RBC GAM, the new fund, will be a 50 per cent owner in every one of those assets in partnership with the BCI.”

While this was the fund’s first equity tranche, the vend-in of the fund’s interest in the initial portfolio will take place over three additional tranches, with the next scheduled to close in the second half of 2020.

“Once these tranches are complete, the fund will have an equal ownership position with BCI in a core real estate portfolio valued at over $7.5 billion,” the press release said.

The fund is open-ended and the management team also intends to seek out other core Canadian investment opportunities, it added.

“The successful launch of the fund establishes a strong foundation with RBC GAM for an innovative collaboration to deliver on the benefits of active asset management,” said Dennis Lopez, chief executive officer of QuadReal, in a press release. “Working with RBC GAM aligns with our strategy to establish key partnerships and invest in exceptional Canadian assets, while diversifying the global real estate program that we manage on behalf of BCI and its clients.”

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