Our Approach

Our Approach

Overall Strategy

CMCC has consistently adapted its investment strategy for each of its Funds based on the economic environment which prevailed at that time.

Our strategy attempts to protect unitholders from major downside risk, without sacrificing upside potential. The key methods are as follows:

Relationships with large, well capitalized residential developers. This strategy ensures an experienced development and construction team, and strong banking relationships.

Modest leverage on multi-residential developments. Debt is normally restricted to 50-60% of purchase price at the time of acquisition. Leverage only increases once key risks are mitigated- namely, zoning approval and pre-sales success are in place.

Industrial Properties- we target multi-tenant industrial buildings for conversion. With low vacancy rates and increasing rents in both Toronto and Vancouver, we regard this sector as one with good downside protection. For example, industrial condominium conversion properties are normally purchased with income in place at 4.0%-5.0% cap rates.

A 30-month investment horizon allows CMCC ample time to select appropriate investment opportunities.

STRATEGY BY GEOGRAPHIC LOCATION

Fund V will continue to primarily focus on the Greater Toronto Area. Specifically, high-rise and mid-rise developments will target quality 416 locations with the greatest pricing power. Low rise developments and industrial projects will be sourced in strong sub-markets in key 905 markets.

The B.C. housing market has strengthened over the last 18 months, and the industrial market is very strong. As a result, Fund V will consider multi-residential and industrial opportunities in the Greater Vancouver Area. We correctly avoided the B.C. housing market in our last Fund after the introduction of the foreign buyer tax in B.C. in August 2016.

We have always avoided equity investments in Alberta due to the province’s economic reliance on the oil and gas industry. We made two successful mezzanine debt investments in 2014-2015 which were repaid.

STRATEGY BY ASSET CLASS

Fund V will invest in a diverse mix of real estate asset classes consisting of:

  • Defensive asset class (25% to 50% target allocation):
    • Industrial condominium conversion projects with income in place. 
    • Industrial development opportunities. 
    • Rezoning opportunities where the sale will occur at time of approval.
    • Repositioning opportunities.

STRATEGY BY ASSET CLASS

Fund V will invest in a diverse mix of real estate asset classes consisting of:

  • Defensive asset class (25% to 50% target allocation):
    • Industrial condominium conversion projects with income in place. 
    • Industrial development opportunities. 
    • Rezoning opportunities where the sale will occur at time of approval.
    • Repositioning opportunities.
  • Residential Developments (25% to 75% target allocation):
    • Low-rise developments within Greater Toronto Area and Greater Vancouver Area.
    • Mixed-use developments with seasoned developers.
    • High-rise & mid-rise developments in 416 regions of Toronto with strong pricing power.
  • Residential Developments (25% to 75% target allocation):
    • Low-rise developments within Greater Toronto Area and Greater Vancouver Area.
    • Mixed-use developments with seasoned developers.
    • High-rise & mid-rise developments in 416 regions of Toronto with strong pricing power.
  • Opportunistic (0% to 20% target allocation):
    • Distressed debt
    • Preferred equity

As market conditions evolve, we will adapt our strategy for Fund V to maximize returns without taking unnecessary risk.

  • Opportunistic (0% to 20% target allocation):
    • Distressed debt
    • Preferred equity

As market conditions evolve, we will adapt our strategy for Fund V to maximize returns without taking unnecessary risk.