Breaking Barriers in Real Estate - Nicola Wealth

Breaking Barriers in Real Estate


By Nicola Wealth Real Estate

It was a very good year for Nicola Wealth’s real estate limited partnerships. The Nicola Canadian Real Estate LP, Nicola U.S. Real Estate LP and Nicola Value Add Real Estate LP posted returns of 18.4%, 11.5% and 12.9%, respectively, in 2021.

However, what really made this past year stand out was the expansion of our portfolio. Our three funds together completed 76 transactions collectively worth $1.9 billion CAD—more than double the dollar value of our previous record year, which was in 2019.

This volume of activity helped us make huge strides to diversify our portfolio geographically, obtain scale within our target markets and pursue specific strategies within each of the funds.

“Overall, Nicola Wealth Real Estate has three different strategies,” says Alex Messina, Director of Acquisitions, Real Estate. “Income-producing real estate (whether residential or commercial) that is held long-term, development properties that we build to hold long-term, and merchant developments, where we build and exit.”

 

Targeting Unique Opportunities with Boots on the Ground

Our Nicola Canadian Real Estate LP is currently targeting industrial product (increasingly in demand with the growth of e-commerce), creative office (workspace sought by tenants, especially in the growing knowledge industries), self-storage and development sites.

The development strategy in this fund is for residential rental apartments and industrial buildings that will be retained long-term. Over the years, we’ve been gradually increasing our presence in eastern Canada, such that a third of the fund is now allocated to the Greater Toronto Area.

“What enabled us to be as productive as we were last year was the strength of our real estate team, which proved itself able to process and underwrite the extraordinary number of opportunities that came our way,” Messina says. “We have local boots on the ground in Toronto and Seattle which allow us to be nimble at responding to off-market opportunities. We also have an in-house mortgage financing team that sources and closes debt on those acquisitions.”

 

Largest Single Transaction in Nicola Wealth History

Nicola Wealth Real Estate made our largest single transaction ever in our history. The Nicola U.S. Real Estate LP picked up a US$225-million portfolio of industrial properties in the Minneapolis area. Together with the acquisition of Nicola Wealth’s first industrial properties in Denver and Dallas, we’re well on our way to executing our strategy of growing our industrial portfolio in our target US markets: Seattle, Las Vegas, Phoenix, Dallas, Denver and Minneapolis. The Nicola U.S. Real Estate LP’s allocation to industrial land is now over 20%.

The Nicola Value Add Real Estate LP, meanwhile, made its first acquisition into a new market; the Montreal market, through an industrial re-positioning project.

Together these milestones make us better able to offer investors—from those new to real estate to long-time landlords looking for a more liquid and low-maintenance way to play the sector—a diversified investment that will provide reliable cash flow and a potential growth opportunity.

In subsequent posts, we’ll look at the factors and strategies that contributed to our limited partnerships’ strong returns, and how we are planning for 2022 and beyond.

 

Past performance is not indicative of future results. All investments contain risk and may gain or lose value. Returns are net of fund expenses charged to date. This is not a sales solicitation. This investment is intended for tax residents of Canada who are accredited investors. Residency restrictions apply. Please read the relevant documentation for additional details and important disclosure information, including terms of redemption and limited liquidity. Please speak to your Nicola Wealth advisor for advice based on your unique circumstances. Nicola Wealth is registered as a Portfolio Manager, Exempt Market Dealer and Investment Fund Manager with the required provincial securities commissions.