RBC’s Canadian Core Real Estate Fund has completed its fifth portfolio transaction with QuadReal Property Group, a two-part deal involving the acquisition of an interest in 40 assets for $860 million and the divestment of interests in five assets for $175 million.
Completion of the transaction means the fund’s gross asset value increases to over $5 billion, according to the Thursday morning announcement by RBC.
“The rise in interest rates and economic uncertainty over the last two years has presented challenges to the Canadian real estate market, but has also created numerous opportunities for investors who are well capitalized,” Jennifer Schillaci, managing director and head, real estate equity and mortgage investments, RBC Global Asset Management (RBC GAM), said in the announcement.
RBC GAM is the manager for the Canadian Core Real Estate Fund.
“Against the challenging backdrop created by high interest rates, the fund was able to exceed its subscription targets, complete its second green bond offering, and close one of the largest real estate transactions in the country in 2024,” Schillaci said. “Our ability to execute under these market conditions demonstrates the strength of our aligned partnership structure, the resiliency of our assets and the confidence our clients have in our ability to deliver results.
“We are also positioned very well for future growth as we head into 2025.”
The RBC, QuadReal partnership
RBC’s Canadian Core fund and QuadReal – the real estate subsidiary of the British Columbia Investment Management Corp. – have been co-investors in a large portfolio of Canadian properties since 2019.
RBC did not identify any of the assets involved in the transactions.
“This is a highly complementary venture that continues to deliver value to clients,” Remco Daal, Quadreal’s president, Canadian real estate, said in the announcement. “The continued growth of our diversified real estate portfolio is underpinned by our high-conviction investment strategy and partnership with RBC Global Asset Management, which shares our commitment to positively impacting the communities we serve.”
The investment was capitalized by the issuance of the RBC Canadian Core fund’s second unsecured debenture, a $250-million green bond offering, and through raising over $500 million in subscription proceeds. This has increased the fund’s net asset value to over $4 billion.
Since its inception five years ago, the fund has steadily grown to become one of the largest core real estate funds in Canada. The fund, which was created based on the partnership with BCI and QuadReal, provides Canadian individual and institutional investors with access to a diversified portfolio of real estate assets in major cities across Canada.
RBC’s green bond issuance
In relation to the green bond issuance, RBC noted in the announcement that: “Since its inception, although the Fund does not have a specific ESG-related investment objective or strategy, it nevertheless considers ESG factors when investing. The proceeds from the Fund’s second green bond offering will be used to acquire additional eligible green projects for the portfolio.”
RBC also notes the fund was rated third in Canada by GRESB in the Non-Listed Core Diversified Category,1 and earned its fourth consecutive five-star rating in the 2024 GRESB assessment. GRESB is an internationally recognized organization which provides analysis and rankings of corporate performance in the ESG sector.
“Launched as the foundational building block of our private markets investment capabilities, we have experienced tremendous growth within RBC Canadian Core Real Estate Fund over the past five years,” Michael Kitt, managing director and head, private markets, RBC GAM, said in the announcement. “Owing to the Fund’s diverse and high-quality portfolio of assets and our unique partnership with BCI and QuadReal, we are executing on our disciplined strategy to provide Canadian institutional and individual investors with one of the most uniquely aligned real estate funds that supports their other portfolio investments.”
Headquartered in Vancouver, QuadReal manages a portfolio of over $85 billion in assets under management across Canada, the U.S., the U.K., Europe and Asia Pacific. In addition to being diversified across sectors and geographies, these assets include investments in programmatic partnerships and operating platforms in which QuadReal holds an ownership interest.
The firm integrates in-house development, operations and property management with capital allocation across public or private debt and equity markets.
QuadReal employs a team of over 1,900 people.