Timbercreek Alternatives, a new Timbercreek Capital subsidiary created to offer commercial real estate options to the wealth management, high-net-worth and family office investor sectors, has hit the ground running.
Timbercreek Alternatives is led by president Fraser McEwen, a 25-plus-year capital markets executive with previous experience at HSBC and GMP Securities. He was most recently the co-founding partner of Slate Securities, a subsidiary of Slate Asset Management, where he established an investment fund management platform specializing in real estate investing across the public and private markets.
McEwen had a long relationship with Timbercreek Capital chief executive officer Blair Tamblyn and the two men thought the timing was right for the creation of a new vehicle that leverages the parent company’s 24-year track record of acquiring and repositioning commercial real estate.
“We felt we were coming into the trough of this real estate cycle,” McEwen told RENX. “This gives us a platform where we can start thinking about looking at different equity opportunities that do not fit in the context of the current mandates.”
McEwen wants to work with strong owner-operators of real estate on behalf of a well-respected capital partner, and his newly created position offers that.
“We felt this would give us more flexibility to diversify across different asset classes,” McEwen said. “We can work with good people and help them realize what they’re good at, operating real estate, other than spending time trying to find capital.”
Timbercreek Real Estate Opportunities Fund LP
Timbercreek Alternatives will provide opportunities to invest directly in commercial real estate in partnership with its network of operators. These will be first offered to investors in the Timbercreek Real Estate Opportunities Fund LP, which will invest in private equity and debt, secondary privates and special situations focused on value-add commercial real estate opportunities in Canada.
“This is where we can really leverage the broader Timbercreek platform and origination and underwriting capabilities to help us identify opportunities, and also be a strong fiduciary to our capital partners that will invest in that fund,” McEwen said of the opportunities fund, which he believes will be the “backbone” of Timbercreek Alternatives.
No money has yet been raised for the fund, but a syndicate of agents will be engaged to do that and McEwen said there are a number of potential targets in the pipeline.
“We are seeing deals that we otherwise would not have seen in a normal market environment,” McEwen, added noting that institutional investors that might have allocated capital to such properties in the past are still largely on the sidelines.
1 Palliser Square LP
Timbercreek Alternatives has just entered a joint venture with Aspen Properties to form 1 Palliser Square LP, which intends to complete a private placement offering to raise capital for converting approximately 418,000 square feet of space at downtown Calgary’s 27-storey Palliser One office building into approximately 420 residential rental units and amenities.
There will be a “meaningful portion” of affordable rental housing included in the project, according to McEwen.
Aspen Creek currently owns 10 per cent of the 54-year-old building and this joint venture aims to acquire the 90 per cent owned by an undisclosed pension fund. Capital is being raised by a syndicate of agents and closing is expected to be on or about Sept. 10.
The City of Calgary will contribute $75 per square foot of office space converted to living space for the property at 125 9 Ave. SE.
“You’re taking a vacant office building and effectively creating residential stock, which is much needed in Canada, and you’re also bringing vibrancy back to those local areas that otherwise would be sitting empty because you don’t have the foot traffic anymore,” McEwen said.
Zoning is in place for the conversion and McEwen would like to see it start in early 2025.
Other Timbercreek Alternatives funds
Timbercreek Alternatives is also offering two other investment funds.
The Timbercreek Real Estate Fund – Ireland II will invest in short-term, mid-market Irish commercial real estate mortgages and income-producing and transitional real estate, with a focus on multiresidential, industrial and retail. The already existing fund has about $178 million in institutional capital and will grow.
McEwen said banks in Ireland are more reluctant to lend than those in North America, which has created opportunities for the fund.
“We’re effectively earning about 200 to 300 basis points more for the same unit of risk in Ireland on what you might earn in Canada and the U.S.,” McEwen explained. “And you’re not going to see the likes of Blackstone coming there, because it’s simply not big enough for them.”
The Southern Europe Multi-Res Value-Add Fund involves a partnership with a Spanish operator that intends to build on an established portfolio of well-located vacant residential buildings in southern European cities. They’ll be refurbished and transitioned into premium serviced apartments.
“We will be coming in as a new capital partner and getting exposure to an already established portfolio,” said McEwen. “We’ll build a portfolio of serviced apartments, which is one of the stronger real estate asset classes now in Europe.”
Andrew Barnicke is also part of the team
Timbercreek Alternatives has brought on Andrew Barnicke, the founder of Barnicke Investments and Consulting, a privately held private equity and advisory real estate company focused on value-add strategies in residential and commercial projects across Canada. He brings more than 35 years of commercial real estate industry experience to his role as strategic advisor.
Timbercreek Alternatives is backed by the full-service platform at Timbercreek Capital, including more than 50 real estate investment professionals globally.
Toronto-headquartered Timbercreek Capital was founded in 2000 and has since deployed more than $18 billion in equity and debt investments focused on value-add real estate in Canada, the United States and Europe on behalf of its capital partners.