That is the cheque Desjardins Global Asset Management just wrote into a $292M multifamily joint venture with Boardwalk REIT. The largest apartment operator in the country. The private real estate arm of the biggest financial cooperative in Quebec. The institutional consensus on Canadian rental just formed publicly.
PV, Mit & Jeff
$292M multifamily venture. 4.7% cap rate. $446K per suite. Alberta and BC only. Deep dive on what that number says, and why FCPRET's Southern Ontario portfolio is priced to compound faster than the institutional deal that just closed.
On July 29, RENX reported that Boardwalk REIT and DGAM Canadian Private Real Estate Fund formed a 50-50 multifamily joint venture around a $292M seed portfolio. Boardwalk is the largest apartment operator in Canada. DGAM is the private real estate arm of Desjardins, Quebec's largest financial cooperative and one of the biggest institutional balance sheets in the country. This is not two smaller operators trading a building. This is institutional capital saying publicly that Canadian rental is the trade.
Today's letter is the deep dive on what that cheque signals for the whole asset class, and why FCPRET's Southern Ontario portfolio is priced to compound faster than the deal Boardwalk and DGAM just closed.
500 Units · Southern Ontario Transit Corridor · Workforce Rent
$1.5M Tranche 1 · Closing in weeks · Accredited investors and existing FC investors only.
Two quotes from the RENX piece are worth reading directly.
"This partnership represents strong endorsement of Boardwalk's operations and long term capital allocation approach."
"We are delighted working with Boardwalk to build scalable partnership growth for our open ended Core Fund."
$292M is not a huge number by institutional standards. A single downtown Toronto office tower trades for more. What makes this deal significant is not the dollar amount. It is who is on both sides of the table and what they are publicly signalling.
Boardwalk is the largest apartment REIT in Canada. Their willingness to co venture rather than buy alone signals two things. First, they see enough runway in Canadian rental to want more capital deployed into it than they can raise on the public REIT balance sheet alone. Second, they are willing to give up half the upside on 655 units to a partner because the operating fee stream at scale is worth more to them than the equity.
DGAM's Canadian Private Real Estate Fund is an open ended core fund, meaning it takes institutional pension and insurance capital that needs to be deployed in stable, income producing Canadian real estate over the long term. That fund choosing to allocate its next $146M into Canadian multifamily is not a tactical trade. It is a strategic call that rental apartments are the multi decade Canadian real estate exposure institutional balance sheets want to own.
When two operators of that seniority publicly form that partnership, the thesis stops being contrarian. It becomes consensus.
The Boardwalk / DGAM deal is Alberta and BC. Two big city markets, high per unit price, tight going in yield. That is what stabilized multifamily looks like when the institutional consensus arrives. Now compare it directly to what FCPRET is buying every day in Southern Ontario.
Lower cost per door. Southern Ontario mid market apartment stock trades at a material discount to Calgary and Victoria per unit. Every dollar an FCPRET investor deploys buys more units of the same asset class in a city with the same structural demand story.
Wider going in cap rates. Boardwalk / DGAM's 4.7% cap is what a stabilized institutional deal in Alberta looks like at consensus arrival. FCPRET is currently underwriting Southern Ontario acquisitions at meaningfully wider going in yields, because the institutional consensus has not fully arrived here yet. That is exactly the window we walked through in the Buy Now letter two Mondays ago.
Re densification runway on top. Every FCPRET building comes with the operating lever we walked through in the More Doors letter. Oversized 1970s three bedrooms split into two or three workforce units on voluntary turnover. That NOI expansion runway does not exist in the Boardwalk / DGAM stabilized product to the same degree.
FCPRET is on the same trade the institutions just publicly endorsed. On a lower price basis. At a wider going in cap. With more operating upside per building. That is what a private REIT structural advantage looks like when the institutional consensus catches up.
Two reads on the investor side.
On FCPRET, the Boardwalk / DGAM deal is quiet cover. Any accredited or retail investor who was hesitating on the Canadian multifamily thesis just got the largest apartment REIT in the country and the biggest institutional cooperative in Quebec publicly co signing the trade. FCPRET is the private, workforce housing focused, Southern Ontario execution of the same thesis, at a better going in price and yield.
On Foundation Development Fund III, the timing is not coincidental. Institutional endorsement of the rental asset class means the exit valuations on new purpose built rental development are structurally supported for the next decade. Fund III Tranche 1 remains open to accredited investors as of last week's announcement.
$10K Minimum · RRSP / TFSA / RESP / LIRA Eligible · Also Cash
Targeted: 15% Annualized (7% cash monthly + 8% appreciation)
Same trade the institutions just endorsed. Priced at a Southern Ontario mid market discount to the Alberta and BC deal Boardwalk and DGAM just closed.
The three trustees on the road from 2023 launch to $10M raised, the rent model evolution, and the road to $20M and beyond.
Talk soon,
PV, Mit & Jeff
P.S. If you are accredited and want the Fund III offering docs on the same trade Boardwalk and Desjardins just endorsed, reply Endorsed. Tranche 1 is a real deadline.
