Yesterday we answered the questions we hear on every Fund III call. Today is the harder companion: the six real objections we have heard from investors who chose not to move. Answered honestly. If your reason is a real reason, we will never argue with it. If your reason is a question that was actually just holding you back, this is the letter to answer it.
PV, Mit & Jeff
If your reason is a real reason, we will never argue with it. If your reason is a question that was actually just holding you back, this is the letter to answer it.
Yesterday's letter answered the seven questions we hear on every Fund III call. Today's letter is the harder companion. Every real objection we have heard from investors who chose not to write a cheque. Answered directly, without marketing gloss.
Some of these are real reasons to pass on the fund. We will name those and respect them. Others are questions dressed up as objections. Those we can answer.
Real estate is a long horizon asset, and both of our vehicles reflect that. FCPRET is designed for a long term hold too. Real estate compounds over years, not quarters, regardless of which vehicle you pick.
Fund III specifically is a four year horizon. Development runs through Q3 2030 with the land refinance liquidity event at the end of October 2026 along the way. If your investment horizon is under four years and you cannot commit capital for that window, Fund III is probably not the right fit.
If you want monthly cash flow while your capital compounds, and you value both an income stream and appreciation on the same investment, FCPRET is the better tool. Same operating team, same thesis, structured to deliver 7% cash yield monthly plus 8% targeted annual appreciation. If you want pure appreciation at a higher targeted return with the trade off of no cash flow along the way, Fund III is the tool. Both are long horizon plays. The right one depends on whether you want cash flow now or you want to compound harder over four years.
Fund III is a different site than Wellington, and a Wellington outcome does not decide a Fund III outcome. On Wellington itself, we are confident in the approval outcome regardless of which of three paths it takes. Council yes in September, settlement negotiation in October if council delays, or Ontario Land Tribunal hearing as the final backstop.
The reason for the confidence starts with the operator. Michael Nemanic is both our planning lawyer and our development manager on this project — the rare combination of senior planning counsel and top tier development executive in one person. Michael previously spearheaded the $2 billion Sheridan Mall redevelopment in Toronto, one of the largest mixed use transformations in the country. He knows exactly how to write, argue, and win a planning file. If Wellington ends up in front of the OLT, Michael's track record is the reason we sleep well at that prospect.
On the merits, the site sits directly on the Wellington BRT corridor, which the province has invested roughly half a billion dollars into to spur transit oriented density. Purpose built workforce rental at scale on that corridor is exactly the outcome the BRT investment was made to enable. A tribunal denying it is not a case a rational decision maker makes. The risk is not zero. It is meaningfully lower than most casual readers assume once they understand the operator, the site, and the corridor.
Development carries different risk than owning a stabilized building, yes. But it also carries the reason the return math is so much stronger. Development is where the equity is actually created. Every unit we build has a construction cost, and every unit is ultimately valued (or sold) at a market number that is meaningfully higher than that cost. The spread between what it costs to build and what the building is worth once it is built and leased up is the developer's equity. That spread does not exist in a stabilized building trade, because you are buying at market.
And development is where the return scales. A stabilized apartment building compounds at whatever the rent growth and cap rate compression of that market allows. A well executed development creates several years of that compounding on day one, at scale, at a moment in the cycle when the country needs 400,000 new homes per year. That is why Foundation Development Fund III targets 20% to 24% compounded and FCPRET targets 15%. Same operating team, different tool, priced for the additional risk with meaningful upside on the other side.
If you want stabilized cash flow at the lower risk profile, FCPRET is the right vehicle. If you want to participate in the equity that gets created when a new building goes from land to leased up, Fund III is the tool built for that.
500 Units · Southern Ontario Transit Corridor · Workforce Rent
$1.5M Tranche 1 · Closing in weeks · Accredited investors and existing FC investors only.
Depends on the exposure. Most Canadian household real estate is one house you live in, in one city, at one snapshot in time. Fund III is 500 doors of purpose built rental on a transit corridor in a different city, on a different asset class (multi family rental, not owner occupied). It diversifies the property, tenant, and geographic risk of your existing home ownership rather than doubling down on it.
Different structures. A public REIT trades on a stock exchange, prices to the market every day, and faces redemption pressure when retail investors get scared. A private REIT and a private development fund do not. They get to be the buyer in a soft market instead of the seller. And a growing, focused operator can execute value add work (voluntary re densification, adaptive reuse, government partnership) on a per building basis that a large public operator with thousands of doors cannot. The trade off is illiquidity and operator concentration. If you value liquidity above everything, own the public REIT. If you value execution and structural advantage, back the private one.
Often not the case. The accredited definition is broader than most Canadians realize. Individual income over $200,000 in each of the last two years, or combined household income over $300,000, or net financial assets over $1,000,000, or net assets (any combination, including real estate) over $5,000,000. Any one of those qualifies you.
And if you are a friend, family member, or business associate of anyone on the Foundation Capital team, we may have flexibility to include you in Fund III even if you do not meet the accredited investor test. The Friend, Family, and Business Associate prospectus exemption is a legitimate path into deals like this one, and it exists for exactly this reason. Book the call and we will walk you through whether it applies to your situation.
And even if none of those paths fit, FCPRET is our workforce housing REIT with a $10K minimum, RRSP / TFSA / RESP / LIRA eligibility, and monthly cash distribution. Same operating team, same anti luxury thesis, different vehicle. Not a lesser investment. A different tool for a different investor profile.
If none of the six objections above apply to your situation, the fastest path is a 30 minute call. Team walks you through offering docs, Tranche 1 mechanics, and projected use of capital. From that call, subscription in days.
If you have an objection we did not name here, reply to this letter with it. We will answer honestly.
The three trustees on the road from 2023 launch to $10M raised, the rent model evolution, and the road to $20M and beyond.
$10K Minimum · RRSP / TFSA / RESP / LIRA Eligible · Also Cash
Targeted: 15% Annualized (7% cash monthly + 8% appreciation)
If Fund III is not the right fit, FCPRET is the workforce housing thesis on a $10K minimum, on registered accounts, with a monthly cash distribution.
Talk soon,
PV, Mit & Jeff
P.S. If you have an objection we did not name here, reply to this letter with it and we will answer honestly. And if you want the Fund III offering docs, reply Fund III and they land in your inbox within 24 hours.
