Most private real estate firms run one fund. We run three. Each one solves a different problem in your portfolio. Today, the long form of why that matters, and how to think about which lane fits.
PV, Mit & Jeff
Income. Equity. Mission. Most investors are told to pick one. We built one fund for each, because the portfolios that compound the longest are the ones that do all three at once.
This week we made announcements across all three Foundation Capital funds. The Canada Day 2% bonus on FCPRET. The continuing Wellington Towers Tranche 1 raise. The Affordable Housing Fund. The Ed Holder appointment. Different vehicles. Different audiences. Different inboxes.
A few of you wrote back asking the same question. Why are you running three of these at once? Most private real estate firms run one. So today's Friday Thesis is the long form of the answer.
Every long term portfolio needs a piece that pays you something every month, regardless of what the market is doing. Stocks do not. Bonds barely do. GICs hand you back what inflation already took. FCPRET pays you 7% targeted annualized in monthly distributions, on top of an 8% targeted appreciation. That is 15% total return, in a vehicle eligible for RRSP, TFSA, RESP, LIRA, and cash, at a $10,000 minimum.
Eight stabilized apartment buildings in southwestern Ontario. Real tenants. Real rent. Quarterly NOI updates to the unit price. MNP LLP audited annually. The fund has met its targeted return every single year since inception. That is the engine the rest of your portfolio compounds against.
Canada is in the deepest housing shortage in modern memory. CMHC estimates we are short roughly 3.5 million homes by 2030. Every year, fewer new homes get built than the year before. The supply curve is moving the wrong direction. The demand curve is not.
Meanwhile, all three levels of government are stacking incentives on top of each other to get purpose built rental in the ground. CMHC MLI Select gives 95% loan to cost financing on a 50 year amortization. Build Canada Homes layers on top. Municipal CIPs forgive tens of thousands per unit. Development charges get waived. GST/HST gets rebated. The economics of building purpose built rental in Ontario have not been this favourable in our careers, and they will not stay this favourable forever.
Wellington Towers in London is how we are deploying into that window. 432 units. 25 storeys. Built at developer cost basis with the full incentive stack behind it. Tranche 1 is still extended at the 24% net annualized targeted return over a four year hold. $100,000 minimum. Accredited investors and existing FC investors only. This is the lane for capital that wants to add real supply to a market that desperately needs it, while it is still the most profitable thing you can do in Canadian real estate.
For Mit, this fund is personal. His brother Apiiran is 31, has developmental and physical disabilities, is nonverbal, and needs 24/7 care. He is one of more than 53,000 Ontarians on the provincial waitlist for housing built for adults like him. There are not enough homes. There are not enough operators. And the market, on its own, will not solve it. The unit economics do not pencil at the rents these tenants can pay.
So we built FAHF I to do what no real estate fund we have ever seen has been willing to do. Build permanent affordable housing for the Canadians the market has forgotten. Adults with developmental disabilities. ODSP recipients. Seniors on fixed income. Canadians with physical disabilities. And, as General Partner, we commit to holding the affordable units forever. Not 10 years. Not 20. Forever.
The structure is built so the math works for investors at the same time. Class A targets 18 to 20% IRR. Class B targets 10% IRR with 6% paid in quarterly cash. Class C is 6% PIK for foundations and impact intermediaries deploying concessionary capital. Every dollar builds a home for someone the market would never reach. For accredited investors who want their portfolio to do more than make money, this is the lane. For Mit, it is the most important thing we have ever built.
Some investors put their entire allocation into FCPRET because they want the monthly cash and the registered account treatment. Some put their entire allocation into Wellington Towers because they want the four year compounding. Some put a portion into FAHF I because their mandate is impact.
A common pattern we see on calls is a split between FCPRET and one of the two private funds. FCPRET handles the income side and sits inside a registered account. The development or impact allocation sits in cash and does the heavier compounding or the heavier mission work. Different vehicles. Same architecture. Same Foundation Capital team building all three.
That is what the Ed Holder appointment changes. The team building all three just got materially deeper. The municipal navigation. The federal voice. The relationships. Every fund benefits.
$10K Minimum · Eligible for RRSP / TFSA / RESP / LIRA
Targeted: 15% Annualized (7% cash monthly + 8% appreciation)
Subscribe by Canada Day for +2% bonus units
432 Units · 25 Storey Purpose Built Rental · London, ON
$100K Min · Cash Only · Accredited / Existing FC Investors
Tranche 1 Extension: 24% Net Annualized Targeted Return
Permanent Affordable Rental · Southwestern Ontario
Accredited Investors Only · Three Classes
If you would rather hear us walk through this thesis on camera, this week's stream covers the Ed Holder announcement, the K shaped economy, Development Fund III in early scouting, the family office conversations driving the next phase of the portfolio, and how each of our three funds fits the rest of this decade.
Have a strong weekend,
PV, Mit & Jeff
P.S. If you read this and thought "I have no idea which lane fits," that is the most common response we hear. The fix is a 30 minute call. Bring your portfolio, your timeline, and your goals. We will tell you which fund (or which mix) actually fits. No pressure. No pitch. Just clarity. Reply Architecture or book the call link above.
