As a CMHC approved lender, the LP invests primarily in short-term “Bridge-To-CMHC" opportunities that act as an important return-engine for our investors.
The current environment of historically low credit yields coupled with the potential of rising rates is not favourable for most fixed-income managers. Commercial Mortgages have a substantial margin of safety given their approximately 70% LTV, combined with the fact that our assets are generally mature income producing properties. Floating rate loans enhance the LP's return profile in a rising rate environment and our vehicle structure adds additional layers of protection to our investors.
Finally, it is Canada’s only mortgage LP offering a first-loss provision of up to $15 million of investor capital.
Suitability
Investing in Commercial Real Estate Private Credit is for medium to long term investors seeking strong risk-adjusted returns. Commercial Real Estate Private Credit provides portfolio diversification, lower volatility, as well as consistent and strong income returns.
Why invest in
Commercial Real Estate Private Debt?
Emerging Opportunities for Bridge Financing Lenders
CMHC and Banks are experiencing the longest turnaround time in history on loans, creating excess bridge loan opportunities. CMHC is on a 6-month delay with files, which allows for a great opportunity to fund high quality deals at above market rates given timing constraints.Conventional Lenders Have Pulled Back From the Market
A tightening lending market allows Peakhill to lend on bank-quality opportunities at a higher rate of return. This allows for our investors to achieve stable and consistent returns from a diversified portfolio of income producing assets.
Strong Risk-Adjusted Returns
The current environment of historically low credit yields coupled with the potential of rising rates is not favorable for most fixed-income managers.
Commercial Mortgages have a substantial margin of safety given their approximately 70% LTV, combined with the fact our assets are generally mature income producing properties.
Floating rate loans enhance the LP’s return profile in a rising rate environment and our vehicle structure adds additional layers of protection to our investors.
Shortage of Housing Units
Housing supply gaps are prevalent across Canada, most significantly in Ontario and British Columbia markets, followed by Quebec and Alberta.
The Canadian government and CMHC are actively taking steps to stimulate the housing market supply and address affordability issues, which allows Commercial Real Estate Private Credit access more funding opportunities.
Liquidity
While investors should consider an investment for the medium to long term, liquidity is quarterly, subject to a 2-year soft lock. Within the first 2 years of investment, investors may be subject to early redemption fees to withdraw their money.
(Redemption price will be 95% of subscription price if redeemed in the first year, 97.5% if redeemed in the second year, and 100% if redeemed after second year following subcription.)
Potential Returns
The LP selectively invests in loans when the economics of the loan allow us to conservatively generate an 8% net of fees return for our LP investors.
The target 8% return is what we pay monthly, but if we can achieve better returns, we pay out excess at year end.
Progressively higher interest rates have been accretive to fund performance and have improved overall returns. Since inception, the fund has returned 10.69% gross of fees.
Taxation
This product is an eligible investment for registered plans. In the LP, tax treatment for income earned is characterized as active business income.
