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Conundrum holds first close in $450m fund

The Toronto-based fund manager has closed on $85m of commitments from Canadian investors for its latest multifamily strategy, part of a larger vehicle targeting industrial deals as well.

Conundrum Capital has held a first close on its latest value-added vehicle, raising $85 million in commitments from investors.

The Toronto-based fund manager is believed to be targeting between $400 million and $450 million for Conundrum Maple Leaf Real Estate Fund, a vehicle that has been split in two to allow investors to target either multifamily or light industrial assets, or both. Conundrum declined to comment to PERE, however, people familiar with the matter said the vehicle’s multifamily strategy had already held a first close on $85 million, raising commitments from predominantly Canadian investors.

Toronto skyline

The Maple Leaf fund’s industrial strategy is expected to target Canadian as well as overseas investors, with a first close due on the overall vehicle by the end of the first quarter.

Since being founded in 2000 by the former chief executive officer of Acanthus Real Estate Corporation Daniel Argiros, Conundrum has raised more than $220 million in equity for its multifamily funds. The firm has also raised two Shariah-compliant funds targeting Canadian real estate investments and self storage deals, respectively, according to its website.

Like the US, prospects for the multifamily sector in Canada are among the best out of all the real estate food groups, according to the 2011 Emerging Trends report by the Urban Land Institute and PricewaterhouseCoopers, thanks to rising immigration and a lack of supply. “Buy apartments if you can find anything available,” the report said. “They offer the best security.”

The Conundrum Maple Leaf fund will target returns of up to 15 percent, focusing on multifamily and light industrial in Toronto, Ottawa and Montreal, sources added. 

Industrial deals in Canada were slow to get off the ground in 2010, however the sale of ING Group’s 50 percent stake in the Summit Industrial Fund to KingSett Capital and Alberta Investment Management Corporation (AIMCo) for C$2 billion (€1.5 billion; $1.9 billion) helped kick start transaction activity.

The deal, which was first announced in August, saw KingSett and AIMCo, the C$69 billion umbrella group of Canadian pensions, endowments and government funds, also buy the ING Real Estate Canada platform, which manages Summit. An Australian listed ING property fund, ING Industrial Fund, kept the remaining half of Summit. According to media reports at the time, ING Group took a C$1.2 billion write-down on the Summit assets.