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Dream wins Oxford Properties backing for new impact fund

Toronto-based real estate manager Dream Unlimited’s open-ended vehicle marks the Canadian investor’s first impact fund investment.

Dream Unlimited has held a first close for its open-ended real assets impact investing vehicle, Dream Impact Fund, securing commitments from institutional investors that include Oxford Properties Group, PERE has learned.

After less than six months of fundraising, the Toronto-based real estate manager has attracted C$136 million ($108.96 million; €91.39 million) in equity for the initial close of Dream Impact Fund. Aside from Oxford, the real estate arm of Canadian pension plan OMERS, limited partners also included the financial institutions Scotiabank, TD, 1832 Asset Management, Canadian Imperial Bank of Commerce, as well as three family offices. Dream Unlimited also committed to the vehicle and expects to own a 25 percent stake in the fund over the long term.

Dream began fundraising for Dream Impact Fund in September and is aiming to raise C$250 million by end of next year, with subsequent closes to follow. In its fourth-quarter earnings results, the firm said it expected to hold a first closing on at least C$125 million.

The vehicle will be the first commingled fund for Dream Equity Partners, the private real estate business that the firm launched last May with former Nuveen Real Estate executive Rahul Idnani.

The covid-19 pandemic has increased interest in impact investing, noted Jamie Cooper, the fund’s portfolio manager. “What covid has done is it’s made us more aware of issues that existed long before covid,” he said. “There’s also more energy on the investor side for impact-type investments so I think there’s more demand overall on the capital side.”

Indeed, Dream Impact Fund marks the first impact fund investment for Oxford Properties. “Whether it’s building the first zero-carbon high-rise towers in Canada or investing alongside our industry partners to effect positive change, Oxford is committed to ensuring our investments create social, environmental and economic impact for the benefit of our communities,” said Michael Turner, president of the Toronto-based real estate investor. “Our commitment to the Dream Impact Fund will deliver these positive outcomes while generating long-term, stable returns for our pension stakeholders.”

The fund’s Canada-focused strategy will target Dream Unlimited’s three impact verticals of affordable housing, inclusive communities and resource efficiency. Approximately 25 percent of the initial fundraise will be invested in a seed portfolio of four assets, including Dream’s interest in the Indigenous Hub in Toronto; Block 8 in the West Don Lands neighborhood in Toronto; the federal government building under construction at Zibi, a carbon-neutral community in Ottawa; and Dream’s interest in Zibi Community Utility, the net-zero heating and cooling system created in partnership with Hydro Ottawa for the Zibi project. The remaining capital is expected to be deployed over the next 12 months.

The company, which is listed on the Toronto Stock Exchange, has been active in impact investing for 20 years but did not identify impact investing as an asset class until last year. “It’s absolutely the DNA of our company,” said Michael Cooper, president and chief responsible officer at Dream Unlimited. “And as we look forward, we think it’s going to be the largest-growing asset class in the world.”

“As we look forward, we think it’s going to be the largest-growing asset class in the world”

Michael Cooper,
Dream Unlimited

In October, the firm rebranded its former Dream Hard Asset Alternatives Trust as the Dream Impact Trust, Canada’s first public impact vehicle. Dream Impact Trust will continue to own 75 percent of the organization’s interest in the Dream Impact Fund’s seed portfolio, while the latter fund will own the 25 percent interest in the assets previously held by Dream Unlimited.

Dream Impact Fund is the world’s first open-ended impact investing vehicle, according to the firm. “The process of bringing the building to stabilization, which is really the opportunity for the building to provide impact, could be the entire life of a closed-ended fund,” Jamie Cooper explained. “So if it takes seven years from when you start pursuing a project to when it’s occupied, in a way, the impact action hasn’t occurred yet. It’s important for us to be able to own the assets on a very long-term basis and we want to create a vehicle that will allow us to do that.”

Dream Unlimited will be providing an allowance for 10 percent of the fund’s net asset value to be redeemed to help encourage liquidity in the fund. “What we want to do instead of trading assets is making redemptions a feature of the fund going forward so that we can change investors and keep these incredibly difficult assets to create in the fund,” Michael Cooper said. “We think that the return will be maximized by holding them rather than selling them.”

The company is targeting 12-14 percent gross returns for the fund. Meanwhile, Dream Unlimited, which is a signatory to the Operating Principles for Impact Management and a member of the Global Impact Investing Network, expects to publicly unveil its impact framework – against which the firm will measure its impact performance – in the second quarter.

Dream Unlimited manages $10 billion of assets, including office and residential assets in Toronto and stabilized income-generating assets in both Canada and the US. Less than one year after its launch, Dream Equity Partners manages close to $500 million of assets on behalf of five institutional clients from Canada for its impact fund and one large institutional client from Europe for its US multifamily value-add mandate.