Tricon Capital Group has held a second close on C$70 million (€50 million; $71 million) in equity for its latest Canadian residential development fund, Tricon XII. The recent closing increases total commitments to date to C$140 million (€101 million; $142 million) for the Toronto-based asset manager's 12th such fund.
“With a second close in place and two new major institutional investors on board, we already have exceeded the size of our predecessor Canadian fund by 65 percent, just months after commencing fundraising,” said David Berman, Tricon chief executive, in a statement. “Our target capitalisation for Tricon XII of $150 million is very much within reach, and we still have more than nine months left to achieve our goal.”
Indeed, the amended and restated limited partnership agreement for the fund allows for subsequent closings for up to one year after the initial close of March 23, 2011.
Tricon XII was launched to take advantage of Canada's strong resource-based economy and solid fundamentals in the housing sector, including favourable demographic trends and robust immigration. The fund also seeks to capitalise on the relative undercapitalisation of the residential industry and Tricon's investment strategy and developer network, as well as its operating partners' ability to source attractive investment opportunities. Tricon XII is targeting a gross IRR of 18 percent.
The fund will invest in major institutional-quality high-rise condominium projects and master planned communities in Canada's fastest growing urban centres in conjunction with local development partners. Individual investments are expected to range in size from C$15 million to C$30 million. Berman noted that Tricon currently is evaluating “a number of marquee opportunities” in Alberta and downtown Toronto.
Since its inception in 1988, Tricon has made 46 investments in Canadian residential projects valued at more than $2 billion. The firm has generated average realised and unrealised transaction IRRs of 24 percent.