Gating wave locks up billions in private real estate funds, testing investor liquidity assumptions
Roughly $30bn of Canadian private real estate capital is locked up – and now one of the country’s largest platforms is freezing redemptions while it eyes a potential go‑public move.
Real Estate News Exchange reports that Avenue Living Asset Management Ltd. will halt redemptions for Avenue Living Real Estate Core Trust and Mini Mall Storage Properties Trust for as long as six months from March 31 as their boards consider a possible “go-public transaction.”
The pause coincides with the date the trusts would have paid investors who redeemed at the end of February, and the vehicles will also stop accepting new equity capital during the review, Bloomberg reported.
Management has urged both trusts to pursue a go‑public deal, while independent special committees review a possible transition to public markets and other alternatives.
Any transaction would close by the end of June, pending market conditions and the committees’ recommendations.
Avenue Living said it does not intend to provide further updates until the strategic reviews conclude, Real Estate News Exchange reported.
During the process, Avenue Living will continue paying monthly distributions, maintain its distribution reinvestment plans and calculate net asset value on a monthly basis.
The firm did not say how much capital investors have asked to redeem or whether it could extend the suspension beyond the initial six‑month window, Bloomberg reported.
The two trusts represent the bulk of Avenue Living’s approximately $9.8bn in assets under management.
One fund primarily holds apartment properties in Western Canada, while the other owns self‑storage assets.
Avenue Living serves as asset manager, with Calgary-based Invico Capital Corp. acting as fund manager for both vehicles.
Real Estate News Exchange reported that Avenue Living oversees more than $9.8bn in assets across over 50 markets in Canada and the United States, including a multifamily division with over 23,000 doors, a self‑storage platform with nearly 13m square feet, and an agricultural land fund managing 50,000 acres.
Both Mini Mall and the Core Trust’s subsidiary, Avenue Living LP, hold investment‑grade debt ratings, and the group has completed $2.4bn in senior unsecured debenture offerings in the past 12 months, as per Real Estate News Exchange.
The move comes after a period of strong reported metrics.
As of December 31, Avenue Living Real Estate Core Trust reported 94.1 percent occupancy, a 70.7 percent NOI margin, 5.2 percent same‑door NOI growth over the past year and a 54.7 percent loan‑to‑value ratio.
Over the same period, it completed $1.1bn in acquisitions totalling 4,697 residential units and held $330m in available liquidity and $1.3bn in unencumbered assets.
Mini Mall Storage Properties Trust reported 89.7 percent occupancy, a 74.2 percent NOI margin, 6 percent same‑door NOI growth, 56.5 percent loan‑to‑value, $887m in acquisitions totalling 3.5m square feet of self‑storage in the past year, $155m in available liquidity and $1.8bn in unencumbered assets.
Avenue Living’s decision lands in the middle of a broader liquidity squeeze across Canadian private real estate and credit funds.
Bloomberg reported that about $30bn — almost 40 percent of the roughly $80bn invested in private real estate funds — is currently locked up as managers restrict redemptions or distributions.
Within that backdrop, Invico has already taken its own steps.
Invico, which oversees about $4bn in Canada and the US, adopted a “structured liquidity management plan” for its Invico Diversified Income Fund after large investors submitted redemption requests.
The firm said it contacted certain larger investors to understand their liquidity needs and put in place a plan that aims to balance ongoing withdrawals with preserving net asset value and yield.
Bloomberg also highlighted a broader trend of funds halting or curbing redemptions or distributions amid higher rates, weaker property markets and liquidity pressure, naming Romspen Mortgage Investment Fund, Nicola Wealth real estate vehicles, Hazelview Investments’ Four Quadrant Global Real Estate Fund, five Trez Capital funds, Centurion Apartment REIT and KingSett Capital’s Canadian Real Estate Income Fund.
At the core of these moves is the mismatch between frequent redemption promises and illiquid assets.
Bloomberg noted that former Bank of England governor Mark Carney warned in 2019 that funds offering regular redemptions while holding illiquid assets were “built on a lie.”
