Timbercreek Hunts Beyond Canada’s Borders for Undervalued REITS

(Bloomberg) -- Timbercreek Asset Management Inc., a Canadian real estate investment firm, plans to more than double its exposure to publicly listed companies amid an increasingly competitive private market.

Timbercreek aims to grow its global real estate investment trust portfolio to C$5 billion ($3.8 billion) from just over C$2 billion, prompted by an inflow of capital from pension funds and institutional investors who are looking for better returns in markets like the U.S., Europe, Hong Kong and Japan.

“There’s a lot more capital chasing fewer deals and that’s creating a very competitive market for private real estate,” Corrado Russo, global head of securities at Timbercreek, said by phone. “A lot of companies are turning to REITs as a good proxy to get their capital to work.”

Timbercreek manages about C$10 billion in total through its lending, development and management operations in addition to public securities.

“When we look at quality of assets in the overall REIT market around the world versus Canada, we’re finding better quality assets outside of Canada,” Russo said.

While Timbercreek has traditionally invested in property sectors such as retail, office or hotel, the firm also likes data centers, cell towers, casinos and and buildings with one tenant who will take care of maintenance over the long term.

“Your rent is very close to 100% profit, and while you typically get less rent, there’s no risk to expenses going up longer term so it behaves like a bond but a bond that gives you equity-type returns because you still have the ability to release that space at higher rents as market rents go up,” Russo said.

To contact the reporter on this story: Natalie Wong in Toronto at nwong133@bloomberg.net

To contact the editors responsible for this story: Debarati Roy at droy5@bloomberg.net, Jacqueline Thorpe

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