SHURE IN YOUR EARS Episode #7: Launching a Canadian Student Housing Fund

November 30, 2023

SHURE Initiative

Alex Bruvels, Partner, Capital Markets & Securities, McMillan LLP

Canada, with its rapidly growth population, is attracting the interest of investors and private capital from various global regions.  Canada’s overall population recently exceeded California's.  Canada would be the largest U.S. state by population. Moreover, Canada continues to attract international students from all regions due to its stable government, effective university system, and overall quality of life. Canada, the U.S., and EU nations have been strong trade partners for many years, with firms from all regions equally active (i.e. TD and BMO active in U.S. markets). But, how should investors and funds seeking to raise capital approach the housing crisis opportunity, and what should they know about launching a Canadian Student Housing Fund of equity investment in Canadian student housing?

In this SHURE In Your Ears episode, Alex Bruvels will discuss the following:

*A Party is seeking to launch a fund that will acquire and develop student housing assets in Canada. What are the major considerations? The discussion will include: whether the structure should be a limited partnership or private REIT, whether the investment will be registered (RRSP, TFSA, etc) versus non-registered plan money, and which investors are being targeted: retail, high net worth individuals, family offices, pensions funds, whether an exempt market dealer is required to participate in a capital raise and what sort of fees are standard/market.

*A strategic investor is seeking investment in a student asset fund in Canada. What should be the “asks” as a strategic investor? Discussion will include: GP board appointment or observation rights, committee appointment rights, early redemption option, financing ROFR rights, consultation/veto rights over certain “hot button” decisions etc).

* A U.S. or E.U. vendor is interested in working in Canada. Its concern is selling to on-campus properties. How should this vendor approach operate within the university parameters in Canada?

* What is required for real estate funds to operate in each province of Canada?

* What should non-Canadian investors know about measures such as foreign surcharges for real estate and/or other taxes when acquiring/disposing of assets?

* What are the tax considerations related to international LP (limited partner) investment in Canadian real estate deals?

*What are key considerations for debt financing for Canadian private student housing projects?

*High level ”shout out” about the work McMillan real estate and tax teams are doing with University Property Development Trusts.

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