Boardwalk REIT (BEI-UN-T) and DGAM Canadian Private Real Estate Fund have entered into a 50-50 co-ownership venture focused on multifamily communities in Western Canada.

The REIT and the Desjardins Global Asset Management (DGAM) fund's long-term institutional capital partnership will launch with an initial portfolio valued at roughly $292 million, Boardwalk said in an announcement released late Tuesday afternoon.

DGAM Real Estate Fund will acquire a 50 per cent interest in the portfolio for approximately $146 million ($86.5 million net of existing mortgages assumed), the announcement said, equating to a gross portfolio of approximately $446,000 per suite.

Calgary-based Boardwalk will retain 50 per cent ownership interest while continuing to manage day-to-day operations and earn a property management and administrative fee equal to 4.25 per cent of effective gross income.

"This partnership represents a strong endorsement of Boardwalk's operating platform, our communities, and our long-term approach to capital allocation," Boardwalk chairman and CEO Sam Kolias said in the announcement.

"We are delighted to partner with the DGAM Real Estate Fund, one of Canada's most respected institutional investors, to establish a platform designed for long-term growth."

The portfolio

The initial portfolio consists of four multifamily properties in Alberta and British Columbia, two located in Calgary and two in the Victoria area.

• BRIO, located 50 Brentwood Common N.W. in Calgary, is a 12-storey, 162-unit mixed-use apartment complex.
• Elbow 5 Eight located at 730 58 Ave. S.W. in Calgary is a 255-suite complex which Boardwalk acquired in 2024.
• The Vue, located at 2830 Peatt Rd. in Langford, B.C., is a 12-storey mass timber, mixed-use building built in 2022 with 124 units.
• Aurora, located at 2 Watkiss Way in Victoria, is a six-storey building with 114 rental units.

According to the announcement, the portfolio is being seeded at an implied cap rate of approximately 4.7 per cent with an occupancy of 96.9 per cent as of late July.

"The co-ownership combines Boardwalk's proven operating platform and local market knowledge with DGAM Real Estate Fund's long-term investment capital and commitment to the Western Canadian multifamily sector," the announcement said.

"The co-ownership is expected to enhance the ability of both parties to pursue attractive acquisition opportunities to their mutual benefit, while retaining capital allocation flexibility for both partners."

The partners intend to pursue attractive multifamily investment opportunities in markets in Alberta and British Columbia characterized by strong demographic growth, attractive affordability relative to home ownership, and resilient economic fundamentals. 

Strategic rationale

The partnership expands Boardwalk's access to institutional capital while maintaining financial flexibility, the announcement said. It provides Boardwalk with an additional source of growth capital while preserving balance sheet flexibility and creating recurring fee-based income streams through property management and administrative services.

DGAM Real Estate Fund will gain access to Boardwalk's operating platform, local market expertise and proven multifamily investment capabilities.

According to its Q2 results, also released yesterday afternoon, Boardwalk ends the quarter with a strong liquidity position of approximately $374.8 million.

In addition to the newly announced partnership, in Q2 Boardwalk closed on a previously announced sale of nine properties comprising 1,096 suites in Edmonton, Regina, Saskatoon and Québec City for a combined gross sales price of $222 million.

The REIT has also finalized the sale of two communities is in London, Ont. - Sandford Apartments and Noel Meadows - for $40 million.

"The Co-Ownership structure is founded on alignment of interests and future collaboration rather than exclusivity, preserving strategic flexibility for both organizations," the announcement said.

"This transaction reflects our approach to investing in high-quality real estate assets in major markets across Canada and partnering with best-in-class operators," Richard Dansereau, managing director and head of real estate, DGAM, said. 

"We are delighted to work alongside Boardwalk in building a scalable partnership for future growth of our open-ended Core Fund. We thank Desjardins Capital Markets for their expertise and serving as exclusive advisor to DGAM Real Estate Fund throughout the transaction process."

Kolias added: "Canada's multifamily sector continues to benefit from compelling long-term fundamentals, including affordability relative to home ownership, population growth, and increasing demand for high-quality rental housing."

Boardwalk REIT and DGAM Canadian Private Real Estate Fund

Boardwalk REIT provides homes in more than 200 communities, with approximately 33,000 residential suites totalling 29 million net rentable square feet. The REIT has three-tiered and distinct brands: Boardwalk Living, Boardwalk Communities and Boardwalk Lifestyle. 

The DGAM Canadian Private Real Estate Fund is an open-ended fund seeking to achieve favourable risk-adjusted returns over the long term by investing directly in a diversified core real estate portfolio in Canada, focusing on value creation while maintaining a disciplined capital preservation. The fund launched in 2024.

RENX has asked Boardwalk REIT for comment and this article will be updated if additional information becomes available.