Purpose Investments Inc. has acquired an interest in Alliance REIT Management Corp., a Canadian residential real estate investment platform now known as Purpose Alliance REIT.
Purpose Alliance REIT provides the opportunity for long-term investments in the downtown and central Toronto residential real estate market through a private RRSP-eligible investment vehicle.
“One of Purpose’s core goals is to democratize investing for all investors,” said Purpose Alliance REIT chief executive officer Hooman Tabesh. “At Purpose, we believe that alternative investments will play a much larger role in investors’ portfolios going forward as interest rates normalize over time.
“Adding Alliance’s business aligns with our long-term goal to be the leading independent investment management firm in Canada. Alliance provides a unique investment platform not previously offered to Canadian investors. That, combined with the Alliance management team’s capability and track record, made it an easy decision for us.”
Tabesh didn’t reveal the value of Purpose’s interest in Alliance.
Purpose Alliance’s investment strategy
“Alliance is a unique investment vehicle for retail, high net worth investors that was not previously available in the Canadian marketplace,” said Tabesh. “Purpose has a tremendous platform and is a leader in offering alternative strategies to retail investors, investment advisers and institutions.
“With Alliance now being part of Purpose Investments’ platform, it would allow Alliance to further leverage the broader operational, marketing and sales capabilities of Purpose and, in the process, create deeper and stronger relationships, hereby fuelling Alliance’s growth strategy.”
Purpose Alliance REIT identifies, purchases and rehabilitates properties in “up-and-coming” neighbourhoods ahead of the gentrification stage to maximize investor returns and growth. It intends to assemble a diversified portfolio of residential income-producing properties, aimed primarily at the millennial market, with above-average rental and growth potential.
The portfolio will continue to be primarily comprised of single-family homes that have been or can be converted into multi-unit residential income-producing properties. Most of Purpose Alliance REIT’s properties were built during the turn of the previous century and have been updated with modern amenities.
41 per cent return in two years
“Because we source and develop all of our own properties, not only are we able to provide much-needed high-end rental stock at very affordable prices, but also be able to do it at a six per cent cap rate,” said Tabesh. “Our strategy has enabled us to return a cumulative 41 per cent to our investors over the past two years.
“Our success to date has been due to our discipline in executing our strategy. We intend to grow organically by continuing to execute on the same strategy but at a much faster rate than before the partnership with Purpose.”
While Purpose Alliance REIT’s initial geographic focus is in downtown and central Toronto, the longer-term goal is to expand throughout Southwestern Ontario and then the rest of Canada.