When making investment decisions, real estate
investors typically look for stability, strong yields
and capital appreciation opportunities. Investors
scour the market looking for real estate assets
that provide these features and can be obtained
at decent valuations. Cranson Capital Securities
(Cranson Capital) is an Exempt Market Dealer
with significant experience in the real estate sector.
Investors in the exempt market have traditionally
been exposed to income producing commercial
and multi-family real estate as well as real estate
development opportunities. However there is an
emerging trend with niche real estate asset classes.
Over the past couple of years, Cranson
Capital has expanded its offerings to include
niche asset classes within real estate such as
seniors housing, student housing and medical
office buildings. The rationale behind investing in
these niche asset classes is straightforward: they
offer stability, strong yield, significant upside and
diversification. Furthermore, they tend to lack the
market risk of traditional real estate investments
and don’t fluctuate with the same volatility. By
investing in niche real estate, investors can expect
the potential of earning above average returns
while diversifying their portfolio.
A great example of a niche asset class is
medical office buildings. Considering Canada
has universal healthcare, doctors are considered
to be very stable tenants. In a recession, rents
at medical office buildings generally remain
unaffected. However managing a medical office
building requires a very experienced management
team as the demands on landlords are much
higher than traditional commercial real estate.
Last year Cranson Capital was approached
by Mohawk Medical (Mohawk), a Toronto based
private equity firm specializing in healthcare
real estate, to raise equity for their most recent
acquisitions. Mohawk engages in acquisitions,
property management and asset management
of Canadian medical office buildings. Mohawk’s
management team previously founded GT
Canada Medical REIT, the first publicly traded
medical office building company in Canada,
which consisted of a portfolio of 12 medical
buildings. GT was one of the fastest growing
REITs in Canada and was then acquired by a larger
REIT for $87.3M. Sean Nakamoto and Andrew
Shapack, whose combined track record includes
66 medical office building acquisitions, formed
Mohawk in September 2012. Since commencing,
Mohawk has acquired 8 medical office buildings
and Cranson Capital has raised $6.6M for the
Fund with properties located all across Canada.
The Fund provides investors a great opportunity
to partner with an experienced management team
in a consolidation of steady income producing real
estate in a recession resistant asset class.
Medical office buildings are a growing niche within
the commercial real estate sector. The medical office
building space is management intensive and requires
many years of industry expertise to be successful.
Consequently, when looking to invest in this asset
class, investors are encouraged to take advantage of
the opportunity to partner with a strong management
team with a growing portfolio like that of Mohawk.
Cranson Capital will continue to favour niche real estate
sectors like medical office buildings as a result of the
stable nature of the asset class and its non-correlation
to other traditional real estate investments.
Cranson Capital is a Toronto based Exempt Market
Dealer that focuses on syndicating accredited
investors in private placements for entrepreneurial
businesses with a primary concentration is in real
estate and occasionally high growth companies.
Cranson Capital is a four-time Private Capital
Markets Association of Canada Deal of the Year
Award Winner, three of which were for real estate-based transactions.
For more information contact:
ISSUERS & PRIVATE PLACEMENTS
Devon Cranson, CPA, CMA
Investing in Niche Real Estate:
Medical Office Buildings
By Devon Cranson