Woodfine Capital Projects (WCP) director/chief executive officer Peter Woodfine has been busy meeting with potential investors and brokers across the country to raise money for his latest real estate venture.
“The structure is a combination of 30 years of being a developer, raising money, doing it by joint ventures and understanding the business thoroughly and now taking it to a market and really understanding the securitization of the product to raise money through the retail channels,” said Woodfine, who used to run Cedaridge Properties in Calgary before moving to Vancouver.
WCP invests in real estate through public, non-listed limited partnerships that raise equity and create leverage through secured debentures. The same structure and format will be used with each of its current offerings of four limited partnerships dedicated to developing separate asset classes of real estate within or near retail power centres in secondary markets in Western Canada.
Woodbine Professional Centres first to launch
Woodfine Properties, wholly owned by Woodfine, invested $1 million to complete the first tranche closing of a private placement in Woodbine Professional Centres (WPC). That initial funding will be used to secure development sites and Woodfine said offers have been put in for three- to four-acre properties in the Alberta communities of Grande Prairie, Airdrie, Okotoks and Sherwood Park.
WPC intends to build three- to five-storey office buildings of between 50,000 and 90,000 square feet to LEED Core and Shell standards, with a minimum of three designated full-size surface parking stalls per 1,000 square feet of leaeable area.
Woodfine said he has almost 20 years of experience working on power centre developments in secondary markets in Western Canada and went into semi-retirement following the global economic meltdown near the end of the last decade. However, he saw an opportunity and launched WCP.
“I wanted to go back into these markets because I know the people and the municipalities,” he said. “At every place where we’ve put offers in, I’ve either sold the land to the person who has it now and I want to buy a piece of it back or I have such a good rapport with the trades and the people in the approval process and the municipalities that it’s just so easy for me to go into these markets.”
Working with local community members
Once preliminary design criteria for the buildings is put in place, likely by COOKFOX Architects in New York City according to Woodfine, work will be given to local architects in each town.
“We’ll really support the communities we work in, whether it’s the architects, the contractors, the property management or the leasing agents,” said Woodfine. “We go out of our way to use the locals and even if they don’t have the capacity to do it, we work with them to show them how to get the capacity and can tell them who to work with.”
The other asset classes listed in the WCP marketing materials are: Woodfine Tech Industrial, which will combine showroom, office and warehouse space; Woodfine Retail Select, which will feature commercial bays in buildings sized between 15,000 and 20,000 square feet that will be suitable for banks, clinics, engineering companies and other similar users; and Woodfine Suburban Office, which will build six- to 15-storey buildings.
Saskatoon, Regina and Alberta cities St. Albert and Red Deer are potential markets in addition to the previously mentioned regions being targeted for WPC. Woodfine said all building will be completed on speculation without bank financing or pre-leasing.
The goal for all of the funds is to provide long-term investors with a means of achieving potential income, capital appreciation and long-term liquidity. Woodfine said he is seeking private placements worth a minimum of $250,000 each and, once $5 million is reached, the minimum investment will be dropped to $5,000 to make the funds more attractive to retail investors. The freely transferable units are valued at $100 each.
Endorsed by investment bankers
It was important for Woodfine to show potential investors he put his own money into WPC with the $1 million to close the first private placement. He said investment bankers have endorsed the concept and dealer/brokers are prepared to become involved once he shows he can privately raise $5 million.
“We’re proceeding as if the money’s not a problem,” said Woodfine. “We’d like to raise enough capital in the next two quarters to close on one or two of the properties, submit the development permit applications and then really push the investment bankers to get this on the street while we work the private market ourselves at the same time.
“The plan is to come out every quarter with an offering of $1 million to $5 million, which is a contribution toward the $50 million so that in the next quarter we go into we’ll have enough money to start securing and fully purchasing one property and then the second property so that by the time we get our building permits, we’ll have gone through another two quarters and will have enough money to build the building. It’s extremely well-organized.”
Available income will be applied principally to developing the projects during the procurement and development phases through the first seven years and investors are expected to see healthy-sized distributions after that, according to Woodfine.
WCP documentation states each limited partnership is required to pay out 90 per cent of its distributable income monthly to limited partnership unitholders. WCP owns 10 per cent of the units.
Long-term payoffs projected
Potential risks include construction cost overruns, demand from prospective tenants and not achieving lease rates assumed in pro-forma calculations, but Woodfine is confident investments in the closed-end funds will pay off handsomely down the line.
“If you put $250,000 into our deal, in the seventh or eighth year you’ll be getting $65,000 a year back,” he said. “The goal is to make three or four times your money.”
Woodfine, board chairman Ian Thomas and chief financial officer Alec Peck are based in Vancouver, but Woodfine said all business administration is being done out of a New York City office via Woodfine Management Corp.
If everything goes as planned in Canada, Woodfine said the long-term goal is to launch similar funds in the United States, Mexico and Europe in the future.