It was announced Wednesday that Vancouver-based Anthem Properties Group Ltd. has received significant interest in, and will soon close, its initial public offering (IPO) raising capital for its “Citizen” project in Burnaby’s Metrotown.
In an Oct. 16 press release, Anthem said “it has received expressions of interest and commitments that in the aggregate are expected to achieve the maximum offering amount of $82 million.” Accordingly, the company has filed a final prospectus with securities regulators in each of Canada’s provinces and territories.
It is expected that the offering will close on Oct. 29, according to Wednesday’s release. The announcement was technically made by Anthem Citizen Real Estate Development Trust (REDT), a newly created, unincorporated investment fund with a five-year target investment horizon.
“The REDT is a newly created, unincorporated investment trust and was established for the primary purpose of indirectly owning an interest in a mixed-use, transit-oriented development project located in Burnaby, British Columbia,” the release stated.
“The project comprises 372 condominium units, 200 market rental units, 73 non-market, affordable rental units, 176 hotel suites and 4,881 square feet of retail space. The Project is currently beneficially owned by a subsidiary of Anthem Developments (Canada) Ltd. and its non-managing, co-investment partner.”
The offering is understood to be the first real estate IPO of its kind in Canada. CIBC Capital Markets is the sole agent for the IPO, and has successfully completed similar offerings for U.S. assets in Florida and New Jersey. The minimum investment for the Citizen IPO is $10,000.
“Policy changes, increased costs, shifting market cycles and more create an ongoing challenge for developers hunting for capital which requires innovative and creative thinking to get projects off the ground,” said Anthem CEO Eric Carlson in a statement when the IPO was first announced in September. At that time, the project was 77-per-cent pre-sold.
Some experts believe this new type of funding model has desirable features, such as allowing individual investors to participate in the industry on a project-by-project basis and spread their risk across multiple developments and developers.
While Real Estate Investment Trusts (REITs) have existed since at least the 1970s, they are generally used to buy and operate commercial real estate. Anthem’s REDT is different in part because the project is mainly residential in nature.
In accordance with securities laws, Anthem’s prospectus identifies a number of risk factors, including the possibilities that the project will not be developed or operated successfully, the operations of the REDT will be unprofitable, or cash from operations will be unavailable to make distributions to unit-holders.
