- What Residences Consortium Initiative envisions up to 10 adult housing sites, 1,385 units
- Why Demand is rising for adult lifestyle and senior housing in the province
- What next RCI is seeking equity partners to develop the portfolio
A Canadian developer is seeking $60m of equity to support the development of a massive adult lifestyle portfolio in the Greater Toronto Area with an anticipated value north of $1bn at stablization.
The Residences Consortium Initiative envisions building up to 10 adult lifestyle housing sites with 1,385 units over the next seven years. The project is expected to cost $765.6m and create $315.7m of value. Projected capitalization rates range from 5% to 6.5%.
The proposal aims to leverage active projects in Aurora, Barrie and Burlington as a foundation for the development. Marketing materials indicate that RCI’s available land inventory includes zoned and development-ready sites in Whitby, Markham and Keswick – all of which could accommodate two phases of development.
The initial phases will focus on independent apartment units, and the following phases are being envisioned as seniors-focused units with optional lifestyle assistance. The inventory lands will be rolled into a limited partnership called RCI LP and will not carry any third-party debt.
The partnership is looking to raise up to $60m secured by Class-A preference shares, according to the marketing materials. The Class A shares will receive an 8% annual return and 49% of the RCI LP net profits and ultimate portfolio disposition.
The RCI sponsors will roll in existing land and building equity with an asset value of approximately $40.3m in exchange for Class B shares – equal only to this contribution. The combined equity, accompanied by institutional financing, is planned to take each project to stabilized revenue, allowing the developers to acquire long-term financing.
Class A shares will be issued to investors in units of $2m each. RCI LP may issue up to 30 of these units. Alternatively, the partnership could replace a portion of the units with traditional development debt, but only if the debt does not negatively impact the projected returns to Class A shareholders.
Several initial projects are under construction or are already generating rental income, providing a steady cashflow to support the next phases. Construction for the remainder of the projects is to run from 2024 to 2030.
The first project, dubbed Residences on Yonge, in Aurora, is in the lease-up phase. It has 105 units at 15520 Yonge Street.
The second project, Residences on Owen, in Barrie, is under construction and will have 359 units. Construction at 55-57 McDonald Street is expected to wrap up in 2027.
Construction is expected to start on Residences on Cumberland, in Burlington, in spring 2025. Builders expect to complete the 124-unit building, which is working through site-plan approval, in 2026. The address is 454-462 Cumberland Avenue.
Ontario is in the midst of a significant demographic shift, with adults 55 and up forming the fastest-growing demographic in the province, according to the initiative’s promotional materials.
Separately, Statistics Canada figures show that the number of people 85 and older more than doubled since 2001, and currently represents 2.3% of the population.
An Altus report from earlier this year painted a picture of strong demand drivers and persisting supply shortages for the sector. “Returns for seniors housing, for both income and appreciation, often exceed other sectors, including multi-family, and the sector has been increasingly capturing the attention of real estate and institutional investors, developers and operators,” the data firm said.
