TORONTO, ONTARIO--(Marketwired - May 27, 2014) - Investors in the Fortress Real Capital syndicate mortgage that catalyzed the development of an under utilized site were rewarded today with a majority exit and a higher than anticipated return on the balance of their investment.
Investors earned 19% in just over 2 years (14% already distributed and 5% accrued) on the 61% of principal capital already returned. An annualized return of 18% to 24% will be generated on the balance over the next 30 to 60 days as investors achieve full exit.
The former home of a Benjamin Moore paint plant, the 2.6 acre parcel along St Clair Avenue West was primed for improvement. This was a key neighbourhood going through wholesale improvements and part of the recent Avenues improvement initiative by the City of Toronto.
In a letter to the developer in January 2012, Ward 11 Councilor Frances Nunziata wrote, "With new residential development south of 6 Lloyd Avenue and existing residential adjacent to it, it is my view, and that of area residents, that 6 Lloyd Avenue should be redeveloped for residential uses."
"We chose to get involved in this project partly because of the strong civic support shown at outset", said Fortress Real Developments CEO Jawad Rathore.
"We also loved the amount of infrastructure and commercial investment in the area," continued Rathore. "The TTC has spent over $150M dollars on adding streetcars and RioCan has a substantial multi million dollar investment in their recently completed 550,000 sq. ft. Stockyards project across the street."
The exit for investors at Lloyd Avenue is the third for Fortress Real Capital investors in the past eight months and the second return of capital this month. Fortress Real Developments COO Vince Petrozza, also a mortgage broker with Centro Mortgage Inc., credits this to hard work and careful planning. "When we underwrite a deal we always look at how to exit a project and protect investor principal and, of course, generate them competitive returns. Even though full draft plan approval wasn't yet achieved, enough substantial value was added to the deal for the investor's to be refinanced out. That's a testament to our valuation process and site selection."
Over the past two weeks, key executives at Fortress Real Developments have been asked to meet with staff from the Bank of Canada to provide feedback and commentary. The focus and strategy of the company continues to be acquisitions and joint ventures in major markets with established industry partners that garner strong bank support.