The Canadian Commercial Mortgage Strategy invests primarily in a portfolio of first mortgage loans and construction financing loans secured by properties located in Canada. The strategy focuses on high quality investments and does not mix in lower quality assets to enhance yields.
The strategy’s objective seeks to provide income while preserving capital over the long term to achieve a total return.
We believe experienced investment teams can achieve excess return on a risk-adjusted basis in commercial mortgages and other private asset classes.
Through our Canadian commercial mortgage team of investment professionals spread across five regional offices, we gather information about a broad range of potential investment opportunities. Ideas are sourced from the commercial mortgage broker community as well as local, regional and national real estate owners. We are able to customize lending solutions that lead to mutually favourable terms that may otherwise not be available in the open market.
We use a top-down approach to create an overall target risk profile for the strategy. The portfolio managers determine the suitability, benefit and ultimately the approval of any investment. Excess running yield on commercial mortgage holdings is expected to be the major source of alpha. We do not expect our top-down views to be a significant source of value added over longer periods, but rather a tool to manage risk at the overall portfolio level. As such, the strategy’s duration is managed to reasonably match that of its performance benchmark index.
We have a strong focus on managing loan-level risks. Each commercial mortgage asset that is purchased or held by the strategy is subject to a rigorous, in-house loan analysis and periodic review, as well as an independent credit risk review. Assets that positively contribute to the risk and return characteristics of the portfolio are considered for acquisition. Once a suitable acquisition target has been identified, the team performs a detailed loan analysis. This analysis focuses on market, borrower as well as property and income specific parameters.