​Getting in on niche deals in the exempt market

​Getting in on niche deals in the exempt market

​Getting in on niche deals in the exempt market
Cranson Capital, a Toronto-based boutique investment firm, offers up deals in the so-called exempt market. Accredited investors can get spots in private placements in downtown Toronto condo deals, technology start-ups and medical buildings.

WP recently outlined a $14.5 million deal that offered over 100 accredited investors a direct equity stake in a condo deal involving an increasingly-rare parking lot in downtown Toronto that will give way to a 50-story condo in the core of the city that is "Manhattanizing." It`s a juicy deal in a hot market. The expected rate of return over five years is 122%.

No wonder the Canadian alternative investment sector is heating up. 

But Cranson has a couple of other investment ideas. Another niche sector the company likes, medical buildings. Universal healthcare means steady business in these properties. The tenants are long-term and stable (physicians). Best yet a government program is making money available to upgrade existing “B” and “C”-rated facilities to "A" status. Devon Cranson, the founder of the firm, likes the steady, stable growth the sector offers.  “There is yield with upside. As the buildings are upgraded unit value increases,” he says.

At the end of July the company completed a $2.59 million private placement for the Columbus Medical Arts Building Medical building in Vaughn. Investing along with another Toronto-based private equity group, Mohawk Medical Growth Partners (a firm that specializes in the medical building market) the property is in a city that will soon be serviced by a subway line extension anticipated to finish in 2016. A  new hospital is coming in 2019. Easily accessible and well-maintained medical office buildings will be in demand. Cranson suggests the building will benefit from increasing rents. He expects it will generate an internal rate of return (IRR) of 14%, or a steady yield of 8-8.5% on the security. “The government will pay for upgrades. This is a safe investment. For investors it's like having government bond at 8%,” said Cranson.

That is, the exempt market, so often considered risky and speculative, is not always so.