BHD provides secure, reliable and growing cash flows to clients seeking access to closed-door commercial real estate deals often out of reach to the public. Our REIF offers a higher total return compared to the competition, thanks to our strong network, diligent management, calculated acquisitions, and vested interest in real estate.
With the long-run strategy of our fund, and the strategic purchase and sale criteria, we can generate a weighted Internal Rate of Return (IRR) of 26.28%, which doubles the average return of six key markets surveyed in Canada. The Internal Rate of Return (IRR) you’ll receive with BHD Commercial Investments is essentially the total return of all the expected cash flows plus the expected return on the sale of the asset. Through diligent and cautious purchasing practices, BHD aims and expects to surpass all expectations of commercial IRR averages and set a new standard for investor returns.
The average high-return commercial space capitalization rate across Canada is between 5-6%, according to Colliers International Canada Cap Rate Report Q1 2013. BHD has a capitalization rate of 8.13%, well above average. Even more impressive, is the increase we witness with each strategic purchase. It increases as time passes thanks to escalating leases. Generally, other real estate funds open to the public offer a maximum 7% capitalization rate.
BHD strives to increase every performance measure with every purchase, meaning individuals who invest earlier are rewarded with higher returns over time.
Most commercial real estate investment funds operate under two different business models for leveraging. The first consists of purchasing all assets entirely through equity, which means a very secure investment but the sacrifice of a higher IRR; or, with the second approach they put forward the minimum amount of required equity and leverage to the maximum, which means a higher IRR but a very risky business model in the circumstance of short cash flows or vacancies.
BHD knows there’s a better way for investors to maximize their IRR and cut their risk.
We maintain a strategic loan to value (LTV) ratio that is anywhere between 30 to 55%, depending on the investments available. This means our fund owns some properties outright, while others are leveraged in order to capitalize on outstanding deals. We chose this direction because it maximizes cash flows for investors by maintaining a low LTV ratio. Our flexible leveraging model lets us undercut and outbid competitors on key assets, while continuing to offer the best possible balance of security and return-on-investment.
BHD is an extremely low overhead business. We are capable of maximizing cash dividends for investors, something that no other fund has been able to publicly replicate. We achieve a 6.96% (and growing) cash dividend, which means you receive a consistent flow of income.
Conversely, most stocks do not issue dividends at all, and many real estate funds only issue between 2-5% cash dividends, as this is the maximum they can provide.
BHD invests exclusively in Canada. With its solid economy and fiscally responsible government, strong banking and resource sectors, Canada provides a stable and growing environment for investors to mitigate risk.
The Canadian banking system and regulatory bodies are stricter than they are in other developed nations. These small but significant regulations give investors confidence, knowing that historically, Canada has weathered the impact of depressions or recessions better than other less-regulated countries. The 2008 subprime mortgage crisis in the U.S. is a key example. As of early 2014, some areas in the United States remain below their pre-2008 values. Canada witnessed a minor dip in 2008 and 2009 but has quickly experienced a bustling return by 2010.
Many of the best deals often happen behind closed doors or before a property is available to the public (pre-list). BHD is partly owned and wholly operated by realtors who have a vested interest in the fund. We have a strong network and vested interest in real estate, which is both a necessity and a huge advantage in the investment world, as great deals rarely make it to the market. Investors who wait for the right deal to come to them usually miss out entirely.
The growth of our investment fund is largely organic with minimal risk, giving us a competitive advantage over other funds. Many of the individuals who invest with BHD own successful businesses that require real estate; therefore, we seek out and capitalize on these opportunities to secure our investments. Our investors are often also our tenants. This level of security is rarely achieved in the public sphere.
This gives us unique knowledge of the financial strength of our tenants. It allows us to make calculated investments that minimize risk and maximize returns — decisions other funds must often leave up to chance.
BHD is governed by a board of directors with decades of experience and deep interests in the success of the company. Our board stands out because we aren’t independent, as other funds like to point out. While independent boards do a good job meeting urgent needs and ensuring immediate returns are adequate, they aren’t necessarily motivated to make the best possible long-term decisions for the fund. We don’t hold unnecessary meetings or compensate our directors from the pockets of our investors. Every member of our accountable and balanced board cares about ensuring the highest possible return for our clients.
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