For decades, public market equity and fixed income assets dominated most investment portfolios, but for reasons that we describe below, core private market investments now represent a meaningful component of the policy asset mix of many institutional investors. Among other things, core private market investments offer the following features:
{{ item.title }}
{{ item.description }}
Private market asset classes such as real estate, infrastructure, and commercial mortgages offer a diverse range of domestic and international investment opportunities, with varying return and risk characteristics. By focusing on high-quality investment opportunities available within these asset classes, our flagship private market strategies are designed to provide investors with the building blocks to establish a long-term foundation for their investment portfolios, alongside traditional fixed income and equity investments. The following core principles guide our investment philosophy:
{{ item.title }}
{{ item.description }}
{{ item.title }}
{{ item.title }}
{{footnote.id}} {{footnote.value}}
Perspectives 2025
Après plusieurs années de faibles volumes d’opérations sur le marché canadien de l’immobilier commercial, la confiance semble s’améliorer en raison de la réduction des taux de la Banque du Canada, baisse qui a commencé plus tôt cette année et qui devrait se poursuivre en 2025. Malgré les mesures dynamiques de la Banque du Canada, les taux des obligations du gouvernement canadien sont demeurés volatils, surtout récemment du fait de l’incertitude suscitée par le commerce américain. La stabilisation des taux d’intérêt du gouvernement du Canada devrait stimuler l’activité sur le marché de l’immobilier, puisque l’effet de levier devrait offrir du soutien et instaurer des conditions favorables pour cette activité. Cette confiance accrue a déjà mené à plusieurs opérations importantes visant des immeubles de bureaux récemment, et nous nous attendons à ce que les activités d’origination d’hypothèques commerciales continuent d’augmenter à partir de maintenant.
{{ item.title }}
{{ item.title }}
{{footnote.id}} {{footnote.value}}
Our approach
RBC GAM commercial mortgage platform
{{ card.title }}
{{ desc }}
* Please refer the ESG disclaimer at the end of the document.
The team focuses on investing in loans that offer attractive reward-for-risk, and benefits from exceptional access across the mortgage market through our market-leading origination network. To support our clients’ investment objectives, our platform offers access across the commercial mortgage risk and return spectrum from conventional to high yield, including strategies that comprise U.S. commercial mortgage-backed securities (CMBS).
{{ card.title }}
{{ card.description }}
The team typically reviews over $15 billion of mortgage opportunities and invests in $1–1.5 billion annually. Our platform provides access to opportunities, information, and enhanced visibility on risk in a private market where access to information is closely held. The team has a strong market position that benefits from real-time market information sourced from our existing $7 billion portfolio comprised of over 450 loans.1 We employ a disciplined approach to underwriting and continue to target quality properties, borrowers, and sponsors when originating new loans.
1 As at December 31,2024
{{ item.title }}
{{ item.title }}
{{footnote.id}} {{footnote.value}}
2025 outlook
As we look ahead to 2025, the divergence between positive underlying property operating performance and softer capital markets sentiment
that emerged in 2024 has created favourable investment conditions for
well-capitalized investors. Market support is expected to come from further potential cuts to the Bank of Canada’s policy rate, and declining new construction activity; these factors are expected to increase market tightness and support occupancy levels across all sectors.
While population growth is expected to slow in the near-term, we expect the more sustainable long-term rate of growth to remain robust and supportive of the asset class. Meanwhile, key risks to monitor include slowing economic growth and labour market headwinds. In addition, certain investors remain challenged in accessing equity to either fund development commitments or lower leverage levels, reinforcing the value of a low leverage, diverse core asset/core market strategy.
{{ item.title }}
{{ item.description }}
Our approach
Our core Canadian real estate strategy provides investors with access to a high-quality portfolio of assets diversified by geography, property type, and tenancy. Through its adherence to quality and diversification, the strategy seeks to provide a predictable and growing source of income, and stable total returns over the long term. The strategy is an open-ended investment trust with a quarterly subscription and redemption schedule.
Underpinning the design of our strategy is the belief that an allocation to core Canadian real estate – core assets in core markets with core tenants – can be a foundational element of an investor’s portfolio, working alongside traditional fixed income and equities. The strategy gives investors exposure to the asset class in the most efficient structure possible, eliminating foreign tax, transaction costs, and currency drag, while positioning investors to integrate global exposure through other more liquid asset classes.
The strategy was created through a distinctive partnership with British Columbia Investment Management Corporation (BCI), a leading Canadian pension plan manager in one of Canada’s largest diversified core commercial real estate portfolios. Investors benefit from the collective oversight of two independent professional investment firms in a unique partnership model whereby both firms are economically and reputationally aligned to deliver long-term investment performance.
The strategy’s investment thesis is focused and consistent: hold a diverse portfolio of quality real assets in core locations that will benefit from positive demand and supply characteristics over time; invest in each asset’s modernization; maintain a strong and liquid balance sheet; and commit to high environmental, social, and governance standards.
Unprecedented alignment
A partnership that represents complete economic and reputational alignment between two of Canada’s most respected fiduciaries, RBC Global Asset Management and BCI/QuadReal.
Investment discipline
Aligned investment and asset management decision-making provides discipline, focus, and access to off-market opportunities.
Diversification totale
Accès à un portefeuille d’immeubles distinctifs d’une valeur de plus de 10,0G$ situés dans les principales villes canadiennes, diversifié selon les catégories d’actifs, les régions et les locataires.
Gouvernance et durabilité
Grâce à une surveillance conjointe, la gouvernance est exceptionnelle et les résultats ESG se classent continuellement parmi les meilleurs de l’industrie.
Core portfolio
Core portfolio
Aperçu des marchés 2024
Les investissements dans les infrastructures privées se sont avérés relativement modestes pendant la majeure partie de 2024, et les exigences en matière de rendement des capitaux ont semblé augmenter légèrement au cours de l’année. La diminution des activités de placement et l’augmentation des exigences en matière de rendement sont attribuables à de nombreux facteurs, dont les suivants : une hausse du coût du capital, une accentuation des exigences en matière de dépenses en immobilisations du fait de l’inflation, un resserrement des marchés du travail, des problèmes résiduels dans les chaînes logistiques et une incertitude accrue quant aux revenus prévus, étant donné le risque élevé de ralentissement économique.
La pénurie de capitaux qui en est résultée a procuré des occasions aux investisseurs disposant de capital à investir. Le petit nombre de collectes de fonds permettant d’amasser des montants substantiels pour certains gestionnaires de fonds a engendré une vive concurrence pour les opérations visant les très grandes infrastructures, mais moindre pour le segment des infrastructures à moyenne capitalisation. Nous avons donc constaté une augmentation du profil de risque et de rendement prévu pour certaines occasions à moyenne capitalisation.
Nous avons également observé que plusieurs grands investisseurs institutionnels sont à la recherche de partenaires chevronnés partageant les mêmes objectifs pour soutenir la future croissance de leurs placements dans les infrastructures privées, étant donné l’approche des limites de concentration internes de leurs portefeuilles. Cette situation a rendu disponibles un ensemble d’occasions de placement de grande qualité sur le marché ainsi que d’éventuels partenaires de coinvestissement bien établis.
Chacun de ces facteurs a contribué à ce qui s’annonce, de l’avis de beaucoup, comme une bonne année pour les acheteurs de sociétés d’infrastructures privées.
Investissements dans les infrastructures, soutenus par de solides données fondamentales
{{ item.title }}
{{ item.title }}
{{footnote.id}} {{footnote.value}}
Perspectives 2025
La baisse des taux d’emprunt attribuable à l’assouplissement de l’inflation a laissé présager une augmentation des flux d’opérations dans l’année à venir, puisque les investisseurs voient là l’occasion d’augmenter leur levier financier pour financer des opérations. Même si l’appétit accru pour le risque devrait constituer un facteur favorable aux activités de placement, les investissements un peu plus défensifs, à savoir ceux ayant une excellente qualité financière (niveau relativement faible d’endettement, lequel est majoritairement à taux fixe) et un rendement à échéance protégé contre l’inflation, continueront d’offrir les occasions les plus intéressantes, à notre avis.
{{ item.title }}
{{ item.description }}
Our approach
Our global infrastructure strategy aims to provide investors with attractive risk-adjusted returns comprised of income and capital appreciation. The strategy invests in a portfolio of core and core+ private infrastructure assets diversified by sector and geography, with a focus on developed market countries included in the Organization for Economic Co-operation and Development (OECD).
A focus on developed markets provides benefits of stable economic growth, positive demographic trends, yields underpinned by contractual income, and inflation sensitivity. The strategy can also offer exposure to positive environmental, social, and governance themes (infrastructure 2.0), as we seek investments that support economic development, enable higher standards of living, and drive the transition to a more sustainable future.
The strategy is open ended to align investor capital with the long asset lives of private infrastructure assets. The strategy is actively managed by the RBG GAM Private Markets Global Infrastructure Investment team and leverages the internal support of RBC GAM’s investment and operational platform as well as the external support of experienced and aligned co-investment partners and advisors.
{{ item.title }}
{{ item.description }}
The strategy benefits from proprietary (and often non-competitive) access to a broad range of unique and high-quality investment opportunities. This access is attributable to:
{{ item.title }}
{{ item.description }}
This broad range of high-quality deal flow gives the team a wide opportunity set to select from, and allows them to capitalize on situations where there may be gaps in the supply and demand for capital in certain segments of the infrastructure market.
The strategy’s focus remains on building a globally diversified portfolio of high-quality core/core+ private infrastructure assets alongside experienced and aligned co-investment partners. With low-leverage and a strong pipeline of investment commitments, we are entering 2025 in a position of strength to deploy capital into a capital-constrained environment. We are actively considering a broad set of potential transactions that have near-term execution timelines, and we continue to see additional new deal flow every quarter driven from existing and new co-investment partners. As we consider portfolio construction and diversification within the strategy, the addition of two new investments in 2024 brought attractive diversification benefits to the portfolio by sector, geography, value driver, and co-investment partner. Going forward, we are prioritizing additional sectors and value drivers to enhance the diversification of the strategy.
Thank you for your interest in our perspectives. We hope this document serves as a useful reference, and your portfolio managers welcome the opportunity of further discussion with you.