Churchill International Property Corporation
Suite 1010, 1040 West Georgia Street, Vancouver, BC Canada V6E 4H1
With over $1 Billion in successful acquisitions, financing, management and dispositions, in income producing real estate, Churchill International Property Corporation has never lost an investors capital in over 40 years. Philip Langridge and Brad Wise have a combined 70 years international residential and commercial real estate experience and have established an outstanding track record of successful offerings with an average IRR of 16.4% on completed funds.
A Limited Partnership is a legal structure that is widely used for investing in commercial real estate. Investors purchase units in the partnership which simply represent a percentage ownership in the Limited Partnership, similar to shares in a corporation. A real estate limited partnership is comprised of a general partner and one or more limited partners. The General Partner typically manages the asset(s) on behalf of the partnership. The limited partners, on the other hand, are passive investors who enjoy the benefits of ownership without the hassles of management. In general, limited partnership units are not publicly-traded, therefore liquidity is limited and these securities generally involve investment horizons of 5 to 10 years, but not always. Churchill has been using the limited partnership structure since 1989, due to the major benefits it affords our investors.
Real estate is the ultimate investment – nothing else provides the same kind of advantages. This classic alternative asset class has always been an essential component in any diversified investment portfolio – helping reduce volatility and enhance returns through both income and capital-appreciation potential. Real estate is a physical asset that cannot be traded by a click of a button by an online brokerage. You can physically walk the grounds of the property, and inspect the building. As such, it’s not subject to the volatility of other investments like stocks, where change can happen fast. Many of the world’s millionaires have made their money in real estate. Investing in high quality real estate via a Limited Partnership or a REIT allows investors to increase their net worth by receiving positive cash flows and capital appreciation. In addition, the tax deferral characteristics of these investments enable investors to accumulate further wealth by utilizing funds that would have otherwise gone to pay income taxes.
A REIT (pronounced “reet”), or Real Estate Investment Trust, is a trust that owns or finances income-producing real estate. Modeled after mutual funds, REITs provide investors of all types regular income streams, diversification and long-term capital appreciation. Most individual investors do not have the capital or management skills to achieve direct ownership of an industrial property, office building, retail shopping plaza or multifamily apartment complex. REITs expose investors to real estate in a way that provides steady, tax-advantaged income, plus the potential for capital appreciation should the properties increase in value.
Most individual investors do not have the capital or management skills to achieve direct ownership of an industrial property, office building, retail shopping plaza or multifamily apartment complex. REITs expose investors to real estate in a way that provides steady, tax-advantaged income, plus the potential for capital appreciation should the properties increase in value.
REITs can do just about everything a mutual fund, individual stock or bond can do, but because real estate has limited correlation to most other stocks and bonds, REITs provide one more layer of diversification – contributing to effective wealth creation for individual investors.
Investing in REITs is an excellent way to diversify a portfolio and establish a steady income stream – without sacrificing growth potential. Real estate offers competitive investment performance relative to stock and bond market indices. And, by investing in real estate through a REIT, you get the following additional growth drivers:
Each Limited Partnership is a unique, stand-alone entity, and so they are priced differently. In general, the equity portion of our private placement partnership units tend to require a minimum investment of $25,000 and are available only to Accredited Investors. Churchill REIT is available to eligible investors under the Offering Memorandum exemption with a minimum investment of $5,000 required.
No. Churchill raises funds through private placements and public offerings to a broad range of individual and institutional investors. Having multiple capital sources means that we are able to pursue many types of deals, pairing the right opportunities with the right investors in the process. Most of our private placement Limited Partnership offerings do require a minimum investment of $25,000 and are available only to Accredited Investors. However, our public funds are made available to retail investors and our private REIT – Churchill REIT – is available to eligible investors under the Offering Memorandum exemption and requires a minimum of investment of just $5,000.
An accredited investor, or sophisticated investor, is an investor with a special status under financial regulation laws in Canada. Generally, accredited investors include high-net-worth individuals, banks, and other large corporations, who have access to complex and higher-risk investments. The assumption underlying accreditation is that individuals or organizations who qualify will have sufficient financial sophistication to understand and take on the risks associated with certain investment offerings. Some types of financial offerings may only be made to accredited investors.
In Canada, an “Accredited Investor” (as defined in NI 45 106) is:
A Limited Partnership is a legal structure that is widely used for investing in commercial real estate. Investors purchase units in the partnership which simply represent a percentage ownership in the Limited Partnership, similar to shares in a corporation. This legal structure protects every unitholder from liability.Title to each property in the fund portfolio is registered at the Land Titles ofﬁce in the region in which the property is located, and in the name of the entity that holds title in trust for the Partnership. Typically, Limited Partnerships distribute all available cash flow from operations to unitholders after the deduction of maintenance capital. In addition to priority in profit, tax deductions, and potential share in the success of the enterprise, the limited partner is “limited” in potential loss, since all he/she can lose is his/her investment, and the general partners alone are subject to claims, debts in bankruptcy and lawsuits against the partnership.
Churchill funds are non-traded securities. There is no secondary market for Limited Partnership units. With regard to our Limited Partnership funds, liquidity is provided by the distribution of 100% of the net proceeds from the sale of each property in the fund portfolio.
With regard to Churchill REIT, investors should allow for a five-year investment horizon, however, we understand unforeseen personal situations may require an investor to liquidate their holdings. To allow for this, Churchill REIT has incorporated a liquidity mechanism into the fund that allows for redemptions on a graduated discount basis starting at 95% of NAV up to the first anniversary of purchase, 96% of NAV up to the second anniversary, 97% of NAV up to the third anniversary, 98% of NAV up to the fourth anniversary, 99% of NAV up to the fifth anniversary, and 100% of NAV after 5 years. The REIT will calculate and publish NAV per Unit on an ongoing quarterly basis. Please refer to the Offering Memorandum for the full Terms of Securities.
Churchill funds are non-traded securities, and generally speaking, they are illiquid investments. However, Churchill REIT does have a liquidity mechanism that allows for redemptions on a limited, monthly basis at Net Asset Value per Unit. The REIT will calculate and publish NAV per Unit on an ongoing quarterly basis pursuant to the Valuation Policy as described fully in the Churchill REIT Offering Memorandum. The overarching principle of the Trust’s valuation policy is to determine a fair value for each of the Trust investments, or the price that would be received for that investment in orderly transactions between market participants. Each Property in the Trust’s portfolio will be externally appraised at least once every three years by accredited independent appraisers with recognized and relevant professional qualifications and with recent experience in the location and category of the investment property being valued. The fair values of the investment Properties will be determined using recognized valuation techniques in accordance with Canadian Uniform Standards of Professional Appraisal Practice.
In the world of private-equity capital calls or “cash calls” are somewhat common. In such a case, the General Partner issues a call for capital to the Limited Partners that is over and above their initial capital contribution at the time of syndication. Often the Limited Partners are contractually obliged to respond to these requests pursuant to the Limited Partnership Agreement. Churchill funds do not incorporate or contemplate contractual capital call obligations in their Limited Partnership Agreements and Churchill has never issued a capital call.
Churchill only invests in properties with sufficient projected cash flow to cover mortgage payments, operating expenses and the targeted annual return (cash distributions) of 7% to investors. Investors generally receive cash distributions on a quarterly basis, along with an update letter. Over the course of twenty-seven years and twenty-four funds, there have been instances when quarterly cash distributions were suspended in order to fund capital improvements and/or accretive growth opportunities with the objective being to maximize the total return for investors. The business model has always been based on conservative cash flow with value appreciation opportunities. Our private REIT will benefit from being an open-ended trust that can continually access capital for value creation opportunities, and thus mitigate the risk associated with disruptions to distributable cash flow. We have established an excellent track-record over nineteen completed funds, with an average IRR of 16.4% and we have never lost one dollar of an investors original capital.
Each year during tax season, Churchill prepares and distributes the relevant tax reporting information so that our investors or their tax professionals can include it on their tax return and process it as usual. In a limited partnership, each limited partner shares in the profits or loss of the business with the other partners and you are allocated a proportionate percentage of the partnership’s income or loss in your income or loss. However, your liability with respect to the partnership’s debts is limited. In general, you can only lose up to your original investment. The limited partnership structure permits certain tax deductions – such as capital cost allowances, asset management fees and start-up costs – to flow through to investors. As a result, a large portion of the investment is returned to investors through personal income tax savings. Generally, a Partnership does not pay income tax on its income and does not file an income tax return. Instead, each limited partner files an income tax return to report their share of the partnership’s net income or loss. This requirement for each partner to report their share of the partnership’s net income is the same whether the share of income was received in cash or as a credit to one of the partnership’s capital accounts.
Churchill has had more than 8,000 limited partners in our syndicated funds.
The Limited Partnership structure limits each investor’s liability to the amount of the original investment. Although Churchill only invests in projects with sufficient projected cash flow to cover mortgage payments, operating and management expenses, and provide cash distributions to investors, there are additional safeguards built into the Limited Partnership structure. The General Partner generally provides a commitment to advance funds to the Limited Partnership for a 5-year period should there be insufficient cash flow to cover the mortgage payments. Furthermore, each project includes a comprehensive insurance package at all times.