Trez Capital Freezes Fund Redemptions, Weighs Strategic Alternatives

Trez Capital is suspending redemptions across five of its real estate funds, citing a flood of withdrawal requests among other factors.

Vancouver-based Trez Capital is one of the largest nonbank commercial mortgage lenders in Canada, with some $3.8B in assets under management, according to the company. The firm said it was making the move to manage an elevated level of redemption requests, ongoing loan obligations and active loan workouts. 

Trez simultaneously announced a review of strategic alternatives Monday. 

The impacted open-ended real estate funds are Trez Capital Prime Trust, Trez Capital Yield Trust, Trez Capital Yield Trust U.S. CAD, Trez Capital Yield Trust U.S. USD and Trez Capital Private Real Estate Fund Trust.

The company said no other funds are impacted, although those are the only investment vehicles listed on the company’s website. Trez does have a broader debt and equity platform that includes direct investment in specific projects, including a recent focus on residential joint ventures. 

“The temporary suspension of redemptions is a proactive measure designed to safeguard the long-term interests of our investors while preserving the flexibility of the Funds,” the company said in a Tuesday email to Bisnow. “Importantly, monthly distributions will continue as scheduled — consistent with Trez Capital’s nearly 30-year track record. We will manage this period with discipline and transparency while maintaining the stability that has defined Trez Capital through multiple market cycles.”

Trez didn’t provide a timeline for when redemptions would resume or when the outcome of the strategic alternatives review would be disclosed. 

The freeze in redemptions is in contrast to the comments from Trez management in first-quarter commentary released on May 21.

“Trez Capital’s debt funds continued to deliver consistent returns and maintain stable net asset values (NAVs), underpinned by high-quality loans in resilient residential markets with strong fundamentals,” the company said in a statement at the time. 

Management said Trez's multifamily assets in Sun Belt markets like Texas and Arizona had benefited from a stabilizing interest rate outlook across the broader market.  

In June, Trez and Brookfield Residential, another Canadian real estate giant, announced a joint venture to build a master-planned community called Osprey Creek roughly 30 minutes south of Orlando, Florida. 

Osprey Creek includes more than 900 single-family residential lots that will be developed with a focus on affordability and first-time homeowners. Executives at Trez said the project underscored the company's broader strategy to form joint ventures to build communities in high-demand markets.