1. What is the nature of your business?
The Scott McGillivray Real Estate Fund is a private equity fund, focusing on development projects in primary Canadian Markets. The objective of the fund is to build a diversified portfolio of off-market private equity real estate investments (ownership stakes) in residential development properties which will be intensified and sold as condos or purpose-built rentals.
The reason we started this fund was because the number one question Scott has been asked in his 20+ years as a real estate investor is, “Scott, how can I invest with you?” With this fund, we can finally answer that question and give investors some confidence that they are investing in the very same projects Scott and his team invest in.
2. What do you primarily use the capital raised for?
The capital we raise is deployed into 3-4 development projects per fund, meaning investments are diversified within the fund. Our first fund closed at the end of 2022 with just over $15M capital raised, and our second fund, Fund II, is expected to close to new investment this summer with approximately $50M capital raised. As of right now we’ve invested in two projects for Fund II, and we expect to secure two more before the end of the year.
3. Why do you choose to raise money from EMDs rather than on your own?
We utilize EMDs to act as our compliance branch. They help us navigate the compliance and regulatory environment alongside our legal counsel. We find that it’s helpful to separate the functions of the issuer from the compliance branch so we can ensure a completely unbiased, third party look at each investor’s needs and suitability. It really comes down to what we believe is best for our investors.
4. Why stay a private company instead of becoming a public company?
Going public adds a lot of bureaucracy and inefficiencies that add no real value to the investors in my opinion. At the end of the day, the money spent ultimately come out of investor's returns, and at this stage, we don't feel it's necessary.
5. Over the past several years, many changes have been made to the exempt market rules and regulations. What is the biggest change you have seen and explain how it has affected your business.
The Scott McGillivray Real Estate Funds (Fund I & Fund II) raise capital using the Offering Memorandum exemption. While the industry has seen several changes over the past few years, the Offering Memorandum itself hasn’t changed much during that time, so from a regulatory perspective, we have not been directly impacted by the changes. However, in an indirect way, the support the regulators have been providing to help non accredited retail investors learn more and access the private (exempt) market has helped improved the overall education about the investments we offer and the difference between public and private investments.
6. What do you think of the reporting regime in the private markets?
I think it’s important to keep investors informed and up-to-date, so a reasonable amount of regulated reporting is necessary to protect their best interests – especially given the large variety of issuers. At the end of the day, it’s important to hold everyone to a certain standard so investors can have as much visibility as possible.
