Who is The Circadian Group?
The Circadian Group is an organization specializing in real estate development, construction management and real estate investments, making it possible for qualified investors to participate in – and benefit from – all the stages of real estate development commencing at the “ground level”, from start to finish. The principals of The Circadian Group began investing in and developing real estate over 25 years ago, as the successes accumulated, a growing number of onlookers anxious to benefit from this knowledge and ability began requesting the opportunity to financially participate in new projects as investors or partners. Understanding the need to ensure investments and partnerships were acceptable within the rules and guidelines as outlined by the provincial securities commissions, Real Estate Limited Partnerships (RELPs) were selected as the preferred investment vehicle to provide the security, flexibility, limited liability and preferred returns that investors were interested in achieving. Investors are naturally attracted to the benefits intrinsic to real estate: security, proven performance over time, capital appreciation and growth. As an experienced developer, The Circadian Group has the inside track on understanding what’s happening in the development industry and to see where the market is heading and where construction costs are going. With the depth and experience of the team, investors can be assured the developments get done – profitably and on time.
What is the role of the real estate developer?
A developer envisions, creates, controls and orchestrates the process of development from start to finish. The developer takes on the greatest responsibility in the creation or development of real estate—and normally receives the greatest rewards. Typically, a developer purchases and controls a parcel of land, designs the development concept and plans, determines the marketing strategy for the property, obtains the necessary public approvals, arranges financing, constructs the structure, then leases, manages and ultimately sells the development. Developers work with many different partners along each stage of the process, including architects, city planners, engineers, surveyors, inspectors, financial institutions, lenders, contractors, sales & leasing agents and others.
How important is the role of the real estate developer?
Real estate developers play an extremely important role in controlling costs and in improving the efficiency and effectiveness of development projects. The best real estate developers are visionaries, looking years – even decades – beyond today’s world to take advantage of regional and city planning strategies to secure future projects. At their finest, real estate developers are entrepreneurs who seek out opportunity and drive it to reality, and in the process improve our communities and cities. Tomorrow’s retailers, professionals, manufacturers and employers will have a future home because today’s real estate developers had the daring and vision to foresee their needs.
What is the development process?
Effective management of the development process requires experience, strong relationships with all the parties involved and a hands-on management approach by a qualified developer, such as The Circadian Group. The Circadian Group effectively manages and controls all stages of the development process – site selection, purchase negotiations, planning, zoning & approvals, design, market feasibility, construction/project management, site servicing, project marketing and sales.
Who will be the developer for the Real Estate Limited Partnerships?
The developments will be managed by Circadian Developments Ltd., a group that specializes in the strategic selection, acquisition and planning of major real estate development projects, from mixed use developments, recreational and retirement developments to retail commercial properties and industrial warehousing. Circadian Developments focuses on creating value from the very early stages of project acquisition and bringing them to completion.
What is a Real Estate Limited Partnership (RELP)?
A RELP is a popular form of real estate investing with many desirable features – including financial rewards, investment security, shorter investment terms and potential tax benefits. A RELP investor is spared any development management responsibilities, relieved of all liability for principal debt, personal guarantees, and in most cases can make an investment of any size. The General Partner is granted all decision-making responsibilities for the investment partnership, and assumes all liability for it. The other partners in the partnership are the Limited Partners – which means financial obligation is limited to their initial investment amount.
RELPs are commonly used for shorter-term projects and developments, and normally do not offer interim cash distributions. They are formed to take advantage of two types of short-term investment opportunities: Build-from-Scratch Development Projects; or Renovate-and-Sell Projects. It is the high potential for capital appreciation that makes a RELP an attractive investment. In most cases, profits, after expenses, development costs, and fees are disbursed to the Limited Partners.
RELP investments are generally not redeemable before a predetermined “liquidity event”. All the capital raised from investors and mortgage lenders is earmarked for the purchase of the property and to fund the development with the objective of increasing its value in the shortest time possible. The investor is normally in the partnership for the duration of the project.
Initially the focus will be on core opportunities available in Metro Vancouver – with specific attention to infill development opportunities in Vancouver, the North Shore (North & West Vancouver), Burnaby, Richmond, New Westminster, and the Tri-Cities (Port Coquitlam, Coquitlam, & Port Moody).
What is meant by Infill Development?
Infill Development refers to improvements on land adjacent to and between existing developments; it is a highly effective way of accommodating increased population and growth in a community without expanding or increasing the boundaries of development. With Metro Vancouver’s high desirability as a livable city, its limited property supply and its natural boundaries – water, mountains, the USA border and the preservation of Agriculture Land Reserve (ALR) lands – there is great opportunity for infill developments in Vancouver, Burnaby, North Shore (North & West Vancouver), New Westminster, Richmond and the Tri-Cities (Port Coquitlam, Coquitlam, Port Moody).
What are the risks associated with Land Development?
Due to the complexity and uncertainty, as with any type of business venture, Land Development has a degree of risk that needs to be controlled and mitigated. Conversely, Land Development also carries with it a very lucrative opportunity for profits. The more effectively one is able to control and manage the uncertainties, the more predictable are the end returns and profits. Within the realm of new construction, some of the primary uncertainties revolve around demand and marketability, obtaining and managing construction finances, controlling construction costs and dealing with delays. In the context of a Limited Partnership, these risks are all controlled and borne by the General Partner.
Demand Uncertainty & Marketability
• At Circadian, each project begins with a period of due diligence which includes extensive market analysis and research. Recent sales of comparable real estate, municipal and regional economic outlook, review of official community plans, demographic statistics and population growth projections are all factors that contribute to the current demand for the particular type of development proposed. By thoroughly researching and analyzing all factors, a developer is able to establish a price point below market value where pre-sale units will be absorbed almost immediately. This price point is then used in the budget to project profitability and to make a decision to proceed or not.
Financial Risks
• Construction Financing is only granted upon a qualified developer providing the necessary corporate and personal guarantees and meeting all the development criteria established by the lending institution or financial partner. This includes achieving the desired threshold of presales or preleasing for each development.
Construction Costs & Delays
• Construction delays which directly relate to increased construction costs – can be mitigated by establishing fixed price contracts and by partnering with a qualified developer and construction management group, such as The Circadian Group.
Limited Partners or investors should expect that as with any real estate investment, due diligence is very important. Investors should carefully review the Confidential Investment Memorandum (CIM) provided for each development or limited partnership – the CIM will provide the investors with a full disclosure of the details of the investment opportunity. It is recommended that investors consult with their lawyer and accountant prior to committing to a subscription for a real estate investment
How do we invest with The Circadian Group?
The Circadian Group only introduces investment opportunities, such as Limited Partnerships, to qualified Accredited Investors. If you qualify as an Accredited Investor, please register (link to User Login) and an Investor Relations partner will contact you to walk you through the subscription process as well as review current Investment Memorandums and supporting documents.
Am I required to be an “Accredited Investor”? What is an “Accredited Investor”?
Yes, you must be a qualified Accredited Investor to be eligible to invest with The Circadian Group. For residents of British Columbia and Ontario, an Accredited Investor means:
• An individual who, either alone or with a spouse, beneficially owns, directly or indirectly, financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000; or
• An individual whose net income before taxes exceeded $200,000 in each of the two most recent years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the two most recent years and who, in either case, reasonably expects to exceed that net income level in the current year; or
• An individual who, either alone or with a spouse, has net assets of at least $5,000,000.
As a Limited Partner Unit Holder, what do we actually own?
You will own Limited Partnership Units, similar to owning shares in a corporation. The Limited Partnership will own the vacant land or property purchased for a multi-family residential, mixed-use, commercial or industrial development.
What is the minimum investment?
Each Real Estate Limited Partnership will have a subscription price per unit and a minimum subscription amount of units required. This may differ for each development.
Is the Limited Partnership RRSP eligible?
No. The Limited Partnership is not RRSP eligible (at this time).
As a Limited Partner, what is my liability?
A limited partnership is designed to shield an investor from liability. As a limited partner, you’re liable only for your original investment amount. The General Partner assumes liability for the necessary mortgage debt encumbered on the project, all personal guarantees, development and construction management responsibilities and all other liabilities.
What are the Key Benefits of the Circadian (Atkins 2010) Limited Partnership?
8% Preferred Return, 50/50 Profit Share with the General Partner, 2 year term or less: A powerful feature of this investment opportunity is the 8% Preferred Return, annualized non-compounding, which means the Limited Partners are paid first, before the General Partner is paid its portion of profits. If the development makes 8% or less per annum – all profits go to the Limited Partners, IF returns exceed 8% per annum then the 50/50 profit share kicks in and investors will receive the 8% Preferred Return and a 50% share of the profits over and above the Preferred Return. The Preferred Return is a simple rate of return, 8% annualized non-compounding, but cumulative (i.e., after 2 years – return is 16%). The Preferred Return is not a guaranteed return; it depends on how successful the project is.
Returns are based on performance, the Limited Partners make their money first with the 8% Preferred Return and they participate in a 50% profit share. It is a short term investment, projected to be less than 24 months in duration. Limited Partners are partnering with a development and construction team with over 70 years of experience.
How is profit ensured?
Profit is ensured and risks are minimized by partnering with a qualified developer, installing cost controls, setting fixed contracts and having the experience to be able to anticipate and mitigate any potential problem areas. Limited Partners are not guaranteed a return; they earn a preferred rate of return.
How often are Limited Partners provided with information regarding development progress?
The General Partner is committed to providing quarterly updates and reports of revenue and expense figures to all Limited Partnership Unit holders. Review engagement financial statements will be forwarded at the end of each fiscal year. Limited Partnership Unit holders will also be notified of important developments on an ongoing basis – via phone teleconference, emails, and direct contact with Investor Relation partners
