Fortress Real Capital Investors Exit Markham Site With Higher Than Projected Returns

Two years ago, Fortress Real Developments CEO Jawad Rathore and Flato Developments President Shakir Rehmatullah struck a deal to complete the servicing of residential lots in a prestigious South Unionville neighbourhood. Today, investors in that deal, through the Fortress Real Capital syndicate mortgage product, were rewarded with a complete exit and an additional deferred lender fee that boosted annualized returns to over 11% for many.
The funding provided by the investors catalysed over 1000 front feet on a scenic cul-de-sac, creating 48 new townhouses and single family residences. This $12 million prime in-fill project expects to see occupancies later this year. Investors in the syndicate mortgage exited from the sale of the serviced lots to builders.
The Fortress executive team from L-R: Frank Margani (EVP Strategy & Development), Josh Will (SVP, National Sales), Vince Petrozza (COO), Jawad Rathore (President & CEO), Ben Myers (SVP, Market Research & Analytics).
Flato Developments has performed exceptionally in Markham for years and has now branched out across the 905 area into several new deals. Their track record of success is what precipitated the initial partnership and their consistent performance has Fortress now involved in four more Flato sites in Brampton (Countryside Crossing and three Mayfield phases).
"What we saw in Flato two years ago was a savvy developer with a very strong planning background. When my team and I signed off on the Helen Avenue deal, we knew it was a very desirable parcel and we really focused on timely and efficient execution during the servicing phase", said Vince Petrozza, COO of Fortress Real Developments and a mortgage broker with Centro Mortgage, the brokerage responsible for closing investor monies. "We look to reduce and mitigate risk wherever we can. A significant factor for our underwriting team was that all the lots were already pre-sold to builders before investors put in a dollar. That's the type of value we look for and seek out."
The intelligent design of the capital stack used by Fortress has helped fill an important need in the construction banking sector when equity requirements changed in the wake of the 2008 global financial crisis. Banks now require that developers diversify and bolster their equity funding into deals and Fortress has now become a national leader in this space.
Fortress EVP Frank Margani sees continued growth and demand from investors in all categories. "When I was director of lending at Canada's largest mortgage bank, we saw several of our longest and best performing clients engage Fortress to partner with them on projects. When our network of bank and lender partners approved close to $100 Million of co-investment into their deals in less than 90 days, it was clear they were onto a winning formula."
"Investors in the Fortress Real Capital syndicate mortgage investment product earned 8% interest every year, paid monthly to them, and because the project was on time and on budget they also qualified for an additional 6% bonus or deferred lender fee", remarked Margani (also a Centro agent). "In my career, I've worked on over $3 Billion of real estate loans, including the largest non-syndicated mixed use and residential construction loan in Canadian history. It takes a lot of work and dedication to get a successful exit and that's what the team here at Fortress has done again."
Fortress continues to expand its roster of blue-chip development partners to bring best-in-class opportunities to real estate investors. At a recent event, Cityzen Developments and Fernbrook Homes (winners of Global Skyscraper of the Year for their 'Marilyn Monroe' buildings in Mississauga) were introduced as new partners. Cityzen CEO Sam Crignano commented, "Fortress has a proven track record and we're looking forward to a very long and successful relationship together".
Recent projects from Fortress Real Developments include several in the highly sought after low-rise space, including three new sites in Mississauga, a commercial project in Oakville and an incredible fifteen acre parcel in Vaughan bordering on north Toronto.
"Our projects provide investors and their financial advisors the tools to include the real estate asset class in their portfolio as part of an intelligently diversified financial plan. The exit on Helen Avenue is another example of our ability to deliver results and achieve success for our partners," said Josh Will, SVP of National Sales for Fortress and a licensed Centro agent. "Our model segregates each deal on a project by project basis and allows investors and licensed advisors to pick and choose developers, regions and built form types that make sense to them. This is the reason why more and more financial professionals are turning to Fortress to get access to our innovative products, our terrific projects and our superior partners."
The numbers support the strategy at Fortress to maintain strong diversity. They are currently involved in over 40 projects in 10 major markets and four provinces. Residential projects are a mix of high-rise and low-rise and many include a mixed-use commercial and retail component as well. Several of them are under construction already including two towers, King Charlotte and Gotham by well-known Fortress development partner Brad J Lamb. In Barrie, construction is progressing very well at Mady Developments' landmark Colliers Centre; a project that was funded in concert between Fortress, National Bank and Laurentian Bank and is the first of several Mady/Fortress ventures.
Helen Avenue is one of several exits scheduled in the next year from Fortress as they continue to expand across Canada.
Fortress Real Developments Inc. - Fortress Real Developments is a Canadian real estate development company that seeks out and analyzes opportunities in major Canadian markets. The company has placed their focus on quality projects with recognizable alpha in residential low-rise, high-rise, commercial and industrial project. For more information visit:

on October 25, 2013