We have sat down with Mr. Mark McKenna, President of Walton Global Investments, to discuss the future of real estate investments in North America during the Trump era, how it impacts Walton, and an update on Southridge Fund.
1. Jeanne Labbé, TIMC: Mr. McKenna, you have been with Walton for over 15 years. Can you please share with us the changes you have seen with Walton’s type of investments and investors?
Mark McKenna, Walton: With over 38 years of experience in land acquisition and administration, land development, and both horizontal and vertical, Walton is well positioned to understand land and identify a lasting investment in all phases of the real estate lifecycle.
With assets over $5.2 billion CAD, over 103,000 acres of land under administration and over 96,000 investors worldwide, we consider ourselves as one of North America's premier land owners, land developers and land asset managers.
Our strategic land acquisition methodology has historically brought value to our investors, while creating residential, commercial and industrial communities.
In 2016, Walton made a deliberate pivot to move away from traditional retail clients to focus on High Net Worth Investors (HNWI). The structure of our real estate investments focus on capital preservation as well as capital appreciation. We have found that most our HNWI are focused on these two attributes.
2. Jeanne Labbé, TIMC: Could you please tell us about Walton’s Southridge development today?
Mark McKenna, Walton: Located in Alberta, Canada, Southridge has over 1,200 acres of maybe the most desirable land, located in the South East corner of the Calgary Region. It has frontage along the Bow River and is designated for future urban development. Given the availability of cost effective developable land for the city of Calgary, we strongly believe Southridge is positioned for success.
The original capital raise on Southridge was $100 million CAD in 2014, with a 7-10 year hold period ($85,000/acre). We successfully raised more than 80% with only $18.5 million CAD left to raise.
With our increased focus on HNWI, we recently restructured the investment ($55,000/acre) where Walton can cover our costs up front and will receive a performance fee on the exit of the investment.
We have aligned the success of this project and the profitability for the investors and Walton.
The hold period has been reduced to 5 years and we will be applying for our Area Structure Plan (ASP) this spring.
3. Jeanne Labbé, TIMC: Why do you think it is important for TIMC’s clients to not miss the opportunity to invest in Southridge presently?
Mark McKenna, Walton: There are 3 key reasons to invest now:
- You are investing in a real asset in a very stable market place.
- The Canadian currency is low at the moment which represents an opportunity for investors who wish to participate in this project to transfer money into Canadian dollars.
- Builders and developers pay a significant premium for lands that are shovel ready for development.
4. Jeanne Labbé, TIMC: In your opinion, what would be the future of real estate investments in North America after the Trump election?
Mark McKenna, Walton: It is Walton’s view that President Trump brings exceptional business experience and practicality to the US economy. He understands the inherent value in real assets as his wealth has been created through real estate. The stock markets have also reacted positively to his election win, lending validity to his experience as a business builder and job creator.
5. Jeanne Labbé, TIMC: Mr. McKenna, last year you travelled with TIMC during a road show to Riyadh, Istanbul and Dhaka, where you met several of TIMC’s clients. Could you please share your feedback and your impressions from these trips?
Mark McKenna, Walton: Before I answer the question below, I would like to say that it’s an honor and pleasure to have TIMC as a partner. Professionalism and knowledge flow through the entire organization.
During my trip, I met many of TIMC’s HNWI that were highly enthusiastic about the idea of investing in Canada, especially in the real estate sector. The financial and political stability, along with the low Canadian dollar, make Southridge an opportunity very attractive for overseas investors.
They recognized and appreciated our experience and track record of success in both Canada and the United States. We pride ourselves on honesty and integrity and I believe they saw why TIMC would choose to work with us.
High Net Worth Investors are interested to invest in real estate in North America; we are seeing a global flood of capital into both Canada and the United States. We believe the stability and predictability play an important role in that.
