Toronto Under Construction – Episode 49 with Nick Macrae of Woodbourne Capital Management

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The Toronto Under Construction podcast is excited to welcome guest Nick Macrae from Woodbourne Capital Management and guest co-host Joel Apostolon from Cameron Stephens to episode 49 of the show.

Joel, Nick and Ben

Nick Macrae, a Toronto native, found his passion for real estate early on after realizing residential real estate wasn’t the right fit for him. With a background in politics, he dove into leasing at Avison Young, where he made lasting connections in the industry. Despite enjoying his time there, Nick realized he wanted to explore the investment side of real estate. This led him to Brookfield Financial and eventually to Healthcare of Ontario Pension Plan (HOOPP), where he played an instrumental role in the company’s growth and success. In his current role at Woodbourne Capital Management, Nick leads the investment team. Nick walks us through his impressive career in the industry and shares some key learnings from his career path.


As we kick off the episode Ben asks Nick about his time at HOOPP, and Nick discusses his 12-year tenure at Hoopp, where he was a co-head of Global Real Estate and senior portfolio manager. He discusses some of the projects he worked on, such as One York Street and Aero Corporate Center, as well as how HOOPP managed its geographic real estate portfolio, and how they decided what percentage of their investment would be in North America and Western Europe and how they assessed the market and competitive landscape.

As he continues to discuss his time at HOOPP, Nick shares more about HOOPP’s asset class specialization, particularly in industrial real estate. He discusses how they were relatively early to invest in industrial real estate and how they were late to invest in residential real estate.

Nick mentions that the financial crisis was a huge wake-up call for the real estate industry and how it led to a shift in the institutional portfolio from office and retail to residential real estate. He discusses how residential became the only positive returning asset class during the financial crisis.

Woodbourne Capital Management

As Nick touches on residential real estate, Ben shifts the discussion to his current role at Woodbourne stating that the company flies under the radar, but seems to be ramping up quickly. Nick jokes that Woodbourne is a 20 year success story, but goes on to explain how it’s a US-based company that has been in business for 20 years, specializing in private equity residential real estate investment, development, and management across Canada.

Going back to the early 2000s, Nick says Woodbourne was investing in Canada from a US perspective; under represented, under researched and better value. At that time the view that came up was, “where are all the new apartments?” Once Woodbourne understood the Canadian market and realized it was more of a condo market, they decided that new rental was inevitable in Canada, it was just a question of when? They decided to raise some capital to do it, and went to key investors where they were able to start a private equity fund of $125 million and invested in apartments, manufactured housing, seniors’ housing, and student housing. Since then, they have raised sequential private equity funds and have grown their capabilities.

Nick says “we continue to invest with developers, we also partner with developers from a development perspective. We also built a management platform called Rhapsody and bring that to the table and then we have the capability to do it ourselves. And really the view is we’re an investor first, but we have these different capabilities within the firm to execute depending on what the situation is. So really we’re looking for the best investment outcome, and have a lot of tools in our toolbox to get us there.” He continues to discuss their business and discusses how they manage risk.


As the guys continue to discuss the rental market, Nick mentions that you really have to understand the condo financial model in Canada, and how it has been de-risked by pre-selling the building and taking deposits. “You’ve de-risked the revenue, you’ve de-risked the financing, you’ve got less equity in, because deposits are subsidizing your equity stack. You’ve got fixed profit and you’re in a stable construction cost environment. It is really profitable. And rental just couldn’t compete with that,” says Nick. He goes on to discuss the psychological shift that took place and how rents continued to rise in Canada.The proliferation of condos in Canada posed a challenge for rental development until 2012 when Woodbourne did their first rental project development. The growth in condo rents, the quality of condos, and the demand for a more quality apartment experience created this shift towards rental development.

Nick continues to discuss Woodbourne’s overall thesis and how it centers around the fact that the rental fundamentals in the GTA are good, with tight vacancy rates, population growth, and limited new supply. Nick continues to discuss this constraint and says that new housing supply has gone down by 20-30%, leading to a supply and demand imbalance. The gap between renting and ownership is at an all-time high, and Woodbourne’s position is that growth is expected to be elevated for a significant period of time.

Nick continues to discuss Woodbourne’s funds and explains how they are structured as 10 year funds, which gives them flexibility to support their investment strategy.

Rhapsody & The Well

Ben asks Nick to share how things are going at The Well, to which Nick replies “Great!” He shares some details on Woodbourne’s management platform called Rhapsody. Rhapsody was built to manage new buildings in Canada and leverage US management practices including delivering service, running a lease up, dynamic pricing, marketing – all relatively new concepts in the Canadian landscape.

Rhapsody uses YieldStar software to appraise every vacant unit every day based on several attributes to optimize NOI, which is different from maximizing occupancy. He discusses Woodbourne’s lease up process which includes starting below the average rent and creating momentum, which builds strong pricing power. He says their lease up process can take a year or so to optimize, but goes on to say that it’s important to get leasing done in the first year to avoid competing with renewals.

Joel takes it back to The Well, and asks Nick to comment on how Woodbourne got involved in the project with RioCan, Allied Properties and DiamondCorp. Nick shares some perspective saying the 3 companies  bought the site from the Globe and Mail and achieved the desired zoning after a multi year timeline. He goes on to mention that RioCan and Allied decided they wanted to include rental as part of the project, which opened the door for Woodbourne to come in with their expertise.

Nick continues to share more about how the landscape is changing and how land owners and even municipalities are looking at a long term view of profits as opposed to a one time profit. Woodbourne believes that mixed-tenure communities are necessary for long-term success. They also believe that professionally managed rental buildings with security of tenure and quality amenities can compete with condos. Nick says Woodbourne is happy to compete with condo renters and considers its real competition to be people choosing between renting and homeownership.

Global Institutional Investors

Woodbourne has raised $2.5 billion of equity across five institutional funds, with a large proportion of the investors being institutional. They have investors globally, including pension plans, university endowments, fund of funds, and global investors. Woodbourne is blessed with institutional investors who add value to their program, enabling them to tap into global insights on what they are seeing in Europe and the US.

 Woodbourne’s original capital base was mostly US-based, raised through institutional investors. They have since expanded their investor base, with a growing number of investors in Canada and Europe. On their most recent fund, the re-up rate was extremely high, and they added new investors for diversification. They believe that Canada’s real estate market fundamentals are excellent, and Nick says this is how he decided where he wanted to spend his time and his capital.


The guys turn the conversation to future-proofing and Nick discusses the quality of buildings in Canada as compared to those in other countries like New York, London, and Paris. He highlights the importance of building high-performance sustainability assets that meet the needs of future tenants. As the guys discuss the future, Nick says it always starts with the customer.

Interest Rate Risk

As the episode winds down, Ben says he’d be remiss if he didn’t ask Nick about Interest Rates. Nick says they manage interest rate risk on their construction loans by pricing off the forward curve, and take into account the duration of the loan, to create a margin. They also consider a diversified portfolio to mitigate the risks.

Episode 49 ends with the guys famous rapid fire questions, and Ben and Joel ask Nick questions like: “Do you support the 15-minute city concept?”, “If you were forced to put all of your investment capital into stocks or real estate, which would you choose?”, “Is Toronto’s vacancy tax going to do anything to improve housing affordability?”, “Is rent replacement a good policy?” and more!

Tune in to our latest episode.

TUC Episode 49

An Audiogram of some of Nick’s thoughts on fusions of condo and rental into the same project:

If you’re looking to get in touch with Nick please visit

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