Canadian investment firm

Avenue Living Asset Management Ltd.

is

suspending redemptions

at two multibillion-dollar

real estate funds

for months while their boards consider whether to

take them public

.

The

Calgary-based

manager said the boards of Avenue Living Real Estate Core Trust and Mini Mall Storage Properties Trust have started a review to evaluate the best way to create value for investors. The firm’s management has recommended both funds pursue a “go-public transaction.”

In the meantime, investors seeking to withdraw capital will have to wait.

“To preserve flexibility and ensure the equitable treatment of all unitholders during this process, the Trusts will delay the settlement of redemptions for an initial period of up to six months,” the company said in a statement Monday.

The delay is effective March 31. That’s the date the funds would have had to pay shareholders who redeemed at the end of February. The trusts also won’t accept any new capital while the strategic review is going on.

The two trusts make up the bulk of Avenue Living’s roughly $9.8 billion of assets under management, according to the firm’s website. One fund invests primarily in apartment properties in western Canada, while the other owns self-storage assets. Avenue Living also oversees an agriculture fund.

Both trusts list Avenue Living as

asset manager

, with

Invico Capital Corp.

serving as fund manager.

The move comes at a challenging moment for Canadian alternative-asset managers, many of whom marketed

private real estate

and credit vehicles as relatively stable income generators while offering periodic redemption windows.

As higher interest rates and property-market volatility weigh on valuations and cash flows, some firms have turned to “gating” mechanisms or redemption delays to limit the flow of money going out the door.

Invico, also based in Calgary, recently adopted what it called a “structured liquidity management plan” for one of its own funds after large investors sought to redeem. The firm said it’s trying to balance the need to generate liquidity with preserving net asset value and yield for remaining investors.

Avenue Living didn’t say how much capital had been submitted for redemption at the two trusts or whether the suspension could be extended beyond the initial six-month period.

The strategic review will assess alternatives that may include a public listing, though there is no certainty it will result in a transaction, the company said.

Bloomberg.com

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