Cetana Developments Inc. has formed a real estate investment trust focused on developing climate-friendly rental housing across Canada which prioritizes both affordability and speed of construction.
Based in Toronto, Cetana REIT is launching an open-ended fundraise targeting $8 million to $10 million for its first project in Okotoks, a suburb of Calgary. The REIT then plans a second build in the Town of Innisfil, just south of Barrie and north of the Greater Toronto Area.
Both of the developments will be designed to meet low-carbon building targets, and are based around mass timber, prefabrication and digital tools including smart building technology and project optimization.
Andrew Bowerbank, CEO and managing partner of Cetana REIT, has years of experience in both sustainability and the building industry. He previously held roles as vice president of WSP Canada, global director of sustainable building services at EllisDon and CEO of the World Green Building Council.
Cetana Group, the REIT's manager, was founded in 2021. Bowerbank is the president and CEO of the group as well.
Bowerbank told Sustainable Biz Canada the REIT has prioritized building design and construction over financing thus far. It is also focused on two issues he calls crises.
“Our goal right now is to build purpose-built rental buildings, multi-use buildings across Canada, really, to respond to the housing crisis," he explained. That is intertwined with affordability and economic concerns, "but we also hit the climate crisis as well. It’s a very unique business model, but I think it can have a lot of traction in the coming years.”
About Cetana REIT
Bowerbank said the catalyst for Cetana REIT came from his interactions with a town councillor in Innisfil. Both collaborated on and recognized the need for green building infrastructure. The growing town is seeking a “holistic, sustainable focus” for its developments.
A half-kilometre stretch of property along Innisfil Beach Road is to be redeveloped by Cetana Group. The plan is to build 10 mass timber multi-use buildings with a total of approximately 580 units that will host local businesses, boutique hotels, rental apartments and condos.
Bowerbank said the Innisfil project is expected to be built over three phases, with purpose-built rental apartments in Phase 1.
As it proposed the Innisfil redevelopment, other Canadian municipalities expressed interest in Cetana’s offering, Bowerbank said. The interest led to the formation of Cetana REIT to promote larger-scale sustainable rental housing.
The Okotoks project is smaller in scale, offering 16 units and main floor retail. But Bowerbank said Cetana REIT is working with Okotoks for future building opportunities.
Bowerbank said Cetana REIT is also in discussions with the municipalities Collingwood and Windsor in Ontario, and is looking to branch out into Kelowna, B.C.
Cetana opted to operate as a REIT to simplify the fundraising process for its developments.
“We had a lot of buildings we wanted to do. If we had to do a raise for every single building, it just takes up so much time to set each one of them up and then put them together,” Bowerbank said.
A company report also lists the ease of access to capital, diversification and tax advantages as other reasons for choosing a REIT model.
Cetana's management team includes several other experienced executives including Adam Muggleton and Peter Friedmann as REIT trustees, and Antonio Meschino as manager of REIT investor relations.
Allan Partridge, a winner of the Alberta Centennial Medal, is an architect for Cetana.
Natasha Arsenijevich, partner and chief sustainability officer, is described by Bowerbank as having expertise in “humanities and social infrastructure and communities.”
In addition to environmental sustainability, Cetana REIT corporate mindset will also focus on health, wellness and community.
Cetana’s sustainable, affordable housing
The REIT’s focus is mixed-use rental buildings up to seven storeys. The market is “calling for” rental housing due to the housing shortage, Bowerbank said.
Developments will target net-zero carbon, aiming for frameworks such as the Canada Green Building Council’s zero-carbon standard, One Planet Living and LEED. Renewable energy, low-carbon systems and circular economy principles will be integrated into the developments.
Mass timber will be the building material of choice because of its sustainability, low carbon and ease of use. The emphasis on mass timber even extends to Cetana REIT’s height limitation. A seven-storey ceiling is the target not only to foster the feeling of a low-rise community, but to showcase the mass timber beams, which would not be possible in a taller building due to Ontario building regulations.
Bowerbank said Cetana REIT is in discussions with Mississauga-based modular panel company UnitiWall Corporation and with an Alberta prefabrication company for interior finishes. The use of mass timber and prefabricated modular systems will help speed construction, Bowerbank predicted.
Affordability is important to Cetana REIT, Bowerbank said. Its rental housing projects are aiming for a price point of about $300 per square foot.
There will be an emphasis on understanding what housing affordability means for people in need of health care at home, aging people, young families and multigenerational families.
Moving fast and slow
Cetana REIT aims to move both quickly and slowly.
Groundbreaking in Okotoks is expected this spring. Innisfil will be “close behind,” with groundbreaking anticipated by late spring.
Bowerbank said Cetana REIT has Vancouver-based Ascenta Finance Corp. as its exempt market dealer, and is seeking other real estate-focused exempt market dealers. More potential sources of funding include retirement savings and pension plans. It is also in talks with Toronto-based CMLS Financial and others firms representing large funds.
But he's willing to bide his time to attract larger-scale investment.
“If we do a series of small raises and then prove to investors in the marketplace that what we’re doing works, we think that will be more attractive to investors, rather than trying to do a massive raise and then start building a whole bunch of stuff without proving our technologies and our systems and our architecture.”
Once full funding is in place for the Okotoks project, Bowerbank said Cetana REIT can move on to the next raise.
His goal is to grow Cetana REIT’s portfolio to approximately $500 million by quickly assembling projects across the country. Constructing four to five buildings in 2024 would set a good precedent for the firm, he said.
"We're making sure that we're not biting off more than we can chew."
EDITOR'S NOTE: This article was edited after being published to update information about Cetana's current executive and board members.