Condo towers in downtown Vancouver in 2024. Vancouver-based Nicola Wealth Management plans to wind down its weakest real estate fund amid a downturn in the commercial real estate sector.DARRYL DYCK/The Canadian Press
Nicola Wealth Management Ltd., a $17.6-billion money manager, has halted investor redemptions at its weakest real estate fund and plans to wind it down amid a downturn in the commercial real estate sector.
The Vancouver-based company said investors will no longer be allowed to withdraw their money from the $755-million Nicola Value Add Real Estate LP, which invests in real estate development projects and has a large exposure to residential condos. The fund posted a loss of 25.5 per cent last year.
“We will begin returning capital to all unitholders as it becomes available with a view to ultimately wind up the fund,” John Nicola, the asset manager’s executive chair and chief investment officer, said in a March 31 notice to unitholders.
Nicola Wealth warns investors about potential delays in redeeming money
The fund is the latest to curtail redemptions as investors sour on private markets. Many private debt funds and real estate funds have limited investors’ ability to withdraw their money – known as gating a fund – as performance continued to deteriorate in 2025 because of higher borrowing costs and amid increasing requests from clients to cash out.
In January, Toronto-based private lender Cortland Credit Group Inc. halted redemptions on its flagship fund, citing trouble with a single borrower that comprised a large portion of its loan portfolio.
Last August, Trez Capital Mortgage Investment Corp., one of Canada’s largest private commercial mortgage providers, halted redemptions from five of its funds.
And last fall, Nicola reduced monthly distributions on two other real estate funds and warned clients that it may delay redemptions because too many investors were trying to withdraw their money.
At the time, Mr. Nicola blamed contagion owing to publicity around the redemptions in other companies’ real estate funds.
Nicola has not specified why its Value Add fund had such a large loss last year. However, residential condos accounted for 25.7 per cent of the fund’s assets and apartment rental buildings were responsible for 17.9 per cent; both sectors have faced problems from the slowdown in the country’s housing market.
Condo developers are dealing with buyer defaults, a glut of unsold inventory and weak sales. At the same time, residential rental rates have been falling with the decline in population and surfeit of empty condo units on the market.
Just over 70 per cent of the Nicola Value Add assets are in Ontario and British Columbia, with the remainder in Quebec and in American states such as Texas and Arizona. Industrial properties such as warehouses – which have been faring better than residential – made up about 39 per cent of Nicola Value Add, while office holdings comprised 8 per cent.
Mr. Nicola said the Value Add fund is better suited to a “closed-end structure,” where investors only get their money back when projects are completed.
“We anticipate that such investment structures will be better suited for deploying capital in the value-add and development market going forward,” he said in the notice to investors.
Mr. Nicola added that the change was necessary because of longer project timelines, along with issues with valuations and liquidity. He said the money manager expects “significant distributions to unitholders” will start in 2027.
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The money manager launched the Value Add fund in 2014 and the return on investment was mostly in the double digits from inception through 2022. The company said the fund has had an annualized return of 7.9 per cent since its launch.
But when the residential market slowdown began in the latter part of 2022 and 2023, the fund’s investment returns dropped precipitously, with the first loss recorded in 2025.
In comparison, Nicola’s other real estate funds have not shouldered the same kind of losses. Its $1.45-billion U.S. Real Estate LP lost 2.2 per cent last year and its $1.27-billion Canadian Real Estate LP had a return on investment of 1.6 per cent.
Alex Messina, managing director of real estate at Nicola, confirmed in an e-mail that monthly distributions continue to be reduced and redemptions delayed at the U.S. and Canadian Real Estate funds, but otherwise, “it’s business as usual.”
“In line with our strategy and normal course of operations, we have successfully been selling properties at or above their appraised values and continue to provide liquidity to unitholders,” Mr. Messina said.