Citing elevated redemption requests and tighter cash flows, two asset managers are joining a growing list of firms who are warning investors about changes to their real estate funds, which range from limited redemptions to reduced monthly distributions.
In recent days, both Nicola Wealth Management Ltd. and Centurion Asset Management Inc. informed investors about such changes. Neither of the firms responded to requests for comment prior to publication.
On Thursday, Centurion announced a temporary “managed redemption program” for its Centurion Apartment Real Estate Investment Trust (REIT), which will see investor redemptions for the REIT limited for the first time in its history. It will, however, continue to pay monthly distributions.
In a notice, the firm said it made the move in response to “current market conditions” and with a “continued commitment to protecting the long-term stability and performance” of the REIT, which invests in rental apartments and student housing properties. Its board plans to review the redemption program on a monthly basis.
“The past 18 months have presented challenges across the alternative investment industry, with elevated redemption requests and tighter capital flows affecting many market participants,” Centurion’s notice reads.
“Several alternative investment companies have suspended redemptions, resulting in the REIT becoming a source of liquidity for some unitholders at a rate 3-4 times higher than the normal course.”
Meanwhile, as reported by The Globe and Mail, Nicola Wealth told investors on Wednesday that it would be reducing monthly distributions on its two real estate funds — the Nicola Canadian Real Estate Limited Partnership and Nicola U.S. Real Estate Limited Partnership — and that it may delay redemptions.
John Nicola, the firm’s CEO, chairman and chief investment officer, told the newspaper this was because too many investors were simultaneously looking to withdraw money from the funds, although the amount they were trying to redeem was less than 5% of the funds’ total assets.
In the same week that clients were notified about the changes, Nicola argued in a post published by his firm that while the last three years “have been challenging for investors looking to earn positive returns in commercial real estate,” his firm believes that now is a “poor time to sell real estate assets.”
“Investors should be patient and, at a minimum, wait for stronger real estate markets before reevaluating a potential sale. There is a strong case for the glass being half full rather than half empty,” he wrote.
He specifically noted that Nicola Wealth’s real estate funds have posted stronger returns over the long term than they have more recently.
In a quarterly report for the period ending June 30, 2025, Nicola Wealth said the Nicola Canadian Real Estate Limited Partnership posted a return of 0.9% year to date, 1.5% over the past year, 2.4% over the past three years, 7.4% over the past five years and 8.1% over the past decade. Since inception, it’s posted a return of 8.8%.
The Canadian real estate fund primarily invests in industrial properties (43% of its portfolio), among other types of real estate such as multi-family properties (13%), self-storage properties (13%), development properties (11%) and office properties (9%).
Meanwhile, a separate quarterly report notes that the Nicola U.S. Real Estate Limited Partnership posted a loss of 2% year to date and 1.3% over the past year. However, it returned 2.2% over the past three years, 6.8% over the past five years, and 9.2% over the past decade. It’s earned a 9.7% return since inception.
The U.S. real estate fund primarily invests in multi-family properties (54% of its portfolio), among other types of real estate including industrial properties (25%) and office properties (11%).
What’s driving this trend?
These moves come just weeks after Trez Capital Mortgage Investment Corp. announced temporary redemption suspensions for five of its funds as it manages “elevated” requests from investors to cash out of them.
There are several factors behind this trend, said Dan Hallett, vice-president, research and principal with Oakville, Ont.-based HighView Financial Group. His firm has been investing in real estate funds since its inception in 2005.
“In some cases, the markets in which [the funds are] investing are challenged, their operations are more challenged. And in others, the performance and operational metrics are fine, and it’s just a matter of people wanting to get out at once,” Hallett said.
One reason people may be choosing to exit private market funds en masse now is because of the publicity one fund with temporary redemption limits receives, causing investor concern over similar products.
“There’s a lot of headlines on that front and it does put a bit of fear into people, and they say, ‘Well, I better sell this one for this product or that product before it runs into trouble,’” Hallett said.
Investment vehicles that don’t have frequent liquidity, such as real estate funds, require heightened due diligence, Hallett stressed.
“I think it’s important if people are going to invest in that kind of product, either they or if their advisor is recommending it, that they dig into how those [net asset] values are arrived at, what outside parties are involved in it, and what methods they are using,” he said.
He likened private asset managers’ fund redemption limits and suspensions to how banks are limited in how much they can allow their customers to withdraw at a given time.
“With something as basic as banking, the same thing can happen,” Hallett said.
“No bank, even a Royal Bank, is going to be liquid enough if … enough people, walk into their branches and say, ‘I want my cash.’”