GP/LP Partnership: 48-Unit Calgary Apartment Acquisition

Amir had successfully managed a 24-unit apartment building in Edmonton for three years. He understood multifamily operations, tenant management, and value-add strategies. But when a 48-unit building in Calgary's Beltline district came to market at $7.8 million, the equity requirement exceeded his personal capital.

Even with CMHC financing at 85% LTV, the acquisition required $1.17 million in equity, plus $430,000 for closing costs, reserves, and a planned $350,000 in unit renovations. Total equity needed: approximately $1.95 million. Amir had $350,000 available—well short of the requirement.

He'd been approached by several friends and colleagues who wanted to invest in real estate but didn't want to manage properties directly. The GP/LP limited partnership model was the answer: Amir would serve as the General Partner (operator), and passive investors would contribute equity as Limited Partners.

Amir structured the deal as a limited partnership with guidance from his securities lawyer. LendCity provided the CMHC MLI Standard mortgage financing for the acquisition. Amir (the GP) contributed $350,000 and committed to managing all operations. Eight LPs contributed a combined $1.6 million in equity, with minimum investments of $100,000 per LP. Total equity: $1.95 million.

The financing was structured through CMHC MLI Standard at 85% LTV. The lender advanced $6,630,000 at 4.35% with a 35-year amortization. The CMHC-insured loan offered the lowest rate available for stabilized multifamily, keeping debt service costs low and maximizing cash distributions to partners.

The building was stabilized at acquisition—42 of 48 units were occupied. Amir's value-add plan: renovate the 6 vacant units and 12 additional units at lease turnover (kitchen, bathroom, and flooring upgrades for $7,500/unit), increasing rents from $1,100 average to $1,350 on renovated units. Projected NOI growth: from $520,000 at acquisition to $640,000 at full renovation completion (year 3).

CMHC MLI Standard is the workhorse financing product for stabilized multifamily acquisitions. It offers up to 85% LTV, 35-year amortization, and the lowest rates in the Canadian commercial lending market—typically 50-100 basis points below conventional commercial mortgages.

For limited partnership deals, the LP structure is transparent to the lender. CMHC evaluates the borrowing entity (the limited partnership), the GP's experience and track record, and the property's operating performance. Amir's 3-year track record managing a 24-unit building was sufficient to satisfy CMHC's operator requirements.

The LP waterfall structure allocates returns as follows: 8% preferred return to LPs (paid quarterly from cash flow), then 70/30 split of remaining cash flow and equity gains (70% to LPs, 30% to GP). This aligns incentives: the GP earns the majority of upside through the promote only after LPs receive their preferred return.

In year one, the building generated $520,000 in NOI against $370,000 in debt service, leaving $150,000 for distributions and reserves. LPs received their 8% preferred return ($128,000 total, or $16,000 per LP), with the remaining $22,000 allocated to capital reserves. (The 8% preferred return is specific to this deal's partnership agreement and is not guaranteed in any other transaction.)

As renovated units come online, NOI is tracking toward the $640,000 year-3 target. At that level, annual cash available for distribution will grow to approximately $270,000—comfortably covering the 8% preferred return plus generating promote income for the GP.

The 5-year exit strategy involves either refinancing to return LP capital (while retaining the asset) or selling at a projected value of $10.2 million based on a 6.3% cap rate. At the projected sale price, LPs would receive an estimated 1.8x their invested capital—a projected 14.2% annualized IRR over the 5-year hold. (These are projections based on assumptions specific to this deal. Actual returns may differ. Past performance and projections do not guarantee future results.)