Apartment Owner Breaks the Ice on Canada’s Frozen IPO Market

A real estate company with apartment buildings in five U.S. states is set to list in Toronto, ending a deep freeze in Canada's market for initial public offerings.

Dream Residential Real Estate Investment Trust expects to close its $125 million offering and begin trading on May 6, according to a statement. Michael Cooper's property group will partially manage the real estate investment trust.

It is the first corporate IPO of more than C$150 million to be completed on a Canadian exchange this year. There were 17 deals of at least that size in Canada last year, with two raising over C$1 billion.

Last year was a record year for IPOs in Canada, with firms undertaking 173 deals with a total value of C$11.9 billion. A combination of inflation, rising interest rates, Russia's war in Ukraine and a resurgence of Covid-19 in China has led to a broad selloff in equities.

Miller said in an interview that there was a broad layer of discontent in the capital markets. The war has made investors more nervous about supporting new issues. The new issues have been mixed and not great in the aftermarket.

IPO proceeds in the US have fallen for five months in a row, and April was the lowest in more than a year. The busy IPO market of the past two years has left fewer private companies that are ready or willing to go public.

The market was open most of the time in 2020.

The worst may be over for the IPO proceeds.

Dream Residential is taking advantage of the strong market for apartments in the U.S. Rents increased in February by the largest amount in more than 30 years.

The prospectus shows that Dream Residential plans to seek out acquisitions in high-growth markets, but that the majority of the company's net operating income will come from properties in Ohio, Texas and Oklahoma.