Direct-hold solutions structural comparison

The Direct-Hold Solutions, as designed, differ from the three most common alternative real estate investment structures — Legacy Joint Ventures, Private Equity real estate funds, and Traditional Real Estate Investment Trusts — across twelve governance and economic dimensions. Only one Direct-Hold Solution is currently established — the Canada limited partnership, Professional Centres Canada LP — and its units are not currently freely transferable, and comprehensive regulated reporting is not currently occurring, because the partnership is subject to an active British Columbia Securities Commission cease-trade order; the United States, Spain, and Mexico vehicles are planned, not yet established. Some dimensions distinguish the Direct-Hold Solutions' design from all three legacy structures simultaneously; others represent parity with listed REITs at features that private structures systematically lack. Four dimensions are exclusive to the Direct-Hold Solutions' design: they appear in no other investment structure in the comparison set.

Structural comparison matrix

Features where Direct-Hold Solutions eliminate legacy disadvantages

No asset sale required for exit. Legacy Joint Ventures and Private Equity real estate funds require asset sales — or portfolio liquidation — to return capital to investors. The exit event is manager-initiated and occurs when market conditions and the fund's internal timeline converge. Investors have no independent exit mechanism. Traditional REITs and the Direct-Hold Solutions both solve this problem through Freely Transferable ownership: investors can exit individually through a secondary transaction without requiring a portfolio-level sale event.

Capitalized interest prohibition

No capitalized interest. Legacy Joint Ventures and Private Equity structures commonly permit interest costs to be capitalized — added to loan principal rather than recognized as a current-period expense. This practice can obscure the actual cost of construction financing and inflate the apparent book value of partially completed buildings. Each Direct-Hold Solution's own governing agreement explicitly prohibits capitalized interest. All interest is expensed as incurred. Traditional REITs typically exclude capitalized interest through their operating REIT structure; the Direct-Hold Solutions impose the same constraint through covenant rather than through the REIT operating framework.

Features where Direct-Hold Solutions match listed REITs

Six features appear in both Traditional REITs and Direct-Hold Solutions but are absent from Legacy Joint Ventures and Private Equity funds:

Ownership and balance-sheet parity

Portfolio Diversification. Both Private Equity and the Direct-Hold Solutions can hold multiple assets across multiple markets; Legacy Joint Ventures are single-asset structures.

Primary Balance Sheet Asset. Investment Units in a listed REIT and Investment Units in a Direct-Hold Solution are securities that appear on the investor's balance sheet as a primary asset. Legacy Joint Ventures and Private Equity interests are typically recorded as alternative investments or partnership interests, which may not receive equivalent accounting treatment.

Freely Transferable Ownership. As Regulated Reporting Entities, the Direct-Hold Solutions issue Investment Units that are freely transferable to any eligible counterparty without a manager approval decision in the ordinary case, parallel to the exchange-tradeable shares of a listed REIT — the governing body's role is limited to a short, enumerated list of eligibility grounds, not open-ended discretion.

Eligible as Collateral. Units that are freely transferable and recorded as primary balance sheet assets can be pledged as collateral in lending or margin facilities, which is not generally available to holders of Legacy Joint Venture or Private Equity interests.

Disclosure parity with listed REITs

Public Registry Access. Both Traditional REITs and the Direct-Hold Solutions file continuous disclosure on public registries — EDGAR or SEDAR+ in their respective jurisdictions — making their financial statements and material disclosures available to any counterparty without requiring the investor to request materials from the manager.

Comprehensive Regulated Reporting. The disclosure standard for both Traditional REITs and the Direct-Hold Solutions is the full continuous disclosure regime of the applicable securities regulator, including audited annual financials, material change reports, and management discussion and analysis. Private structures may provide periodic reporting but are not subject to regulatory enforcement of that standard.

Features exclusive to Direct-Hold Solutions

Four features appear only in the Direct-Hold Solutions column:

Compensation and fee structure

Equity-Based Developer Compensation. Woodfine does not extract developer profit as current cash compensation. Compensation is taken as Equity-Based Compensation — Investment Units in the vehicle — held in trust until investors' initial capital is fully returned. The developer's economic interest is a direct alignment with investor returns, not a fee extracted from the vehicle regardless of performance. This structure is absent from Legacy Joint Ventures, Private Equity funds, and Traditional REITs, all of which permit the manager or developer to receive carried interest or performance fees that are cash-settled independently of investor capital recovery.

Single Fixed Management Fee. Variable management fees — asset management fees, acquisition fees, disposition fees, financing fees — are replaced in the Direct-Hold Solutions by a single fixed annual fee calculated on the Gross Funded Value of the vehicle. This fee is a contribution to overhead rather than a percentage of assets under management or a transaction-based charge. The resulting fee structure is fully predictable at the time of investment and does not increase with the passage of time, the addition of assets, or the execution of capital transactions.

Debt participation and capital deployment discipline

Debt Right of First Refusal. The Direct-Hold Solutions provide investors with a right of first refusal on the First Secured Mortgage Debentures issued by the vehicle for new construction financing. This right allows existing equity investors to participate in the vehicle's debt issuance before it is offered to external purchasers, preserving the ability to maintain exposure across both the equity and debt capital structure of the same underlying assets.

Qualified Investment Discipline. Each Direct-Hold Solution's own governing agreement mandates that capital is deployed strictly into a Qualified Investment — a site proposed for one of four defined Woodfine Building types, each subject to a minimum proximity to an existing Power Centre and a minimum parking-stall ratio:

No other structure in the comparison set imposes a comparable capital deployment constraint through its governing documents: Legacy Joint Ventures are project-specific, Private Equity funds have investment mandates that are manager-discretion, and Traditional REITs operate under broad asset class definitions.

See also

• Direct-hold framework — the framework the comparison set is measured against
• Four-jurisdiction framework — where each Direct-Hold Solution is established or planned, by jurisdiction
• Limited partnership structure — the legal form of the Canada and United States vehicles