Timbercreek offers LP unit for a joint investment by Canadian and US investors in US apartment buildings

Under a blind pool offering to Canadian investors in a new Canadian LP, that Canadian LP will make a joint investment with a Delaware LP which is simultaneously funded by US private-placement investors.  Their joint investment will be in a subsidiary Delaware LP which will acquire US apartment buildings.

In order to shield the Canadians from US reporting requirements, a "blocker" Ontario general partnership (Holding GP) will be interposed between their LP and the operating Delaware LP.  Holding GP will elect to be a corporation for US purposes, but will be a flow-thorough entity for most Canadian purpose.  Most distributions from the operating LP to Holding GP, including gains from property sales, will be subject to 35% US withholding tax.  This high rate may not be problematic in the case of top-marginal-rate Canadian investors, as Timbercreek expects property gains to be on income account for Canadian purposes - the Fund only has a projected term of about four years, and will renovate and "reposition" the acquired properties.

Neal Armstrong.  Summary of Timbercreek U.S. Multi-Residential offering under Foreign asset income funds, REITs and LP offerings.