Calgary-based XXIII Capital Inc. has quickly emerged as a serious player in the city’s industrial real estate market.

Since its founding in January 2023, the firm has assembled a portfolio of nearly half a million square feet through three key acquisitions, supported by over $100 million in capital raised across its first two funds.

The company’s holdings include:

• a 160,000-square-foot warehouse facility in Great Plains acquired from Manulife;
• a 210,000-square-foot sale-leaseback and expansion project with Staples Canada at the Calgary International Airport, in a transaction which closed just a few weeks ago;
• and a soon-to-be-announced 133,000-square-foot development in southeast Calgary.

These early moves reflect a bold, focused strategy.

XXIII Capital's history

XXIII Capital was founded by Matt Rachiele, formerly of Colliers, and is backed by a deep pool of limited partners as well as strategic advisors from Longbow Capital and Ursataur Capital. With a third, open-ended fund set to launch, the firm appears poised to build on its early momentum.

“I had been working on this idea for a couple of years at that point. I wrapped up my book of business at Colliers in December with three final transactions — one of which was advising on the sale of 801 Seventh (the former Nexen building in downtown Calgary). The purchaser of that building was Ursataur Capital (Management) and Andrew Cockwell, who is now an advisor to (XXIII Capital),” said Rachiele, the firm's founder and managing partner.

“We’re just over $100 million in capital today. We've got three deals that will take us to half-a-million square feet. One of them will be announced on July 8 - a development joint venture with Hopewell. Then there’s the Aero Drive deal that’s 210,000 square feet, and the third asset is one we bought from Manulife in August 2023 - our Great Plains property.

“We’re just over 90 limited partners across our first two funds  - Origins and Gemini Funds - and we’re about to launch our third fund, which will be an open-ended construct.”

Focus on Calgary-area industrial market

Rachiele said the company focuses solely on industrial real estate in the Calgary region.

“We’re very bullish - not only on the asset class but specifically on Calgary industrial. Without giving away too much of our thesis: it’s a 175- to 180-million-square-foot market, depending on how you measure it, with around four per cent vacancy. It’s been remarkably resilient for 25 consecutive years of net positive absorption.

“We believe in the fundamentals driving the market. With every new net migrant to Alberta, you need in the area of 100 square feet of additional warehouse space. The Calgary industrial market is well sub-10-per-cent energy tenancy, and less than five per cent of leasing activity has been energy-related for a long time now. It’s well-diversified from what is still our primary economic driver in the city, energy and oil and gas, specifically.”

Rachiele said the company is focusing on both existing income-producing properties and on development opportunities. One such development is the soon-to-be-announced 133,000-square-foot, multi-tenant project in South Calgary.

XXIII Capital's portfolio growth

XXIII Capital first acquired the Great Plains property in August 2023. It’s a 160,000 square foot distribution and warehouse facility at the corner of 52nd Street and 76th Avenue SE - near the Great Plains Recreational Facility and across from Big Rock Brewery.

The second property on Aero Drive is a sale-leaseback and expansion deal with Staples Canada. The existing building is 125,000 square feet on just under 10 acres: Rachiele said they are expanding it by 85,000 square feet to a total of 210,000 square feet.

Hopewell is the construction and property management partner. It’s a long-term sale-leaseback and includes the Calgary Airport Authority, since it's on airport land under a lease that’s now been extended.

The third development will be in southeast Calgary close to its Great Plains property, a four-tenant industrial warehouse on just under seven acres.

The XXIII team includes Phil Brown as chief operating officer, who was formerly with Hopewell Development as senior vice-president, acquisitions and leasing, industrial. Prior to that, Brown had senior roles at One Properties, BentallGreenOak, Triovest and Colliers International.

Also on the team is Taylor Hudzinski, vice-president and co-founder, who prior to this role led strategic corporate development restructuring initiatives for a group of family-owned businesses operating in homebuilding, foreign manufacturing, import/export and retail sales.

The advisors on the team include Larry Birchall, executive chairman, Longbow Capital Inc., and Andrew Cockwell, managing partner, Ursataur Capital Management.

The Staples Aero Drive acquisition

Casey Stuart, executive vice-president, JLL Capital Markets, represented Staples in the Aero Drive transaction. 

He said the property was attractive because it’s a high ceiling, well-built precast concrete warehouse still very functional for today’s loading depth and staffing requirements. 

“The location is fantastic on the airport lands, which created a bit of a challenge, because a lot of owners, investors in real estate, prefer fee simple so this was a land lease with the airport authority. This is a little bit different. There's not fee simple ownership. It's a long term land lease that you're paying on annually,” Stuart explained.

He said Calgary is currently the top performing commercial market in Canada from a transactions perspective. There's a lot of interest from both domestic and foreign buyers.

“We have not seen the declines in lease rates, in office and industrial inventory that have been seen in Vancouver, Montreal and Toronto. So we've been a stable market the last two years, and transactions are happening both on the lease side and the sales side.

"Overall, the market's fairly strong.”