Adapted from an interview conducted by Inge van den Berg as part of the PrivCap Spotlight Series.
Liam Dougherty, CFA, Co-Founder, CIO and Managing Partner, Real Estate at Greyhill Capital Partners, discusses the investment rationale for Northern Ontario, the role of operational execution in creating value, and how an integrated platform can uncover opportunities beyond Canada’s established real estate markets.
Real estate investment often gravitates towards major urban centres, where established capital markets, familiar benchmarks and deep transaction volumes attract the greatest attention. Yet compelling opportunities can exist beyond these traditional destinations, where acquisition pricing, operating economics and local market dynamics create a different set of investment considerations.
For Liam Dougherty, CFA, Co-Founder, CIO and Managing Partner, Real Estate at Greyhill Capital Partners, identifying these opportunities requires more than looking for higher yields. It means understanding why an asset is attractively priced, what drives demand in its local market and whether an investment manager has the operational capabilities to translate its thesis into results.
Greyhill has built its strategy around this approach, focusing on multi-family residential real estate in Northern Ontario and combining investment expertise with direct asset and property management. The underlying premise is that disciplined acquisitions and effective execution can create value in markets that receive less attention from institutional investors.
A Different Investment Equation
Dougherty’s interest in real estate developed through his early career in private capital markets, where he conducted due diligence and analysis on real estate issuers across North America. Exposure to different operators and investment strategies shaped his interest in building a platform that could combine investment analysis with the capabilities required to manage assets and deliver on business plans.
At Greyhill, this translates into a deliberate search for markets and assets that may be overlooked or undervalued by the broader investment community.
Northern Ontario offers several characteristics that underpin the firm’s approach. Dougherty says Greyhill has typically acquired assets at capitalization rates 100–200 basis points above those available in the Greater Toronto Area (GTA), while purchasing properties at approximately 30–50% below replacement cost.
Higher initial yields can generate more income relative to the acquisition price, potentially supporting financing with less equity while maintaining appropriate debt-service coverage. A lower entry basis also provides a different starting point for managing downside risk, particularly when compared with the cost of developing a comparable property today.
But acquisition pricing is only part of the equation. Greyhill also sees potential in the relationship between rental income and operating expenses.
Dougherty notes that expenses may represent approximately 60% of rental revenue in the secondary markets where the firm operates, compared with around 30% in a primary market. Assuming expenses remain broadly fixed, this difference can affect how rental growth translates into net operating income (NOI).
In his illustration, a property generating NOI equal to 40% of rental revenue would require approximately 30% rent growth to increase NOI by 30%. A property with an NOI margin of 70%, by contrast, would require approximately 70% rent growth to achieve the same proportional increase, under the same simplified assumptions.
The implication is not that secondary markets will necessarily experience stronger rent growth. Rather, their operating economics may offer different avenues for value creation when supported by effective property management, expense control and sustainable leasing demand.
Understanding the Fundamentals Behind the Numbers
An attractive acquisition basis must be supported by credible local market fundamentals. Greyhill therefore looks beyond headline yields and property valuations to assess the economic conditions that underpin rental demand.
Dougherty highlights population growth, affordability, diversified employment and investment activity as factors supporting the firm’s interest in Northern Ontario. He also points to the region’s critical-minerals resources and the potential for related public and private investment to contribute to economic development.
The relationship between household incomes and rents is another consideration. Dougherty notes that the Northern Ontario municipalities examined by Greyhill generally have a more favourable ratio of median household income to average rent than the Ontario average or the GTA. In the firm’s assessment, this relative affordability may help support demand from households seeking more accessible housing costs.
These broader indicators are only part of the analysis. Greyhill also monitors residential and commercial transactions, home prices, leasing activity, tenant applications and arrears. Conversations with local economic development officials, property owners, appraisers, realtors and accounting firms provide additional context on changing conditions.
At the property level, tenant payment patterns are particularly important. Rising arrears may signal emerging pressure on household finances or employment, making it essential to understand the circumstances behind missed payments rather than relying solely on aggregate market statistics.
This combination of regional intelligence and ongoing asset-level monitoring helps the firm assess whether an investment thesis remains valid as conditions evolve.
From Investment Thesis to Operational Execution
For Greyhill, the distinction between identifying an attractive investment and delivering its projected returns lies in execution.
A financial model may demonstrate the potential of an acquisition, but realizing that potential depends on the ability to manage the property, improve performance and maintain effective oversight. Greyhill’s vertically integrated structure brings together investment, asset management and property management, allowing information and decisions to flow across the organization.
Technology is an increasingly important part of this model. As the firm expanded from two to four markets, increased its unit count by 71% and grew its on-the-ground headcount by 50%, the need for consistent systems and processes became more pronounced.
One initiative was the development of a proprietary maintenance application after Greyhill identified inefficiencies arising from the multiple systems used by frontline staff to manage work orders, receipts, time tracking, inspections and status updates.
Consolidating these functions into a single workflow is intended to reduce administrative burdens, limit errors and allow employees to focus on maintaining properties. The firm has also automated much of its accounts payable and receivable data entry, freeing accounting personnel to concentrate on financial analysis and operational insights.
These examples illustrate a broader principle: technology creates value when it addresses specific operational constraints. For a growing property platform, better systems can support efficiency and consistency without requiring administrative complexity to increase in line with the portfolio.
Scaling With Structure and Discipline
Greyhill’s growth strategy combines expansion within its existing markets with investment in the infrastructure required to manage a larger portfolio.
The firm is establishing a mutual fund trust, with a longer-term ambition to develop a private real estate investment trust. Dougherty identifies potential benefits including independent board governance, access for investors using registered plans and broader distribution, which could provide greater flexibility around investor liquidity.
The structure is also intended to support access to more permanent sources of capital, aligning the firm’s funding model with its long-term objective of owning assets and compounding wealth over time. The effectiveness of this approach will depend on the final fund terms, governance arrangements and the alignment between investor liquidity and the underlying assets.
Over the next 12–18 months, Greyhill is targeting approximately 1,500 units and more than $200 million in assets under management. Dougherty describes the priority as building on the platform already established: growing in existing markets while continuing to invest in operational capabilities and technology.
The emphasis on disciplined expansion is important. Geographic growth introduces new demands on staffing, local oversight and portfolio management. Sustainable scaling requires those capabilities to develop alongside the asset base, rather than after operational complexity has already increased.
Looking Beyond Conventional Market Boundaries
Greyhill’s approach highlights a broader consideration for real estate investors: secondary markets should not be evaluated solely on the basis of higher yields or lower acquisition prices. Their attractiveness depends on the interaction between entry valuation, local economic fundamentals, operational potential and the manager’s ability to execute.
For investors, the relevant question is not simply whether a smaller market is undervalued, but whether its underlying economics support the investment thesis and whether the operator can translate that thesis into sustainable performance.
Dougherty’s perspective is that opportunities can emerge beyond established investment centres when capital is deployed selectively and supported by local knowledge and operational expertise.
Ultimately, the opportunity lies in combining disciplined acquisition with the ability to influence what happens after closing. In markets that receive less investment attention, that combination may be a more meaningful source of differentiation than geography alone.
To watch the full interview, click here.
