Peakhill Income Opportunity LP
Bridging the Gap for CMHC-Insured Mortgages – Initiating Coverage
Published: Oct 23, 2025
Author: FRC Analysts
*Peakhill Income Opportunity LP has paid FRC a fee for research coverage and distribution of reports. See last page for other important disclosures, rating, and risk definitions.
Sector: N/A | Industry: Mortgage Investment
Ticker Symbols:
Report Highlights
- Peakhill Income Opportunity LP (“fund” or “LP”), established in 2020, is a mortgage investment vehicle primarily focused on short-term bridge financing for income-producing multi-family properties seeking CMHC insurance. We view CMHC-insured loans as relatively low risk, given the government guarantee in the event of borrower default.
- The fund’s manager, Peakhill Capital, has been in the mortgage business since 2020. Since inception, the manager has funded $14.8B across 1,900+ loans, including $9B in CMHC-insured loans. The manager, and the management team, have significant skin in the game, having invested $22M in the fund, representing 6% of units. Additionally, the manager guarantees the first $15M of investor losses.
- At the end of Q2 2025, the fund held $333M in mortgages, with CMHC bridge loans representing 72% of the portfolio. Ontario accounted for 53% of exposure, followed by Alberta (21%), and Quebec (18%).
- In H1-2025, the yield was 9.1% vs 10.1% in 2024 (full year), driven by lower interest rates. Note that 95% of mortgages are floating rate.
- Multi-family rents in major Canadian cities have declined over the past year, as vacancies rose due to higher supply, weaker employment, and fewer international students. We remain positive on the Canadian multi-family rental market, supported by steady long-term demand, high property prices, and affordability challenges from elevated mortgage rates.
- Since late 2024, the Bank of Canada has cut rates twice (50 bps total). We see room for one or two more cuts in the next six months, amid slowing GDP growth, elevated trade tensions, high unemployment, and cooling inflation. While mortgage delinquencies remain a concern, lower rates should ease pressure by reducing financing costs, compressing cap rates, and supporting property valuations, benefiting Peakhill’s borrowers.
- We find high-yielding funds, like Peakhill, increasingly attractive in the current declining rate environment. This is because MIE lending rates are less elastic, meaning their yields tend to decline less in a falling rate environment, and rise more slowly in a rising rate environment. We are forecasting a yield of 8.9% in 2025 vs 10.1% in 2024.
Risks
- Highly competitive sector
- A downturn in the real estate sector may impact the company’s deal flow
- No guaranteed distributions
- Default rates can rise during recession
- Timely deployment of capital is critical
Fundamental Research Corp. Equity Rating Scale:
- Rating – Excellent Return to Risk Ratio
- Rating – Very Good Return to Risk Ratio
- Rating – Good Return to Risk Ratio
- Rating – Average Return to Risk Ratio
- Rating – Weak Return to Risk Ratio
- Rating – Very Weak Return to Risk Ratio
- Rating – Poor Return to Risk Ratio
Fundamental Research Corp. Risk Rating Scale:
- (Low Risk)
- (Below Average Risk)
- (Average Risk)
- (Speculative)
- (Highly Speculative)
FRC Distribution of Ratings
| Rating | Percentage | Risk | Percentage |
|---|---|---|---|
| Rating – 1 | 0% | Risk – 1 | 0% |
| Rating – 2 | 33% | Risk – 2 | 10% |
| Rating – 3 | 45% | Risk – 3 | 41% |
| Rating – 4 | 4% | Risk – 4 | 32% |
| Rating – 5 | 8% | Risk – 5 | 8% |
| Rating – 6 | 1% | Suspended | 10% |
| Rating – 7 | 0% | ||
| Suspended | 9% |
Disclaimers and Disclosure
The opinions expressed in this report are the true opinions of the analyst about this company and industry. Any “forward looking statements” are our best estimates and opinions based upon information that is publicly available and that we believe to be correct, but we have not independently verified with respect to truth or correctness. There is no guarantee that our forecasts will materialize. Actual results will likely vary.
Fundamental Research Corp. “FRC” owns shares of the subject company: No. The analyst owns shares of the subject company: No , and does not make a market or offer shares for sale of the subject company, and does not have any investment banking business with the subject company.
Fees ranging from $10,000 to $20,000 have been paid by AWM Diversified Mortgage Investment Corporation to FRC to issue this report. This fee creates a potential conflict of interest which readers should consider. The purpose of the fee is to subsidize the high costs of research and monitoring. FRC takes steps to ensure independence including setting fees in advance and utilizing analysts who must abide by CFA Institute Code of Ethics and Standards of Professional Conduct. Additionally, analysts may not trade in any security under coverage. Our full editorial control of all research, timing of release of the reports, and release of liability for negative reports are protected contractually. Distribution procedure: our reports are distributed first to our web-based subscribers on the date shown on this report then made available to delayed access users through various other channels for a limited time.
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