The British Columbia Investment Management Corp. is turning over the management of its real estate assets to newly launched QuadReal Property Group.
Currently, Bentall Kennedy, GWL Realty Advisors and Realstar manage most of the B.C. pension fund’s Canadian real estate assets. The internalization process will begin in 2017, after which QuadReal’s portfolio will include more than 500 office, industrial, retail and residential properties in Canada and more than $2 billion worth of international real estate investments. The company’s mandate includes growing both Canadian and foreign real estate investments. At $18 billion, real estate assets make up almost 15 per cent of the B.C. pension fund’s $123-billion portfolio.
“It’s very efficient to use external expertise — people who know the local markets and are able help you grow,” says Derek Warren, assistant vice-president at Lincluden Investment Management in Mississauga, Ont.
“As you hit a certain level, and in this case the level is $18 billion in real estate . . . then you can start to look at whether it’s more efficient to manage it internally, which of course means hiring your own accounting staff, your own asset management people, but also hiring people who drive around in pickup trucks and clean floors and fix things in your buildings. So it’s a big step to go that way.”
Remco Daal will lead QuadReal’s domestic business and Jonathan Dubois-Phillips will lead its international operations. Daal is the former president of Bentall Kennedy’s Canadian operations.
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“Bentall Kennedy, GWL Realty Advisors and Realstar have been providing outstanding asset and property management services for us for many years. We appreciate their exceptional work, and thank them for being expert partners on hundreds of projects across the country,” said Gordon Fyfe, chief executive officer and chief investment officer of the B.C. pension fund.
“We expect there will be assets for which we compete and opportunities for tenants which we compete,” Daal, referring to the asset managers the pension fund is dropping, told the Financial Post. “It’s all fair game.”
Warren notes the fund’s real estate holdings skew heavily towards Canadian assets (89 per cent). “That’s not what a typical large firm would want,” he says.
Hiring Dubois-Phillips, an expert in Asian real estate, “implies that the vast majority of their growth will be out of Canada,” says Warren.
He adds: “And I wouldn’t be surprised if, as deals appear on the global context . . . they sold some of their Canadian assets to pay for that.”