A separate piece for bcIMC

The Canadian pension plan is following many of its peers with the formation of a standalone real estate business, but using a different approach.

Earlier this month, British Columbia Investment Management Corporation (bcIMC) unveiled its newly created real estate company, QuadReal Property Group.

“The establishment of QuadReal is a natural evolution for a company of scale and ambition and it fits perfectly with our strategy to expand our global reach,” said Gordon Fyfe, chief executive officer and chief investment officer at bcIMC, in a statement announcing the launch.

The Victoria-based pension currently has C$123 billion ($95.8 billion; €84.9 billion) in overall holdings and is understood to be growing quickly, with C$18 billion in real estate assets, including C$2 billion outside of Canada. To manage this growth and expand globally, bcIMC formed QuadReal, in a move similar to how many of its peers now manage their real estate holdings. With the exception of the Canada Pension Plan Investment Board, Canada’s other major pension plans have separate real estate companies, including La Caisse de dépôt et placement du Québec (CDPQ)’s property company Ivanhoé Cambridge, Ontario Municipal Employees’ Retirement System (OMERS)’s equivalent Oxford Properties Group and Ontario Teachers’ Pension Plan (OTPP)’s The Cadillac Fairview Corporation.

Unlike those pension plans, which all acquired and then integrated standalone companies, QuadReal will be a brand-new entity that its parent organization is creating with its existing real estate assets. Those assets will begin to transfer from bcIMC’s three external real estate managers – Toronto- based firms Bentall Kennedy, GWL Realty Advisors and Realstar Group – to QuadReal in 2017.

This transition will have a significant impact for Bentall Kennedy – which currently derives 17.5 percent of its assets under management from the pension plan – in particular. Three to four Bentall Kennedy subsidiaries, along with 500 of the company’s staff, are now expected to become part of QuadReal. PERE understands that the vast majority of the Bentall Kennedy staff that are joining QuadReal previously worked on the bcIMC real estate assets that Bentall Kennedy had managed for the Canadian pension plan. Approximately one-third of those employees were investment management and support staff, while two-thirds are property management professionals.

bcIMC and Bentall Kennedy will not be severing ties after the transfer of assets is complete, however. For example, Bentall Kennedy will be spearheading the 1.3 million square foot mixed-use redevelopment of the former Post Office building in downtown Vancouver on behalf of the Canadian pension plan for years to come. Bentall Kennedy bought the building in January 2013 for $160 million, according to real estate data provider Real Capital Analytics (RCA).

bcIMC’s latest publicly-disclosed real estate transaction was the April sale through GWL of a 14-acre office park in Ontario for $8.5 million, according to RCA.