US NEWS: True north heads south

The Ontario Municipal Employees Retirement System (OMERS) may call the Great White North home but, from a real estate perspective, the largest country in the Western hemisphere by total area is downright modest compared to its neighbour to the south. In 2011, Canada’s commercial real estate market was valued at $770 billion, roughly one-tenth of the vast $6.5 trillion US market, according to Prudential Real Estate Investors. Perhaps then it comes as no surprise that the $53 billion pension plan wants to invest more outside its borders.

Toronto-based OMERS, through its investment arm Oxford Properties Group, is eyeing a major real estate expansion in the US, with an aim to boost investment in the country from $1.5 billion currently to $5 billion over the next five years. The increased allocation is part of a plan by Oxford – a standalone real estate development and investment company sponsored by the pension fund– to invest $10.5 billion in the asset class in North America and Europe during that period. The company also plans to increase its real estate investments from $2 billion to $5 billion in Europe and from $16 billion to $20 billion in Canada.

Driving the real estate expansion in the US and Europe is Oxford’s desire to broaden its geographic reach and diversify its portfolio, which currently is more than 80 percent concentrated in Canada, according to Neil Jacob, head of Oxford’s US office. “We view the US and UK/Europe as prime targets for our future growth,” he said.

Oxford began its US operations in a temporary location in New York about 18 months ago, and it has since relocated to a new office, which officially opened on Park Avenue in October. The company already has begun beefing up its real estate team in New York as it pursues a three-pronged approach that will focus on the acquisition of long-term office assets in New York, Boston and Washington, DC; multifamily and retail properties; and real estate debt.

Earlier this year, Oxford hired Kevin Egan as managing director to oversee Oxford’s debt and preferred equity programme. Egan, who previously held senior positions at Goldman Sachs and UBS, will be helping to increase the company’s real estate debt investments from $250 million to $1 billion over the next  two or more years.

Another new recruit in 2011 was Dean Shapiro, who as managing director will be dedicated to the overall development of Hudson Yards, a 12 million-square-foot master-planned, mixed-use project in New York. Last year, the company acquired a 50 percent stake in Hudson Yards in partnership with local developer The Related Companies.

“We’ll be deepening our pool of professionals on the team,” said Jacob. In the next 12 to 18 months, Oxford plans to expand its seven-person US team – which also includes managing director Andrew Trickett, who handles equity investments – to between 12 and 18 people.

Among those hires, Oxford will be recruiting more staff to work on Hudson Yards. “2012 is going to be exciting and active at the Yards,” said Jacob.  

Arguably, the same could be said for Oxford’s overall US plans next year.