Oxford Properties Group, the 100 percent owned real estate subsidiary of Canada’s Ontario Municipal Employees Retirement System (OMERS), is rolling into Continental Europe.
In late September, the group announced its first investment as 32 Rue Blanche in the 9th Arrondissement, which is a fully let 237,500 square foot office building in what is fast becoming Paris’ new digital central business district in the historic financial area. It was bought for €263 million from Washington D.C.-based, The Carlyle Group, that acquired various adjacent sites and redeveloped the property in 2012.
In an interview, Paul Brundage, Oxford executive vice president and senior managing director of Europe who helped establish the company’s London office in late 2008 told PERE that the acquisition was part and parcel of Oxford and OMER’s strategy to generate absolute higher returns from real estate and the pre-set idea of doing so by diversifying real estate holdings internationally, particularly targeting cities benefiting from the global urbanization trend.
Canadian real estate will remain a significant element of the portfolio. However, notable international deals are cropping up more frequently. For example, Oxford has invested in Hudson Yards, the 17 million square feet project on the west side of Manhattan in New York. More recently, it made a $1.2 billion acquisition several months ago of 3.3 million square feet of office property in Boston from The Blackstone Group. Meanwhile, Oxford has surpassed its target to become a C$30 billion property organization, and has set a new goal of C$50 billion to achieve. Said Brundage: “We have gone longer and deeper into key global cities of the urbanization trend you are seeing everywhere.” It has gone into the US in New York, Washington D.C. and Boston, while in London he explained it had a team of 25 and had built up a $5 billion business matching that of the US. It just completed the development of a tall, sculptured building in Leadenhall Street dubbed “The Cheese Grater”.
Of the acquisition of 32 Rue Blanche in supply-constrained Paris, he went further: “We said we wanted to play the global urbanization theme and Paris fits that bill. There’s a lot of noise about the French economy, and there is an appropriate level of concern, but we believe that Paris over the long term will continue to be one of the great cities and we have spent a lot of time trying to figure out how to invest there. The combination of a 100 percent leased and good financing brought us to a number we felt comfortable with and makes sense for how we are trying to build a European business as part of that global business to meet the absolute return” he said.