QuadReal had a busy first year. Since its June 2016 launch, the real estate subsidiary of the C$121.9 billion ($89.67 billion; €80.9 billion) British Columbia Investment Management Corporation has been consolidating its Canadian assets in-house and making an aggressive push abroad. Last month, QuadReal made its first US student housing investment – $600 million into a joint venture with CA Student Living and GI Partners – and announced the appointment of former AXA Investment Management – Real Assets chief investment officer Dennis Lopez as global chief executive. PERE caught up with QuadReal president Jonathan Dubois-Philips to see what else is ahead for the firm.
PERE: What was the genesis of QuadReal?
Jonathan Dubois-Philips: bcIMC had a 20-year plus real estate business, which was primarily run by three external managers: Bentall Kennedy, Great West Life [Realty Advisors] and RealStar. The managers were great, but we got to a size where it made sense to follow the Canadian model, where you create a wholly-owned platform, with all decisions made in one place. bcIMC had owned a third of Bentall Kennedy, but [in 2015] we sold it to Sun Life and its management was divested. That was an opportune time to launch this platform.
PERE: What about outside of Canada?
JDP: The portfolio was 87 percent Canada when QuadReal launched. Over time, we want to grow that to more of a 50-50 percentage to diversify the risk. And in rough numbers, 50 percent outside of Canada will be in the Americas, 25 percent will be Asia and 25 percent the UK and Europe.
That’s where Dennis comes in. Dennis brings his vast international experience and great network. So he’s going to help complete the transition in Canada and then help plan the growth of the portfolio outside of Canada.
PERE: How are you looking to grow?
JDP: First, programmatic joint ventures: we’ve done a number of them in the US and Mexico. The second would be club deals, where we’re partnering with like-minded, deep-pocketed, long-term investors. We’ve done one of those in London, where we invested in a 1.4 million-square-foot office building with three other partners, and we’re all 25 percent interests, all similar investment horizons. Then a very distant third and a very small piece of the business would be strategic fund investing, probably representing less than 10 percent of the portfolio.
PERE: How does the student housing JV fit into your strategy?
JDP: Where we are in the cycle, we are focused on sectors that we think are recession or downturn resistant. I think student housing fared very well in the last two downturns in the US. We’ve been looking for a long time, trying to find the right partner with the right deep track record. The CA Student Living guys had a long track record and were willing to put skin in the game. It was of the right scale so it made sense for us.
PERE: What has been QuadReal’s international activity thus far?
JDP: We’ve committed probably C$1.5 billion to the US since June 1 of last year, which is sizable for a company of our size. We’re active in multifamily and we’re active in logistics. We’re also formulating our strategy for Asia, where, of the three regions, we have the least invested.
PERE: How do you see the team evolving at QuadReal?
JDP: Our plan is to get the big domestic pieces under our belt and build the team in Vancouver. So, by this time next year, we’ll have 1,100 employees in QuadReal. Once we’ve gotten the big pieces in Canada sorted out and honed the strategy more, then we’ll look in the future at opening offices outside of Canada. Right now, it looks like the first office will be in London. That’s probably 24 to 36 months out from today. We’ll have a presence in the UK, the US, and in Asia over the next five years.
PERE: Why London in terms of your first international office?
JDP: Because we have investments there, having boots on the ground is very helpful. Most people would think the US should be first, given we have more money invested there, but we find that covering the US from Vancouver is fine. It’s not difficult.