It has been a busy year for Manulife Real Estate. Today, the insurance company announced its Canadian Property Portfolio fund finalized the acquisition of 180 Wellington St. in Toronto as well as a national 24-building industrial property portfolio.
The latest purchases complete a series of acquisitions across the country that have in 2014 added more than 2.6 million square feet of real estate, worth $438 million. Currently, the fund has assets under management of more than $885 million.
“These properties represent the type of high-quality assets we acquire in target markets as a priority for our fund’s strategic plan,” said Kevin Adolphe, president and CEO of Manulife Asset Management Private Markets. “Our fund has experienced tremendous growth this year due to the significant capital we have raised and deployed to acquire assets that serve our external institutional investors.”
The industrial portfolio comprises multi- and single-tenant industrial properties of more than 1.5 million square feet in Calgary, Edmonton, Montreal and the Greater Toronto Area, with the largest concentration being in the two Alberta cities and Montreal.
“We’re actually very positive as well on the Montreal market,” said Timothy Blair, Manulife Real Estate’s managing director and senior portfolio manager. “There has been very strong momentum in that market.
“We quite like this portfolio. It provides the fund great critical mass as well as very significant tenant diversification which we are attracted to. The locations where these properties are are among the best locations in their respective markets. The other component is we see long-term redevelopment and value-add in this portfolio.”
Manulife would not name the sellers of the portfolio, but just last week LaSalle Investment Management announced it had sold a 1.5-million-sq.-ft. industrial portfolio located in the same Alberta, Ontario and Quebec markets. That sale of industrial properties, which was 90 per cent leased, was carried out for its Canadian Income & Growth Fund III and Lotus Pacific Investments Inc. of Vancouver.
With the 180 Wellington St. West purchase, Manulife picked up a 12-storey, 209,869 sq. ft. building in Toronto’s downtown core. It is 100% leased to a single tenant (Royal Bank) on a long-term lease. Manulife purchased the tower directly from the bank.
The acquisition marks the first purchase for the Manulife fund in Toronto’s downtown core and, given its extensive and recent renovations, is basically a brand-new building.
In 2012, an ambitious renovation of the 40-year-old building was directed by Stantec. It was emptied of its 1,500-plus employees, reclad and updated throughout.
“It is effectively a new building,” said Blair. “We do intend to have it certified as LEED Gold. It is a great location, it is close to transit and it gives the fund exposure to Toronto’s central business district, which was important to us, but with a well-tenanted asset so it doesn’t expose us to any short-term leasing volatility.”
Blair said the goal of adding geographic, tenant and property-type diversification that was attained this year will continue in 2015.
“As we look to build out the fund going forward, we are looking to add more retail properties to the fund and increasing that allocation,” he said. “That will be our objective as we move into 2015. But we feel that the industrial market is a great place to put capital in today’s market in Canada.”
Blair added that his growth objectives for 2015 are similar to the current year: adding $300 million to $400 million in real estate properties.
“In some markets, where we don’t feel that we are able to acquire, we have stayed out of the markets. 2012 is a great example, we didn’t acquire any real estate because of our view of the market at the time.
“We are very opportunistic in terms of finding acquisitions. A number of those we did this year were off-market. So we are pragmatic and we will see how the market goes in 2015.”