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Epic Investment Services, MDC Group merge: $16.5B portfolio

Epic Investment Services and MDC Group have merged, becoming a fully integrated real estate platf...

IMAGE: 33 Bloor St. East is part of the portfolio of newly merged Epic Investment Services and MDC Group. (Courtesy Epic Investment Services)

33 Bloor St. East is part of the portfolio of newly merged Epic Investment Services and MDC Group. (Courtesy Epic Investment Services)

Epic Investment Services and MDC Group have merged, becoming a fully integrated real estate platform with a portfolio worth more than $16.5 billion and encompassing 35 million square feet of office, retail, industrial and residential assets under management in Canada and the United States.

The platform will operate as Epic Investment Services in Canada and MDC Realty Advisors in the U.S.

“We’ve been a partner of Epic in Western Canada for over 10 years,” MDC owner and president Jeffrey Kohn told RENX. He founded the company after a subsidiary of The Great-West Life Assurance Company purchased TGS North American Real Estate Investment Trust, where he was chief executive officer, in 2006.

“The Epic business was primarily institutional and pension fund business, whereas MDC represented high-net-worth individuals and wealth management companies. Everybody knew of the two entities, so it was natural to just combine the two in Canada under Epic.

“MDC Realty Advisors is an entity that we’ve been operating under in the U.S. for about five years. Credibility in real estate is everything, and in the U.S. they know us as MDC Realty Advisors, so we felt we’d operate as MDC Realty Advisors in the U.S. as a wholly owned part of Epic.

“Maybe over time we’ll merge the names, but we want to leave it as MDC in the U.S.A. for now.”

Epic/MDC post-merger structure

Epic Investment Services  is an employee-owned real estate advisory, asset and property management, and mortgage services company created through the merger of three commercial real estate firms. With the retirement of Epic’s founding partners, Stuart Smith and Gordon Thompson, the timing was right to merge with MDC.

“There was an opportunity for me to take a larger ownership role in the entity,” Kohn told RENX. “We now have substantial scale with our platform in the U.S. and Canada.”

Kohn and Epic’s former chief operating officer, Craig Coleman, are co-CEOs of the new company. Laetitia Pacaud, MDC’s former executive vice-president of business development, is now COO.

Coleman and Pacaud are based in the Canadian head office in Toronto. Kohn is based at the Vancouver office.

The U.S. head office is in Denver and there are also offices in Montreal, Ottawa, Calgary, Edmonton, Phoenix and Chicago. The merged company has 165 employees.

Epic/MDC merger benefits

The new entity combines Epic’s property and asset management expertise with MDC’s transactional acumen and development management experience. It’s positioned to build on the opportunities that come with a larger operational footprint and provide a full suite of services to generate greater long-term value for clients and partners throughout the real estate life cycle.

“We take it over, we come up with ideas, we manage it and may redevelop it,” Kohn said of the operational strategy. “Every year we’ll do an analysis on whether a property is a hold or a sell, and we advise our clients on the best decision for that particular asset.”

The merged company will provide enhanced and institutional-quality deliverables, such as leading-edge technology and sustainability initiatives. Expansion also means more investment potential, increased market presence and a dedicated American platform which offers clients extensive cross-border opportunities for growth.

Kohn said a goal of the merger is to attract international investors and pension funds as clients.

“Epic today is known for being agile, and for providing institutional-quality, best-in-class services in property and asset management,” said Coleman in a release announcing the merger. “Now we’ll be able to provide our clients with the same quality but across all service offerings — right from asset acquisition to management, from development to disposition — with dedicated experts in each service line.”

Canadian and American portfolios

The Canadian portfolio, with approximately 25 million square feet of assets under management valued at around $14 billion, is much larger than the U.S. portfolio. There are approximately $8 billion in assets under management in Ontario and around $5 billion in Alberta, according to Kohn.

The merged company also oversees properties in Quebec, British Columbia, Colorado, Illinois, Washington, California, Arizona, Kansas and Texas.

Kohn told RENX he’d like to see the portfolio grow to 100 million square feet, with 70 per cent of it in the U.S. The company will continue to invest in its four current asset classes and plans to be more aggressive on the acquisition front in the U.S., southern Ontario and Eastern Canada while taking a more opportunistic approach in Western Canada.

“We see opportunities in Canada and particularly in the U.S., given the size of the market,” said Kohn.

Sustainability at Epic

Epic Investment Services has a sustainability strategy that includes: a governance and accountability structure; core economic, environmental and social priorities based on a materiality analysis, key performance indicators, action plans, targets and commitments; monitoring and reporting; and a stakeholder engagement framework.

Its focus areas are: green certifications; increasing energy-efficiency; reducing greenhouse gas emissions; water conservation; waste management and recycling; environmental reviews and procurement; green leasing; and tenant and stakeholder engagement.

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