Fiera Capital spent $32 million to acquire the 45 per cent of Fiera Properties it didn’t already own from minority shareholders.
“We were in a partnership and now we’re not,” Cuthbert said. “We’re 100 per cent owned, but we’re effectively an autonomous organization within Fiera Capital.”
Montreal-headquartered Fiera Capital is a publicly traded, multi-product investment management firm with more than $128 billion of assets under management. It provides institutional, retail and private wealth clients with access to full-service integrated money-management solutions across traditional and alternative asset classes.
Fiera Capital has ambitions to grow to $200 billion of assets under management by launching similar operating platforms in the United States and Europe over the next three to five years.
Fiera Properties is a real estate investment management firm that manages some $2 billion of office, retail, industrial and multi-family properties across Canada through its investment funds and accounts. It has offices in Toronto, Montreal and Halifax.
“We have a range of products that have a range of strategies based on risk and reward,” said Cuthbert. “You can mix and match and shift your allocations around.”
Fiera Properties CORE Mortgage Fund
Fiera Capital launched its Fiera Properties CORE Mortgage Fund and appointed Fiera Properties Debt Strategies Ltd., a wholly owned subsidiary of Fiera Properties, to lead the mortgage strategy in November.
It’s designed to provide investors with an opportunity to invest in mortgages secured by commercial real estate across Canada and offer stable monthly income and capital preservation. Senior vice-presidents Scott Rowland and Geoff McTait head up Fiera Properties Debt Strategies.
Fiera Properties CORE Mortgage Fund has raised more than $100 million and deployed about $50 million since inception. Cuthbert expects to have deployed close to $70 million within another month. Most of its activity has been in the Greater Toronto Area (GTA) so far.
“We expect that fund to grow to more than $200 million,” said Cuthbert. “We think it could happen before the end of this calendar year.”
Peter Cuthbert’s management goals
Cuthbert was a five-year veteran of Fiera Properties and its chief operating officer and lead fund manager of the Fiera Properties CORE Fund before his promotion. He continues to oversee management of the fund as well as firm management and operations.
Cuthbert’s first priority is to improve performance for investors, which subsequently helps in sourcing capital.
“Making money is a byproduct of those efforts,” he said.
“We don’t necessarily need to be front and centre. We just need our investors to love us. If they love us, then everything else falls into place.”
Fiera Properties’ acquisition outlook
Fiera Properties is always looking for opportunities in the GTA because of its size, but steep prices and low yields have made management take a hard look at whether there’s enough potential rental income growth to deliver a decent return over time.
Fiera Properties is keen on investing in Quebec these days and is perusing multi-family and retail properties in Victoria.
Fiera Properties is watching Alberta carefully because Cuthbert believes recovery is on the way in the province. It purchased a 461,817-square-foot industrial portfolio in Calgary and Edmonton from Morguard (MRC-T) for $61.4 million in January.
“You’re always looking at the big six markets, and then on the margin you’ll go to some of the smaller communities where you think you can get a yield play and you have centre-ice dirt, where no matter what happens you can retain tenants and hold on to market share,” said Cuthbert.
Fiera Properties’ Ottawa office purchase
Fiera Properties acquired four office buildings at 3000 and 3001 Solandt Rd., 450 March Rd. and 1001 Farrar Rd. in a technology node in the West Ottawa community of Kanata for $74.1 million in March. They are 99 per cent leased with a weighted average lease term of more than six years.
The properties were previously managed by Morguard on behalf of the Healthcare of Ontario Pension Plan (HOOPP). Ottawa-based Colonnade BridgePort is responsible for property management and leasing service contracts for the 344,000-square-foot Kanata North portfolio.
Cuthbert said there are few immediate capital expenditures needed for the buildings. He added that the rents in place are below market rates and there’s an opportunity to grow them with relevant employment.
“Whether we go for a certification or not, we will be moving them towards LEED and BOMA BEST standards if they’re not already there,” said Cuthbert. “There will be some investment in those areas, but generally we improve as tenant demand requires.
“We’ll sit with our tenants and talk about their aspirations and then respond to that. That usually results in term renewals. We’ll update washrooms and corridors and things like that as we go along.”
Fiera Properties’ Quebec industrial purchase
Fiera Properties acquired a 925,807-square-foot industrial portfolio from Investors Group Trust Co. for $82.5 million in April. It included eight properties in the Greater Montreal Area and another in Quebec City. The buildings are 91 per cent occupied by 27 tenants with a weighted average lease term of six-and-a-half years.
“We feel that the price reflected the condition of the buildings and there’s not a lot of capital expenditure there, but we got it at a price where we can make the improvements that are necessary on a few of the buildings that are a little bit older,” said Cuthbert. “I think one building was built in the ’70s and the rest are from the ’90s, so they’re actually in pretty decent shape.”
Canderel is property managing the Montreal industrial portfolio.
“They’re in good locations and have good features and they’re good, functional buildings,” said Cuthbert. “They’ll retain market share and we’ll be able to keep them as close to full as possible.”
Cuthbert said Fiera Properties has already received two offers for the Quebec City property, but has no plans to sell it.
“The majority of the capital we have in the CORE Fund is pension and the program is income-focused, long-term hold. We’ll occasionally prune from the portfolio and sell assets when they don’t serve a strategic purpose or materially impact performance.”
Fiera Properties has also reportedly agreed to purchase three properties in Flamborough, Guelph and Orangeville, Ont., as well as one in Duncan, B.C., for $216.9 million from RioCan Real Estate Investment Trust (REI-UN-T).