Fiera Properties Ltd. set a record for investment volumes last year, and is off to a fast start in 2019 with the acquisition of a 13-building office portfolio in Richmond, B.C.
“We’re acquiring assets from coast to coast,” said Blair McCreadie, Fiera Properties’ executive vice-president and CORE Fund manager.
Fiera Properties offers a variety of real estate investment funds, with the CORE Fund being its primary vehicle. The CORE Fund strategy is to invest in core income-focused properties in the industrial, multi-residential, office and retail sectors. The multi-product investment management firm is currently focusing on the industrial and multi-residential sectors.
“Our strategy in multi-res is typically more on the value-add side, where we’re doing refurbishments and improving rents, or we’re building it from scratch,” said McCreadie.
Fiera Properties generally targets properties and portfolios valued between $20 million and $200 million (all figures Canadian). Montreal, Toronto and British Columbia are the markets it’s most interested in at the moment.
Fiera Properties’ acquisitions
Fiera Properties is also acquiring real estate platforms. It agreed to purchase an 80 per cent stake in London-based and United Kingdom-focused real estate investment manager Palmer Capital in December. The acquisition had an equity value of about $70 million and an enterprise value of about $53 million, subject to post-closing price adjustments.
The Palmer Capital acquisition, which is expected to close this quarter, will give Fiera Properties approximately $1.3 billion in additional assets under management.
“This acquisition marks Fiera Capital’s first acquisition of a real estate investment management business outside of Canada, and its second acquisition in the U.K. market following its acquisition of boutique fund manager Charlemagne Capital in 2017,” said William Secnik, Fiera Properties’ senior vice-president of investments.
“Expanding globally, in March 2018 Fiera Capital increased its presence in Asia with the acquisition of Clearwater Capital Partners.”
Similar to what it offers in Canada, Fiera Properties wants to make a variety of funds available in the U.K., United States and Asia through the acquisition of asset managers in those territories.
“It gives us the ability to offer these products and solutions using local talent — because real estate is a local business — but in global markets,” said McCreadie. “By acquiring right-sized asset management platforms in multiple jurisdictions, you get the same touch and feel and flavour that you get in Canada in every market.”
Fiera Properties’ 2018 transactions
Fiera Properties’ CORE Fund completed more than $600 million in transactions, including six separate portfolios, during 2018. This amounted to 33 properties and approximately 3.5 million square feet. They were:
* an industrial portfolio of three multi-tenant buildings and one single-tenant building, totalling more than 460,000 square feet on 32.6 acres, in Calgary and Edmonton;
* a portfolio of four class-A suburban Ottawa office buildings, totalling more than 340,000 square feet, and approximately three acres of land for future development and expansion;
* Sunwapta Business Park, a recently built 410,000-square-foot industrial park in northwest Edmonton;
* an industrial portfolio of more than 900,000 square feet, comprised of nine single- and multi-tenant buildings, in Montreal and Quebec City;
* four retail assets in established growing markets in B.C. and Ontario, totalling more than 900,000 square feet, that are 99 per cent leased to strong anchor tenants;
* a 75-per-cent interest in a six-storey, class-A, 126,000-square-foot LEED Gold-certified office development in downtown Kitchener which has a lead legal tenant in place;
* outstanding ownership interest in a 200,000-square-foot industrial portfolio of four assets with long-term tenancies in Manitoba and Alberta;
* and a 90 per cent interest in two three-storey multi-family properties with 69 units.
The CORE Fund made two dispositions last year: a 3,000-square-foot property in downtown Toronto; and a 29,000-square-foot property in Edmonton.
Fiera Properties had $3.2 billion of assets under management at the end of 2018 on behalf of its primary clients, which include institutional investors, foundation and endowment clients, and high-net-worth investors.
Richmond portfolio acquisition
Fiera Properties’ CORE Fund has more than $300 million in assets under contract, including the recently completed acquisition of a 13-building office portfolio totalling 707,809 square feet on a 31.5-acre site near Vancouver International Airport. The purchase price was more than $200 million.
The portfolio is 97 per cent leased and offers long-term development density, with 655,000 square feet of unbuilt gross floor area permitted by existing zoning.
“The investment represents an attractive yield for the Vancouver market and was bought well below replacement cost, considering high land values in the area,” said Secnik. “With 4.9 years of weighted average lease term, the purchase represents the fund’s first Vancouver-area office acquisition and offers net operating income upside, given in-place rents are below market.”
Fiera Properties’ 2019 plans
McCreadie expects 2019 to be similar to 2018, with acquisitions in the $600-million range.
In addition to U.S. expansion, McCreadie said Fiera Properties is looking at launching a pan-Canadian opportunity fund this year. The firm has three other closed opportunity funds, focused on Toronto and Quebec, which are fully invested.
“It’s an active market,” said McCreadie. “There’s a lot of product, but there’s a real bifurcation between prime and non-prime. Prime is highly sought-after and pricing is very keen. Non-prime is sitting on the market and pricing is weakening.
“So, there are opportunities, especially where we’re being opportunistic.”
Fiera Properties also has about 30 projects being completed, that the firm is managing with partners, McCreadie said.