Five questions for Canadian real estate icon Blake Hutcheson

Blake Hutcheson, president and CEO of Oxford Properties Group leads one of the top real estate investment firms in Canada – a company that will likely be worth $30 billion in coming years.
For real estate professionals, Hutcheson is like the E.F. Hutton or Warren Buffett of Canada – when he speaks, people listen.
Before joining Oxford, Hutcheson served as the head of global real estate with Mount Kellett Capital Management, which has offices around the world.
He also spent 14 years with CB Richard Ellis as president for Canadian, Latin American and Mexican operations.
Earlier this month, Hutcheson spoke about the company's expansion plans for the next few years, including plans to invest in Europe at a time when some of his prominent competitors are backing away from the continent.
Here are five of the questions we put to Hutcheson along with his full answers.
Property Biz Canada: When do you predict interest rates will increase, and how will that affect companies like Oxford?
Hutcheson: Oxford uses very conservative leverage. We are about 44% per cent levered across a plus-$20 billion portfolio and so we have never put the franchise in jeopardy by overlevering on an asset-specific basis or on a portfolio-wide basis. We can see through multiple cycles and never be put in a position where we have to trade out of cycle because of increasing interest rates or downturns of any type.
As a general comment, interest rates may move up slightly, but certainly knowing the need for most nations, including ours, to keep interest rates at a very sustainable level and a sustainable low level, there is a motivation there that is overwhelming. It's true here and it's true in America. If they bump up a bit, I don't think it will kill the golden goose or our industry and I don't think it is a great concern for the industry.
Property Biz Canada: Can pension funds compete with REITs for acquisition of assets?
Hutcheson: Canadian REITs have done extraordinarily well. I think on balance they are well-managed and they are very well-placed in the economy because there is an insatiable demand for yield for investors and there is a high demand for owning a piece of the real estate sector. If you are a small investor, the only way to gain yield and gain access to the real estate world without buying hard assets and other things is through the REITs. I think they are serving the market well and in contrast to most other nations, Canada's REIT industry is alive and well.
In terms of our view of the REITs, we don't currently own REITs in Canada, but our view is this: The more money there is in the system, the more liquidity opportunities there are for all of us in the industry and there are times that we like to trade assets. We are quite happy they we are here because they are providing liquidity for the best real estate and the best markets in Canada not only for us, but for everybody. They are welcome and they are a critical part of the industry. There are days we will compete head-to-head with them and sometimes they win and sometimes we do.
Property Biz Canada: Does the presence of REITs make it a seller's market for Oxford?
Hutcheson: There is a certain philosophy where we will trade out of assets and continuously replace them with newer product that will stand the test of time among the best assets in every city and every region that we choose to invest. So we have a constant churn in our portfolio, which is about 59 million square feet today and so yes, we will continue to trade out some assets this year as we did last year and as we will next year, but we are not straight across the line net sellers in any market in Canada. It's specific to the asset, specific to the strategy as to how we will replace that money if we are going to trade.
Property Biz Canada: Do you have any interests in the casino business?
Hutcheson: We are not in the casino business in Toronto or anywhere else. We did not intend to be in a casino business. If the city chooses to approve a casino, what we have said all along is that we will provide the real estate to house one, but we are not an operator and we do not want to be in the casino business. They would be a tenant in the same way that our retail tenants and office tenants would be. It is our hope to redirect any revenue stream from that casino and reinvest it in the convention centre and bring it up to top 10 in the continent, where it is currently about 33rd. It was never our ambition to get into that.

Property Biz Canada: I know that this is an issue that is near and dear to Oxford with your company's growing green footprint in the last decade. How do you intend to achieve the next level of reductions?
Hutcheson: We really have made it one of our key ambitions as an organization to be, if not the leader, then a leader in all the forward-thinking initiatives in relation to all our buildings. We have invested heavily and will continue to invest heavily. We are ambitious to be on the leading edge and we will continue to make prudent bets as technology and habitual techniques change and improve. We have a team of world-class talent embedded within our Oxford platform who are always thinking and always investing new ways to do things in this regard and really showing leadership to me and our senior team to take us into the next couple of decades. It will be fun for the industry to watch us go in the next several decades.



Ann launched RENX in 2001 as a part-time venture and has grown the publication to become a primary source of online news for the Canadian real estate industry. Prior to…

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Ann launched RENX in 2001 as a part-time venture and has grown the publication to become a primary source of online news for the Canadian real estate industry. Prior to…

Read more




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