With an eye to playing with the big guys, Landmark Properties and Kipling Group have joined forces to create a property management services company with national aspirations dubbed LandmarkKipling Inc.
The 50-50 joint venture of Landmark and Kipling’s property management operations (it doesn’t include other businesses within the two companies) diversifies the companies beyond their regional bases: Landmark is strong in Quebec, Kipling’s strength is in Ontario and Alberta.
It’s also fair to say the companies are not done yet. It is likely another partner will be brought in, to add both scale and geographic reach.
“We’re going to look for a partner right away for British Columbia,” said Richard Geurts, co-founder and managing partner of Kipling. “Our goal is to expand further into Western Canada and build in Ontario and Quebec.”
Rationale is simple
The rationale for the venture is simple, he said. “It’s very difficult to build a national platform today on a one-off basis. We are operating in Ontario and Alberta currently but we were not operating in Quebec.”
The combination will give them 12 million square feet under management, well below the 20 million sq. ft. “magic number” they believe is necessary to compete with the biggest players in the industry and give their current employees headroom to grow.
“If we build scale, we build a company that provides opportunities for our employees. I’m not talking about getting to 100 million square feet, but if you get to 20 million square feet, then your employees have room to grow.”
A 20-million-sq.-ft. portfolio also “provides you with penetration into all the major markets in Canada while at the same time being able to keep your hands on every client’s needs and what is happening at every property.”
Long time coming
Geurts was founder and president of Redcliff Realty Management Inc. After he sold his interest to a partner, that company was acquired by the Coril Group of Companies in 2011 and merged with Tonko Realty Advisors Ltd. to form Triovest Realty Advisors Inc.
Geurts then founded IGB, a partnership with German property investors who pulled out of North American real estate after the financial crisis. He and a partner bought out their German partners and rebranded the company as Kipling Group in 2010.
Geurts has known the owners behind Landmark (Harvey Elman and Doron Altman) for more than a decade and the two sides started a discussion more than a year ago with the intention of growing their property management services.
“The brokers are into the business as well as the traditional management firms and it is very competitive. It has gotten very difficult to land new business so we thought let’s build a national platform, which is what I did at Redcliff.”
A point of difference
Given that the property management business is already a pretty crowded marketplace, what makes LandmarkKipling Inc. stand out in the crowd?
“I would say that we are veteran property managers on both sides,” said Geurts. “We are not brokers. Brokerage is a core business, whether it is be Avison Young or Colliers, and with the big guys, whether it be Morguard or Bentall, those guys are primarily focused on acquisitions and asset management and property management feeds the machine.
“In our case, property management is a core business for us. My entire career has been spent in the property management/leasing game, and so has Luc’s (Landmark president/CEO Luc Sicotte). We know how to run properties effectively.”
LandmarkKipling’s 120 employees working out of offices in Quebec City, Montreal, Ottawa, Toronto and Edmonton are also a point of difference according to the Kipling founder.
“Our people are, I think, miles ahead of a lot of our competitors’,” he said. “There is a passion in what we do and I think our clients pick up on that. We are focused on doing good jobs for them and running the properties . . . not just profitability, but like they are our own. We coined the phrase, ‘We think like an owner, but act like a manager’ and that is ingrained in both our cultures.”
While LandmarkKipling is a 50-50 venture, one partner is bringing a bit more to the partnership.
“I think in the scheme of things, Landmark is bringing more to the table than we are,” said Geurts. “What they were looking to us for in this partnership is our network. We have strong relationships with Canadian pension funds and if you have got any aspirations of being national you have to be in Toronto.
“We are small in Toronto, but we have plans to certainly build it one property at a time in Ontario.”
Even though the partnership was announced only this past Monday, Geurts said the companies are well along on the path to integration.
“Our backroom services will all be the same, so we will be running on the same accounting systems, the same policies and procedures, the same governance protocols, everything will be the same between the companies.”