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$2.3B LaSalle Canada Property Fund plots its next five years

The Rideau and Chapel development in Ottawa. (Courtesy LaSalle Canada Property Fund)
The Rideau & Chapel development in Ottawa. (Courtesy LaSalle Canada Property Fund)

LaSalle Investment Management’s LaSalle Canada Property Fund (LCPF) launched in December 2017 with an initial seed portfolio of $440 million and has quintupled in size over the past five years.

The LCPF is an open-ended fund targeting core properties in major markets across Canada. It seeks commitments from Canadian and global institutional investors looking to access the real estate market through a diversified, income-oriented vehicle. 

The LCPF’s asset value is now more than $2.3 billion across 22 investments, with interests in 53 properties totalling nearly 9.5 million square feet in the Vancouver, Calgary, Edmonton, Toronto, Ottawa and Montreal markets. The portfolio includes industrial, multiresidential, office, retail and mixed-use properties, along with select development projects in those sectors. 

The LCPF’s marquee properties include: 

  • a 50 per cent interest (with Manulife) in the 28-storey, 485,752-square-foot Maison Manuvie in Montreal’s financial sector;
  • a 50 per cent interest (with Ivanhoé Cambridge) in the 1.2-million-square-foot, 200-plus-store Guildford Town Centre and an adjacent 18-acre development site in Surrey, B.C.;
  • and a 21-property, nearly 810,000-square-foot industrial portfolio in Mississauga that was acquired with an unnamed European investor last April.

Evolution of the portfolio

LaSalle managing director of development and fund management, and LCPF deputy fund manager, Sam Barbieri told RENX the LCPF started with a defensive-oriented, nine-asset seed portfolio from an institutional investor that was weighted heavily in Alberta and in office properties.

That has evolved over the years, along with the investment strategy.

“Our asset strategy over time has been to make the assets more resilient from an operational perspective and to continue to rebalance,” said Barbieri. “So we spent a lot of 2021 enhancing our industrial allocation and now it's on par with what you see in the (MSCI/REALPAC Canada Property Fund) index. I think we're right-sized there. 

“We'll spend more time going forward on continuing to downsize our office exposure. We have some great office assets and those will forever be part of this fund, but there are some markets where office is still very opaque generally and we're taking a close look at those markets. 

“We'll also continue to rebalance Alberta, where I think we’re slightly overweighted. It’s just generally a very opaque market across all product types. 

“So that's the thinking going forward. There's some fine-tuning to do, but I think the fund today is in an excellent position and positioned well for the next number of years.”

Acquisitions and dispositions

While the LCPF has been quiet on the acquisition front since the April 2022 deal for the Mississauga industrial portfolio, Barbieri said the goal is to become more active again and add more multiresidential moving forward.

LaSalle managing director of development and fund management, and LCPF deputy fund manager Sam Barbieri. (Courtesy LaSalle Canada Property Fund)
LaSalle managing director of development and fund management, and LCPF deputy fund manager Sam Barbieri. (Courtesy LaSalle Canada Property Fund)

“The market for transactions is volatile at the moment as a result of what's happened with interest rates, and the math around returns has changed. 

“Velocity was down significantly last year, but I think this is a year perhaps of transition where transaction volumes creep back up again and we'll look to make more acquisitions likely in the second half of this year.”

The LCPF is in the process of selling a couple of undisclosed assets as part of the rebalancing and Barbieri expects those deals to close in April.

Development and value-add component

The LCPF also has a 20 per cent development and value-add allocation which it’s putting to good use.

“We have amassed a pipeline of development positions in Ottawa, Edmonton and Vancouver, and we are in the process of entitling in Edmonton and Vancouver,” said Barbieri. “We delivered our first large multifamily development in Ottawa (Rideau & Chapel) in September of ’22, with 315 units brought to market, so we're moving on to the second phase of that development, likely in the first half of ’24.”

The LCPF has a 47.5 per cent interest in Rideau & Chapel. It will include more than 600 rental apartments and 9,000 square feet of retail space on the eastern edge of Ottawa’s central business district near the CF Rideau Centre upon completion, which is expected in late 2026.

Ivanhoé Cambridge and the LCPF are about halfway through the site plan approval process for the 18-acre Guildford Town Centre development site in Surrey, according to Barbieri. There are plans to build 4,200 multiresidential units on the site.

Sustainability initiatives

Sustainability initiatives continue to be a key driver in the active asset management of the LCPF portfolio.

More than 85 per cent of its properties have received a sustainability certification, including seven LEED certifications, six BOMA BEST certifications and nine WELL Health-Safety certifications. 

The LCPF has also submitted to the Global Real Estate Sustainability Benchmark (GRESB) and earned back-to-back five-star ratings in 2020 and 2021 and four-star ratings in other years.

“Our scoring on an absolute basis actually crept up in each of those four years,” said Barbieri. “So we’re very happy about how we've treated ESG and our focus on ESG, and that will always be a cornerstone of our fund going forward.” 

Fundraising and growth outlook

While the COVID-19 pandemic sidetracked real estate funds around the world, the LCPF had a good fundraising year in 2022 and is still in that mode.

“There are a number of prospective investors that we're currently in dialogue with around investing in this fund,” said Barbieri, “and we currently have some dry powder already sitting there that we could deploy.” 

The LCPF has achieved its goal of outperforming the MSCI/REALPAC Canada Property Fund Index by 100 basis points on a gross, five-year rolling basis.

The fund has also maintained top quartile performance against the index over one-, three- and five-year periods on a gross basis as of Dec. 31, 2022. 

“This fund could double in size in the next five years quite easily,” said Barbieri. “We're looking to evolve a fund that is going to be defensive in terms of returns for investors but also have the potential of outperforming the index, which it did in the last five years.” 

LaSalle’s global and Canadian activities

LaSalle Investment Management managed approximately $82 billion of assets worldwide in private and public real estate property and debt investments as of Q2 2022.

LaSalle's global client base includes public and private pension funds, insurance companies, governments, corporations, endowments and private individuals.

It sponsors a range of investments, including separate accounts, open- and closed-ended funds, public securities and entity-level investments.  

LaSalle has operated in Canada since 2000 and has executed on more than $8 billion in real estate transactions.

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