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LaSalle portfolio acquisition executes on Canadian strategy

The diversity of LaSalle Investment Management Canada’s very active LaSalle Canada Property Fund...

IMAGE: The Maison Manuvie in Montreal. (Courtesy LaSalle Canada)

The Maison Manuvie in Montreal. (Courtesy LaSalle Canada)

The diversity of LaSalle Investment Management Canada’s very active LaSalle Canada Property Fund (LCPF) has been shown again with this week’s acquisitions of interests in three major properties from Ivanhoé Cambridge.

The three acquisitions included Ivanhoé’s 50 per cent stake in the high-profile Maison Manuvie in Montreal. Ivanhoé, the real estate subsidiary of the Caisse de dépôt et placement du Québec, and Manulife had been equal ownership partners in the 27-storey, 485,000-square-foot, class-AAA downtown office building. Manulife has its Quebec headquarters in the tower.

The LCPF also acquired a 50 per cent stake in Ivanhoé’s Guildford Town Centre, a super-regional mall with more than 200 stores in Surrey, B.C., as well as in Ivanhoé’s 18-acre development site directly north of the shopping centre.

The price of the portfolio wasn’t disclosed.

“For Ivanhoé Cambridge, the sale of 50 per cent ownership of Guildford Town Centre and 50 per cent ownership of Maison Manuvie is yet another milestone in the acceleration of our major portfolio pivot,” Ivanhoé principal advisor of public affairs and communications Gabrielle Meloche said in an email to RENX.

“In strategic deployment since the beginning of 2020, the pivot consists of reducing our footprint in overweight asset classes in order to increase our investments and presence in growth sectors, such as logistics, to create value for our depositors.”

Although the deal included existing office and retail properties, LaSalle Canada chief executive officer John McKinlay told RENX the multifamily development component at the Guildford Town Centre was a key to the overall transaction.

“We’ve been targeting this type of strategy for a while, in terms of using our significant underweight retail to source best-in-class multifamily residential density,” McKinlay said in an interview.

The deal took quite a while to come together, according to McKinlay, who noted RBC and CBRE were involved in establishing the relationship between LaSalle and Ivanhoé. He added that LaSalle has an established relationship with Manulife and the partnership in Maison Manuvie is “kicking off on the right foot.”

LaSalle’s new acquisitions

Maison Manuvie is 97 per cent leased with a 13.7-year average weighted lease term. It has direct access to amenities and underground connections to the McGill and Peel Metro stations.

It also has LEED Gold CS, Energy Star and BOMA BEST Platinum certifications, which was important to LaSalle because of the priority it places on environmental, social and governance criteria.

It was valued at $220 million upon completion in 2017.

Guildford Town Centre is 95.5 per cent leased. It was built in 1966 in the Vancouver suburb of Surrey and has experienced eight renovations during the past 55 years.

It underwent $280 million in capital improvements in 2013 and is LEED Gold and BOMA BEST Level 3-certified.

“Guildford is absolutely a top-notch, best-in-class asset,” said McKinlay. “Ivanhoé is a top-notch institutional partner that has spent a lot of capital in terms of keeping Guildford up to speed, current and renovated.”

The 18 acres north of the mall is in the process of being zoned for additional residential density, which LaSalle covets.

In addition to having Guildford Town Centre next door, McKinlay said there’s also a school, a community centre and public transit nearby, which adds to its allure for a high-density residential-focused mixed-use site.

McKinlay said the new partners are still figuring out building sizes and unit counts, and mapping out development phases over several years. The multifamily residences will primarily be rental, with the potential to also include a condominium element along with ancillary uses.

“Vancouver is the hardest market to access in Canada,” McKinlay said, “and new multifamily rental is pretty much the hardest asset class in Canada to access.”

LaSalle already has office and multiresidential properties in Montreal and Vancouver under management and is looking to add more — some of which is already in its acquisition pipeline, according to McKinlay.

The LCPF and its acquisition pipeline

IMAGE: Guildford Town Centre in Surrey, in Greater Vancouver. (Courtesy LaSalle Canada)

Guildford Town Centre in Surrey, in Greater Vancouver. (Courtesy LaSalle Canada)

LaSalle is focused on deals similar to the one with Ivanhoé, which McKinlay described as relationship-driven, off-market, programmatic and involving synergies in what his company can deliver and what its potential partners are trying to execute.

The LCPF has now acquired $1.8 billion in assets, with a 42 per cent allocation in office and 19 per cent in retail. The LCPF’s industrial allocation is 18.6 per cent, which McKinlay would like to increase to the 25 to 30 per cent range while lowering the office allocation percentage to the low-30s.

“We’re focused on a couple of transactions in a space that’s primarily industrial right now, with urban repurposing and mid- to long-term development of industrial,” said McKinlay. “We will always be looking to move that allocation for the near-term.

“We like these types of mixed-use deals in multiple asset types so we can keep our overall weightings within a band as we acquire so we’re not going yo-yo — up in one asset class so the next transaction has to be in another asset class.

“We like to maintain flexibility as much as possible to buy the best deals and assets that we’re targeting and structuring.”

Despite the 50 per cent acquisition of Maison Manuvie, McKinlay said the Ivanhoé Cambridge deal decreases the LCPF’s office weighting while increasing the quality of the portfolio due to the other elements in the deal.

The fund has been active on the acquisitions front for the past several months.

The LCPF acquired a newly constructed, three-building class-A logistics portfolio comprising more than 600,000 square feet in the Greater Toronto Area from Carttera in August.

In March, it acquired a 527,568-square-foot, fully leased distribution centre in Brantford, Ont., west of Hamilton, as well as a 47.5-per cent stake in the Rideau & Chapel multifamily development in Ottawa.

The players in these new partnerships

LaSalle Canada has executed more than $7 billion in real estate transactions since 2000. The LCPF launched in 2017 as an open-ended fund targeting commitments from Canadian and global institutional investors to acquire core properties in major Canadian markets.

LaSalle Investment Management managed approximately $73 billion US worth of assets in private and public real estate property and debt investments at the end of 2020.

Through subsidiaries and partnerships, Ivanhoé Cambridge holds interests in more than 1,100 buildings — primarily in the industrial and logistics, office, residential and retail sectors. It held $60,4 billion in real estate assets at the end of 2020.

Manulife is a Toronto-headquartered insurance company and financial services provider with more than 37,000 employees serving approximately 30 million customers in Canada, the United States and Asia.

It had $1.3 trillion in assets under management and administration as of March 31, 2021.

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