Vision Capital Corporation’s Vision Opportunity Funds have an impressive annualized return of 14.7 per cent since inception in July 2008.
“We focus on taking advantage of inefficiencies in the market for publicly traded real estate securities, the result of which is we buy real estate cheaper in the stock market than in the Canadian property market,” said Vision president, chief executive officer and portfolio manager Jeffrey Olin.
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Vision’s three portfolio managers — Olin, chairman Frank Mayer and senior vice-president Andrew Moffs — have worked in the real estate industry for a combined 95 years. They use their experience and expertise to analyze the underlying net asset value of a company’s real estate and compare it to where the company is trading in the stock market.
“Our preference is to buy real estate at a discount, whether it’s a REIT or a corporation, and find situations where there’s a path to service value,” said Olin. “We have Howard Hughes Corporation, which we love.
“HHC on the New York Stock Exchange is a corporation with no dividend. We think it’s worth US$170 a share and it’s trading around US$135.”
Vision’s preferred investments
Olin said Vision currently likes: A-class shopping centre and industrial real estate owners globally; seniors housing and value-add, purpose-built rental apartment owners in Canada; certain land development companies; and some New York City office owners.
“We tend to shy away from hotels because, in our view, it’s an operating business and not a real estate business,” said Olin.
“You can do the best real estate deal in the world, but if you’re not a good operator you’re going to lose money. The operators tend to do better on a consistent, long-term basis than the owners of the hotels.”
Toronto-based Vision’s focus is on risk-adjusted returns, and its funds have never had a down year.
“On average over the past 10 years, during months when the stock market has been down, our funds have been up,” said Olin. “We believe that the best way to make money for our investors is to not lose it. If you don’t lose capital, you’ll probably do pretty well over the longer term.”
Vision’s three portfolio managers have significant personal investments in their funds, as do all of the company’s hands-on advisory board members and a dozen CEOs of North American REITs, according to Olin.
Vision advisory board members
Vision’s advisory board members are:
* Sienna Senior Living (SIA-T) board chairman Dino Chiesa, the former chair of Canada Mortgage and Housing Corporation, CEO of Toronto Lands Corporation, and president and CEO of Residential Equities Real Estate Investment Trust;
* former Reichmann International executive vice-president and IPC REIT president and CEO Gary Goodman;
* Rotman School of Management adjunct professor Richard Nesbitt, the former chairman and CEO of CIBC World Markets and president and CEO of HSBC Securities;
* Gluskin Sheff + Associates Inc. co-founder Ira Gluskin, the former chair of the University of Toronto Asset Management Corporation;
* and Albert Soberano, the former CEO of M. Inc. and CEO of The Whitby Waterfront Development Corporation.