Pension fund partners with Gateway Capital, Asian sovereign wealth fund on investment vehicle
The pension fund for Canada’s largest teacher union is teaming up with a pair of international investment partners to expand its presence in Australia’s industrial market.
The Gateway Capital Urban Logistics Partnership, known as GULP, has agreed to a deal to buy a Sydney logistics property at 2-34 Davidson St. in Chullora. GULP is an investment vehicle that includes the Ontario Teachers’ Pension Plan, an unnamed Asian sovereign wealth fund and Gateway Capital.
The partnership has exchanged contracts for the acquisition of a recently upgraded and expanded building that has more than 275,000 square feet of gross leasable area. It is leased to consumer products company Shriro Australia and food distributor Two Providores.
The move shows how global property investment plays a role in pension fund operations. Diversification not only can mean including commercial real estate investment, but geographical distribution as well to provide a mixture of markets.
No price was given for the building sale, but Toronto-based Ontario Teachers’ said the acquisition gave GULP a presence in the suburb of Chullora, “a prime Sydney urban industrial and logistics precinct.” C
hullora is 13 kilometres west of Sydney’s central business district and 12 kilometres northwest of Sydney Airport.
‘Growth potential’
“With strong sectoral tailwinds and market fundamentals, we see positive demand and continued growth potential in the Australian industrial and logistics sector,” said Jun Ando, head of Asia-Pacific real estate at Ontario Teachers’, in a statement.
Ando added that “the acquisition complements our existing portfolio, and we’re pleased to be expanding our partnership as we look ahead to identifying opportunities for future collaboration.”
GULP was established in April 2023 as a cornerstone investment by Ontario Teachers. This year, the equity base of GULP was expanded through the introduction of an Asian sovereign wealth fund, which provided additional capacity to seek investment opportunities.
“The acquisition of this asset complements the existing GULP portfolio, not only providing exposure to the key Sydney market but also adding strong core plus exposure in a premium asset with strong rental upside,” said Stuart Dawes, Gateway Capital chief executive and co-founder, in a statement.
Dawes also said, “The broader capital base increases our dry powder, allowing us to continue to seek additional assets for the GULP portfolio, with a focus on inner urban core plus and value-add opportunities on the east coast markets of Australia.ā
Gateway Capital is an Australian-based investment management business focused on creating core assets in the industrial and logistics sectors through active management and development.
Cost and Time Required To Open a Restaurant Patio Depends on Your City, Notes New CFIB Report
Restaurant owners hungry to feed their revenues by adding streetside patios in front of their locations are required to pay a wide variety of permit fees for this use across Canada according to a new study from the Canadian Federation of Independent Businesses.
Permits for restaurant owners to open streetside patios in Toronto cost $917 and require an eight-week delay, while that same permit can cost around $1,100 and take four weeks in Montreal and Vancouver, according to the CFIB data.
The CFIB report demonstrates the wide variety of costs for patio permits across Canadian municipalities. (Canadian Federation of Independent Businesses)
The best restaurant patio permit bargains can be found in Winnipeg and Saskatoon where the cost is zero and the process is fast. Calgary municipal authorities ask only $116 for a permit but require eight documents and a six-week wait, while Edmonton charges $405 for the permission and five documents.
In Canada’s capital, patio permits are among the most expensive, as Ottawa charges $1,424 for the permit, according to the study.
The most expensive spot to set up a patio is in St. Johnās Newfoundland where the permit costs $2,765 and requires three documents, but only a two-week wait.
The political magnitude of the patio permitting issue was exposed in June after Montreal firefighters ordered all restaurant patios closed on downtown Peel Street during the Grand Prix festivities, one of the biggest tourist draws in Canada. The story caused a stir after the owner of theĀ Ferreira CafeĀ posted a video online criticizing the forced closure of her terrace. Montreal Mayor Valerie Plante denounced the firefighters’ action and reopened the patios soon afterward.
Healthcare services giant strikes deal to shed retailer with 385 locations
U.S. healthcare services giant McKesson has struck a deal to sell its Rexall Pharmacy Group, one of Canada’s largest pharmacy chains, and online company Well.ca to private equity firm Birch Hill.
Founded in 1904, Rexall operates 385 pharmacies across Canada and employs approximately 8,000. Well.ca offers online customers more than 40,000 health and wellness products via delivery.
No price was disclosed for the deal, which must still meet certain regulatory conditions
“Birch Hill is committed to maintaining and investing in reliable, accessible healthcare services to expand Rexall’s current network of pharmacies across Canada,” Toronto-based Birch Hill said in a release.
As part of the deal, McKesson will remain Rexall and Well.ca’s wholesale distribution supplier.
Irving, Texas-based McKesson bought Rexall in 2016 for $3 billion, but it was reported earlier this year the company was looking to sell the division.
McKesson said the deal will allow it to “focus and prioritize investments” to grow its oncology and biopharma services platforms. The company said it is committed to its Canadian distribution and biopharma businesses.
“This transaction marks an important milestone aligned to our enterprise strategy, advancing our strategic priorities, further streamlining our business and prioritizing investment in our growth areas,” McKesson CEO Brian Tyler, said in a statement. “We remain fully committed to and confident in the strength of our Canadian distribution and biopharma businesses.”
CanadaOne Auto Group has acquired 20 Ontario dealerships so far this year to stake a claim in Ottawa’s flourishing auto sales market
An Edmonton-based car dealer, CanadaOne Auto Group, has been investing heavily in the Ontario region’s auto retail landscape. So far this year, CanadaOne has acquired 20 auto dealership properties in the area for an aggregated transaction volume of $201 million.
In total, the sales have accounted for approximately 5% of all retail space sold in Ontario this year, both in terms of square footage and dollar volume.
CanadaOneĀ employs more than 3,000 people in its 42 dealerships across Canada, with locations in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario.
The flourishing Ontario auto trade has benefitted from a combination of factors. Since the beginning of 2018, Ontario auto sales have surged from $4.5 billion to $6 billion. This growth reflects a robust post-pandemic economic recovery and population growth.
Historically, there has been a strong correlation between auto sales and the size of the labor force in Ontario, notwithstanding the auto sales blip experienced throughout the pandemic.
In addition, Prime Minister Justin Trudeau recently announced plans to impose 100% tariffs on Chinese electric vehicle (EV) companies, a move aimed at protecting the burgeoning domestic EV market and encouraging local production.
Ontario is also experiencing a boom in the development of EV battery factories. These facilities are crucial for supporting the growing demand for electric vehicles and positioning Ontario as a key player in the global EV market.
Also, the new bridge set to open between Windsor and Detroit, will enhance cross-border trade by streamlining logistics and reducing transportation costs, making it easier for Canadian manufacturers to export vehicles and parts to the United States and vice versa.
The combination of increased sales, strategic tariffs, and infrastructure advancements paints a promising picture for the auto industry’s future in Canada, particularly Ontario.
Maple Leaf Gardens was where Toronto Maple Leafs last hoisted the Stanley Cup
Crestpoint Real Estate Investments has purchased a 50% stake in three properties from Loblaw Properties, including an interest in the historic Maple Leaf Gardens that once was home to Toronto’s NHL team.
Toronto-based Crestpoint did not reveal a price but said it would have $10.4 billion in assets under management and 38.3 million square feet upon closing the acquisition.
Crestpoint acquired the property interests in the portfolio from Loblaw Properties Ltd. and Shoppers Realty as part of a 50-50 joint venture with an affiliate of Choice Properties Real Estate Investment Trust. Crestpoint said it entered into the joint venture transaction with Choice Properties, Canada’s largest real estate investment trust, on behalf of its Crestpoint Core Plus Real Estate Strategy open-ended fund.
The deal includes a 150,000-square-foot Real Canadian Superstore in Winnipeg, Manitoba, and a strata title interest in the lower floors of 60 Carlton St. in Toronto, formerly Maple Leaf Gardens. Constructed in 1931, the building was the home arena of the Toronto Maple Leafs until 1999. It’s the arena where the NHL team last won the Stanley Cup in 1967.
The arena site now houses 95,000 square feet of retail space, including a flagship Loblaws grocery store, an LCBO outlet, a Joe Fresh location and 150 underground parking spaces. Toronto Metropolitan University will retain ownership of the top level of the property, which houses the Mattamy Athletic Centre.
The multiproperty acquisition also includes a 711,000 distribution centre in Mississauga, Ontario.
Crestpoint said the portfolio is fully leased and backed by Loblaw’s and Shoppers’ investment-grade credit parent company, Loblaw Companies Ltd.
Swiss Bank To Shut $2 Billion International Fund Amid Mounting Redemption Requests
UBS Group plans to liquidate a $2 billion real estate fund holding 12 office properties in the United States and Canada in the latest sign that investors are pulling funds out of the troubled commercial real estate market.
The Swiss bank plans to liquidate the properties in its Credit Suisse Real Estate Fund International, a fund it acquired after Credit Suisse collapsed in 2023, UBS said in a statement.
The announcement comes as share redemption requests by investors have exceeded permitted amounts allowed by such property giants as Blackstone Real Estate Income Trust and Starwood Capital, as property values have declined amid persistently high interest rates and recession concerns.
Real estate loans estimated at nearly $2 trillion in the U.S. are coming due within the next two years, a time when some investors have been unable to weather a combination of low demand for corporate office space ā from both tenants and investors ā and high interest rates.
The Credit Suisse Real Estate Fund International contains 53 properties across the globe, roughly 80% of which are offices, according to a company filing. The fund includes nine office properties in the U.S. and three in Canada, with the remaining assets in the United Kingdom, Europe, Australia, New Zealand and the Asian Pacific Rim.
UBS said the valuation of the fundās global property portfolio declined 12% between Dec. 31, 2023, and June 30, 2024, based on the bankās latest appraisals.
The U.S. properties in the fund include:
Third + Shoal, a 29-story office tower at 607 W. Third St. in Austin, Texas
250 S. Wacker Drive, a 16-story office, and the four-story 1333 N. Kingsbury St. in Chicago
4555 Airport Way, a four-story office in Denver
The eight-story 207 Goode Ave. in Glendale, California
777 Post Oak Blvd., a mid-rise office building in Houston
1320 SW Broadway St. in Portland, Oregon
101 Elliott Ave. W in Seattle
1099 New York Ave. NW in Washington, D.C.
The Canadian properties in the fund include 121 Bloor St. E and 160 Bloor St. E in Toronto, and The Exchange, an office property at 475 Howe St. and 819-829 W. Pender St. in Vancouver, British Columbia.
The fund had faced investor redemption requests, but UBS said meeting the requests would require selling assets at an “inopportune time” that would affect existing investors. The Swiss bank concluded it was better to start an “orderly liquidation” of the entire fund, according to the statement released Thursday.
“Given the current limited liquidity of the real estate markets, property sales and payments of liquidation proceeds will be made over several years,” UBS said in the statement.
Nontraded real estate investment trusts allow retail investors to own shares in a managed portfolio, but place restrictions on taking out money in case there is a rush to the exit door.
Such trusts have clamped down on redemption requests as they have sought to shore up liquidity in the face of a wave of investors looking to exit as property values decline.
Billionaire Barry Sternlichtās Starwood Capital, based in Miami Beach, Florida, in May limited redemptions from its nontraded $10 billion Starwood Real Estate Income Trust property fund.
The $60 billion Blackstone Real Estate Income Trust, the largest of the nontraded REITs, was the first to limit redemptions in 2022. In February, it lifted the restrictions and saw its shareholder buyback requests decline in the following months.
iQ Offices invests in new property in Toronto, notes interest in higher-quality workspace
The chief executive of one of Canada’s largest independent coworking office providers said his company’s latest survey would seem to be a study in contradictions.
The survey done on behalf of iQ Offices by Maru Public Opinion found that 43% of respondents prefer to work in-office full-time or in a hybrid capacity compared to fully remote positions, but the same percentage of respondents said they don’t like their current office conditions.
“People just don’t think coming into the office creates an encouraging and enjoyable work environment,” said Kane Willmott, CEO of iQ Offices, in an interview.
The survey, conducted between July 1 and 2 among 859 randomly selected employed Canadian adults, found 34% dislike the workspace in their current office.
The survey also found that 54% of respondents believe their current space is outdated, while 47% said it is out of touch with what they need in a work environment. Respondents could select multiple reasons.
“You look at (public discussion), and it’s about no one wants to return to the office and about the benefits of remote work, but no one talks about the quality of the workspace they are going to,” said Willmott.
Tapping employee sentiment
iQ Office, with coworking locations in Ottawa, Montreal, Toronto and Vancouver, has a stake in people returning to the office and has doubled down on that bet with the decision to open a new location at 302 Bay Street in Canada’s largest city. The new location is expected to open on December 1.
“We did this survey because there just was not a whole lot of data that talks about sentiment around the office when you get there and whether that situation would improve if we improved the experience,” said Willmott.
The company’s latest location is a 14-storey building connected to Toronto’s underground Path system that links the core’s buildings, a convenience that iQ Office hopes may address some of the issues the company found in its survey.
That survey found that 76% of respondents said they could be enticed back to the office if it had a well-designed working environment, perks like free snacks and beverages, a central location, and convenient amenities.
Asked to list what would influence them to return to the office, 42% cited ease of commute, 38% said comfortable, dynamic workspaces and 35% said in-person collaboration.
Willmott said another trend he is seeing is companies setting up small offices for short periods of time, utilizing the space three days a week.
“We call that a sprint space and it’s almost like an event. We are working with a large technology company that wants six-week sprints, three days a week, and brings people in from all over the world,” said Willmott.
Acquisition is Estonian company’s fourth, with Elysium, as it continues to expand in Canada
Hepsor, its Canadian partner Elysium Investments and International Property Group/Oikoi Living have acquired a development property in Torontoās High Park neighbourhood on which there are plans to construct a two-tower residential project.
The acquisition of its interest in the property assembly is Hepsorās fourth investment in Canada. The company is based in Estonia, and initially entered the Canadian market in 2023.
“Entering the High Park development was another step in implementing Hepsor’s strategic plan,ā Hepsor’s chairman of the board, Andres PƤrloja, said in the announcement. āIn the spring of 2022, we decided that part of our business should be outside the European economic area and away from the Russian border. We chose the dynamic and rapidly developing Canadian market.
āWe plan to continue expanding our positions in Canada to the extent possible and are constantly looking for new and interesting investment opportunities.”
Elysium Investments and IPG/Oikoi are both Toronto-based investment, real estate and development companies.
The High Park acquisition
The acquisition involves an assembly of 11 properties at 21-29 Oakmount Rd. and 26-36 Mountview Ave. in the upscale Toronto neighbourhood. As Hepsor notes in the announcement, āHigh Park is one of Toronto’s most sought-after residential areas, offering abundant greenery, excellent recreational opportunities, and convenient access to public transportationā.
The development area is planned to feature a high-rise building with rental apartments in two towers. It is the first Canadian project for which the company plans to also include Estonian private capital investors.
The total investment value of the property and the first phase of the project is approximately $89 million, Hepsor states. High Park Limited Partnership, established for the project’s development, will invest approximately $12.5 million.
To accommodate the first phase of the project, the company will seek a zoning amendment from the city. It also states planning activities will be initiated for the construction of a residential rental building. Development of the first phase is expected to last 24-30 months.
Hepsor’s Canadian expansion
Hepsor’s residential development portfolio in Toronto includes interests in four development projects. During October, a fifth transaction under the same program is expected to be completed, which, when added, would mean that Hepsor and its partners have approximately 2,500 new apartments in their development pipeline in Toronto.
In addition to its residential development program, Hepsor is āactively seeking opportunities for the development of warehouse and logistics spaces in the vicinity of both Toronto and Montrealā.
About Hepsor
Hepsor AS is one of the fastest-growing residential and commercial real estate developers in Estonia and Latvia, and also operates in the Canadian market. Over the last 13 years Hepsor has developed more than 1,800 homes and approximately 388,000 square feet of commercial space.
The company also considers itself an innovator in the Baltic States, implementing engineering solutions that make its buildings more energy-efficient and environmentally friendly.
The company’s portfolio is comprised of 24 development projects with a total sellable space of almost 1.9 million square feet.
EDITOR’S NOTE: This article was updated after being published with additional information provided by IPG/Oikoi and Elysium.
CBRE report ranks Toronto as 4th-best North American market, has largest job growth since 2018
Toronto has moved up a notch to No. 4 in CBREās latest Scoring Tech Talent report ranking North Americaās Top-50 technology markets. Eleven Canadian cities are ranked in the report, including three emerging markets.
Toronto created 95,900 tech talent jobs between 2018 and 2023, representing 44 per cent growth in that period and the most job gains of any market.
With CBRE reporting an 18.5 per cent national office vacancy rate in the second quarter of this year, the sector is not driving a lot of leasing today, but CBRE Canada chairman Paul Morassutti told RENX the tech sector remains very important to the asset class.
āThe rationalization of the tech sector over the last 24 months, we think, is very helpful in getting that sector healthy again and preparing for what we think will be a new wave of growth as we emerge from the sort of economic weakness that we’re in now,ā Morassutti said.
Tech job growth across Canada
The 1.1 million tech workers in Canada accounted for 6.4 per cent of the countryās total workforce in 2023. The number of Canadian tech workers has increased by 30.2 per cent since 2019, substantially higher than the 7.5 per cent rise in total employment.
Technology sector jobs increased by 1.7 per cent or 18,400 in Canada last year, led by tech management and computer support positions across all industries.
While 15 of the Top-50 markets lost tech sector jobs from 2018 to 2023, only Calgary (78.1 per cent), Ottawa (51.7 per cent) and Waterloo Region (45.5 per cent) posted higher percentages of job growth than Toronto.
Though this tech job growth is good news for the overall Canadian economy, many people in the field can do much of their work remotely so there are still questions about how it will translate into occupied office space.
Morassutti doesnāt think tech office demand will return to where it was late in the previous decade when companies were leasing more space than they needed, thinking they would grow into it. But, he expects leasing to pick up again.
āMost of that demand is going to be for good-quality office assets, not for secondary assets,ā Morassutti said. āThe future for good-quality space I think is much better than people realize, and the future for commodity and secondary product might be worse than people realize.ā
How other Canadian cities ranked
Ottawa, with more tech workers employed in government than in the tech industry itself, moved up one spot to No. 10 thanks to job growth. Waterloo Region, despite its job growth, remained at No. 18. Calgary improved by one position to No. 20.
Other Canadian markets didnāt fare as well. Vancouver dropped from eighth to No. 11, Montreal fell three spots to No. 15, Quebec City slipped five places to No. 40, and Edmonton dropped 10 spots to No. 49.
āAll of those tech markets remain very strong,ā said Morassutti. āI don’t really think there’s been anything that gives us concern. In fact, I think the research reinforces that in almost all of our major Canadian markets, tech continues to play a very important role.ā
The scorecard for the rankings incorporated 13 metrics to measure each marketās depth, vitality and attractiveness to companies seeking tech talent, as well as to tech workers seeking employment. Each metric was weighted by its relative importance to job creation and innovation.
CBRE also ranks the next 25 emerging tech markets on a narrower set of criteria. London, Ont. ranked fourth on that list, with 88.5 per cent tech job growth in the past five years, while Halifax appeared at No. five and Winnipeg came in at No. 13.
Growing importance of artificial intelligence
Artificial intelligence (AI) is rapidly becoming a catalyst for growth, driving new tech talent hiring and office space demand. Toronto, Vancouver and Montreal are Canadaās leading AI markets, accounting for 60 per cent of the countryās 41,374 AI tech jobs.
āOver the last 12 months, it’s had a much more significant impact on the numbers than it had previously,ā Morassutti said of AIās increasing importance. āWe’re seeing an awful lot of AI talent going into companies like banks and real estate companies and law firms as opposed to just being gobbled up by theĀ NVIDIAs of the world.ā
The tech industry employs almost half of all AI specialty talent, followed by the professional and business services and financial activities sectors.
āIn Toronto we are working with several AI companies that are looking for new space and more space,ā Morassutti noted.
Bigger political and economic issues
Morassutti said some of the Canadian governmentās new policies ā relating to immigration and foreign students and workers, a capital gains inclusion rate change and more ā have raised concerns that āthe economic backdrop in Canada is becoming less conducive to innovation and technology companies.
āAnd there is a greater concern that if we allow that to continue, and if we allow productivity or GDP (gross domestic product) per capita to continue to decline, a lot of this growth that we’ve enjoyed in Canada may end up going to the U.S.ā
A housing shortage and high housing costs is an issue that ripples through every aspect of the Canadian economy, but Canadian cities are still considered a bargain and have the eight lowest estimated one-year company costs for tech talent among the top 50.
While talent used to trump cost in the tech sector, Morassutti said that narrative began to change in 2022 when interest rates rose and companies began to ātransform from a grow-at-all-cost mentality to a focus on profitability.
āThat’s why we’ve had so many layoffs. If expenses are now something that these companies are watching more closely, and Canada is half the expense of the U.S., I still think that very much works in our favour and it will continue to work in our favour going forward.ā
Invests in commercial portion of former home of Toronto Maple Leafs as part of 3-building portfolio
Crestpoint Real Estate Investments Ltd., has acquired a portion of Torontoās iconic former Maple Leaf Gardens building as part of a three-property portfolio it is buying into, in a 50/50 joint venture with a Choice Properties REIT affiliate.
The transaction, announced Monday, involves a distribution centre and two retail properties including the portion of the former Maple Leaf Gardens at 60 Carlton St. in downtown Toronto.
The distribution center is a 711,000-square-foot dual-load distribution facility in Mississauga. The other retail asset is a 150,000-square-foot Real Canadian Superstore in Winnipeg.
The 60 Carlton St., property is structured as a strata title interest in the lower floors of the building.
Financial details were not disclosed.
Originally constructed in 1931 and recognized as one of Canadaās most iconic buildings, it was the home arena of the NHLās Toronto Maple Leafs, other professional sports teams and hosted other major entertainment events until 1999.
It now houses 95,000 square feet of retail space including a flagship Loblaws grocery store, an LCBO outlet, a Joe Fresh location and 150 underground parking spaces.
Toronto Metropolitan University will retain its ownership of the top level of the property, which houses the Mattamy Athletic Centre arena, sports and special events venue.
Loblaw, Choice and the Gardens
Loblaw had acquired ownership of the then-Maple Leaf Gardens for $12 million in 2004, according to reports at the time. After years of delays and planning, it open the redesigned retail portion of the building in 2011, including its flagship Loblaws retail store which retains a number of features from the former arena.
The Mattamy Athletic Centre, which now hosts the university’s sports teams as well as other events, was developed at the same time above the retail portion of the building.
The project was valued at about $60 million.
Loblaw spun out its real estate holdings into Choice Properties REIT in 2018.
Portfolio fully occupied
The three-building portfolio is 100 per cent leased for 15-plus years and is backed by Loblaw’s and Shoppers’ investment-grade credit parent company, Loblaw Companies Limited.
Crestpoint, on behalf of the Crestpoint Core Plus Real Estate Strategy (its open-end fund), entered into this joint venture transaction with Choice Properties (CHP.UN-T), Canada’s largest REIT with over 700 properties valued at $16.7 billion and a market cap of ~$10.6 billion.
The closing of this acquisition brings Crestpoint’s total assets under management to $10.4 billion and 38.3 million square feet.
Crestpoint is a commercial real estate investment manager dedicated to providing investors with direct access to a diversified portfolio of commercial real estate assets.Ā ItĀ is part of theĀ Connor, Clark & Lunn Financial Group, a multi-boutique asset management company that provides investment management products and services to institutional and high net-worth clients.
With offices in Canada, the U.S., the U.K. and India, Connor, Clark & Lunn Financial Group and its affiliates collectively manage approximately $133 billion in assets.
