In 1997, an internal review of the Caisse Real Estate Group concluded with subsidiary restructurings and wider geographic dispersal of holdings, both nationally and internationally, to account for market trends. At the end of 1997, over 42 percent of total real estate investing was located in Quebec and over 15 percent in the rest of Canada.Endnote 123
Since its inception in 1975, Morguard Investments (headquartered in Toronto, Ontario) has been one of Canada's largest syndicators of the assets of pension funds and other institutional investors for the purpose of real estate investing. Indeed, pension participation has been central to Morguard's mandate of acquiring, holding and developing non-residential properties of all kinds in urban locales in western Canada, Ontario and Quebec.
Morguard has a unique approach to facilitating pension involvement. A primary vehicle is Pensionfund Realty, a corporate structure currently owned by thirty-three pension funds, most of which are medium-sized to large. Included are such private sector plans as Domtar Pension Fund Investments, General Motors of Canada, Hudson's Bay Company Pension Fund, Shell Canada Pension Trust, Telus Corporation Pension Fund and others from manufacturing, resource and service industries. Among other public sector plans, there is CBC Pension Fund Administration, Hydro-Quebec Fiduciarie, HOOPP, Manitoba Civil Service Superannuation Board and the Ontario Hydro Pension Plan. At the end of 1997, the investment portfolio of Pensionfund Realty was valued at $1.2 billion, based on a total of 138 properties. This includes nine new acquisitions made that year. Approximately 42 percent of total holdings are retail outlets, 32 percent are office (and mixed-use) buildings and 26 percent are industrial complexes.
Morguard is Pensionfund Realty's manager. With respect to adding new assets, it undertakes market research of potential real estate opportunities with the aim of identifying existing properties of good value or that may be undervalued. Morguard also investigates prospects for development and redevelopment, including new construction on acquired sites, usually in the business cores of Canadian cities. Purchases and projects deemed viable, income-generating and consistent with pre-determined criteria are brought to Pensionfund Realty to explore interest among a group of pension shareholders seeking increased exposure. This is followed by structuring of a co-investment project, on a per deal basis, using different combinations of debt and equity financing.
Morguard also sponsors a REIT, first offered publicly in 1997, that invites participation by pension funds and other investors. Listed on the TSE, the investment activity of Morguard REIT observes the same diversification strategy, based on geography and non-residential property types, as Pensionfund Realty. Portfolio holdings were sixty-four at the end of 1997, valued at over $475 million. 10 percent of REIT earnings are retained for re-investment at the time of regular distributions.Endnote 124
Beginning in 1989 as the $27 million Vancouver Land Corporation - a government and private sector partnership intended to supply more new and affordable rental apartments in the city - Greystone Properties is today a real estate developer and manager with an even broader, full-service mandate. Now operating with over $300 million in assets, it has supplemented original goals with targeted financing of other types of residential construction, such as new multi-family, for-sale housing, as well as commercial, industrial and infrastructure investing in urban and rural communities throughout British Columbia.
Greystone Development Corporation assists projects across all phases of development, from design, planning and financing (through loans and mortgages) to completion of construction. In the majority of cases, Greystone Realty Services continues to manage the property thereafter. Among Greystone's new activity is urban neighbourhood planning, reflected in the creation of rental and owner-occupied homes, as well as community recreational facilities, in the Collingwood Village district of Vancouver. More recent still is its role in the expansion and retrofitting of the convention centre at Canada Place that includes significant redevelopment and integration of Vancouver portside structures relevant to multiple forms of transit.
In 1998, the Greystone portfolio comprised over a dozen projects (including those identified above), of which approximately 80 percent are oriented to rental and for-sale housing constructions and renovations, while commercial/industrial developments make up the balance. All portfolio investment activity is undertaken following an evaluation of both probable risk-adjusted returns and local economic impacts (see below). Largely as a result of this dual focus, Greystone has persevered with development spending, even during periods when such was rare elsewhere in Canadian real estate markets (e.g., the early 1990s).