By Jon Peterson
Toronto-based Bentall Kenndy Group is now planning to be owned by a single institutional capital source with yesterday’s announcement of its planned purchase by Toronto-based Sun Life Financial in a transaction worth $560 million.
“We looked at the pension fund real estate management universe and saw how successful the model of a single owner had been for other managers and though this would be a good fit for us going forward. We were very familiar with Sun Life as they have been a client of our company since 2004. We manage real estate assets for them across Canada valued at $3.5 billion in Canadian dollars. This includes their corporate headquarter building in Toronto,” says Gary Whitelaw, group chief executive officer for Bentall Kennedy.
Bentall Kennedy started the process of looking to find a single investor in March of this year. It hired New York City-based Hodes Weill & Associates as its financial advisor. The person working on this assignment was David Hodes, a manager partner with the company.
“We did look at a limited number of financial partners before we decided to focus on dealing with Sun Life,” said Whitelaw.
The sale of Bentall Kennedy to Sun Life will give Bentall Kennedy co-investment capital from its new owner. “I would expect that the co-investment could be to invest in certain properties that we buy or to co-invest in commingled funds that we will be formulating,” said Whitelaw.
One of its planned new products would be to create a new development-only commingled fund. “We are looking at creating a commingled fund in the future that would be investing equity in new development projects that are in areas that have very high levels of educational learning and tenants that take advantage of this. The three markets that are at the top of our list are San Francisco, Seattle and Boston. Some other examples would be Denver, downtown Chicago and some parts of New York City,” said Whitelaw.
Bentall isn’t sure if the capital raise for the commingled fund would start this year or next year. The property types that it would focus on are apartments, office buildings and urban retail.
The real estate manager hopes that it would be similar to the Multi-Employer Property Trust commingled fund that is managed by Bentall Kennedy. This is an investment fund that was formed in 1982 and has a current net asset value of $5.5 billion. Its investment strategy can be buying exiting properties and investing equity in new development.
