Canada Life Real Estate Fund

Established in 2005, the Canada Life Real Estate Fund invests in units of the Great-West Life Real Estate Fund.

Fund Performance

as of December 31, 2018

$5.3B

in real estate assets

$5.8B

in total assets

123

properties

Source of Return

2009201020112012201320142015201620172018
Income 6.3%5.7%5.7%5.2%4.7%4.8%4.5%4.5%4.5%4.3%
Capital (4.7)%(0.9)%10.9%14.5%6.1%2.6%0.1%0.9%1.8%2.7%
Total 1.6%4.8%16.6%19.7%10.8%7.4%4.7%5.4%6.3%7.1%

Compound rates of return

(gross of investment management fees)
Three Month – Q4 1.52%
Year-to-date 7.05%
One Year 7.05%
Three Year 6.25%
Five Year 6.16%
Ten Year 8.31%

Diversification by property type

By property type (millions)

Retail 11.8% $ 624
Office 42.3% $ 2,231
Industrial 16.9% $ 895
Residential 26.1% $ 1,382
Other 2.9% $ 156

Diversification by region

By region (millions)

British Columbia 14.8% $ 780
Alberta 16.4% $ 868
Prairies 1.9% $ 102
Ontario 57.6% $ 3,046
Quebec 7.7% $ 405
Atlantic 1.1% $ 60
U.S. 0.5% $ 28

Quarterly Highlights

Q4 2018 CREIF Bulletin

Canada Life Real Estate Fund

Canada Life Real Estate Fund finished the year on a high note, delivering investors a total gross return of 7.1%. In the face of ongoing headwinds linked to Calgary’s challenged office market, the Fund’s capital return (2.7%) closed at its highest level since 2013. Performance for the year was further highlighted by a 130 bps decrease in overall portfolio vacancy, concluding 2018 at 6.3%, which represents the lowest figure since 2008. With limited correlation and substantially less volatility when compared to equity markets (the S&P TSX index was down approximately 11% in 2018) and bond-like consistency, the results of 2018 will remind investors as to the merits of having exposure to a diversified mix of core institutional quality real estate within their broader investment portfolios. Fourth quarter activity is summarized below.

Transaction Updates

In October, the Fund acquired its second multi-residential development site in Calgary’s Beltline District. The 0.4-acre parcel, located at the corner of 13th Avenue and 8th Street, is directly adjacent to the site acquired earlier in the year and is currently improved with a 35,000 square foot, Class ‘C’ office building known as Barclay Square. The ultimate redevelopment of the two sites, which are intended to be phased, will provide scale and operating efficiencies while helping reposition the Fund’s asset mix within the market.

For the year, new investment into real estate totalled approximately $108 million across five acquisitions, while two non-core holdings were sold for $26.5 million.

Financing Activity

In November, new financing was put into place at 5140 Yonge Street. The 10-year, $100 million mortgage was executed at an attractive spread of 145 bps over the corresponding Canadian bond and is interest only for the first three years of the term. The facility ultimately helps move the Fund closer to its short-term leverage target. The asset, which is part of the North York City Centre, is a 555,000 square foot, 24-storey building with direct TTC access and has achieved BOMA BEST Level 3 certification.

Financing activity for the year reduced the overall portfolio weighted average interest rate by 15 bps to 3.6%. With a conservative 16.2% loan to value across the portfolio, Fund management will continue to look for opportunities to take advantage of an attractive debt market by selectively applying new leverage in 2019.

Forward Outlook

With limited vacancy, a balanced expiry profile and strong market fundamentals across most of the country, the Fund is very well positioned as we turn the page on 2018 and look ahead to 2019. The tone coming from the Bank of Canada would suggest a level of conservatism with respect to the pace and frequency of future rate increases, a result of economic growth targets missing the mark. At least in the near term, debt should remain inexpensive. South of the border, the Fed appears to be on a slightly more aggressive path, and the diversion will likely continue to put pressure on the Canadian dollar, increasing the appeal of Canadian exports. Should this be the case, it could add fuel to the fire with respect to what is already a very healthy industrial market. Technology is certain to continue to play a vital role in reshaping the commercial real estate sector which historically has been reluctant to adapt. Embracing new ideas will be key to keeping pace.

Downloads

Latest annual report

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Latest bulletin

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Past Performance Reports

Quarterly Bulletins

Q4 2018 Bulletin PDF (965 KB)
Q3 2018 Bulletin PDF (1 MB)
Q2 2018 Bulletin PDF (1 MB)
Q1 2018 Bulletin PDF (2 MB)

Annual Reports

Canadian Real Estate Investment Fund – Annual Report 2017 PDF (4 MB)

Want to Invest?

Contact a Canada Life advisor to invest in the Canada Life Real Estate Fund.