Great-West Life Real Estate Fund

Established in 1981, the Great-West Life Real Estate Fund is one of Canada’s largest real estate segregated funds. The Great-West Life Real Estate Fund (also known as the Canadian Real Estate Investment Fund No. 1 (or CREIF)) invests in a portfolio of high-quality, income-producing properties diversified by type and location. The objective is to provide investors with strong income returns and the opportunity for long-term capital appreciation.

Fund Performance

as of June 30, 2019

$6.0B

in real estate assets

$6.2B

in total assets

125

properties

Source of Return

2010201120122013201420152016201720182019
Income 5.7%5.7%5.2%4.7%4.8%4.5%4.5%4.5%4.3%2.2%
Capital (0.9)%10.9%14.5%6.1%2.6%0.1%0.9%1.8%2.7%1.9%
Total 4.8%16.6%19.7%10.8%7.4%4.7%5.4%6.3%7.1%4.1%

Compound rates of return

(gross of investment management fees)
Three Month - Q2 2.23%
Year-to-date 4.07%
One Year 7.76%
Three Year 6.88%
Five Year 6.47%
Ten Year 8.50%

Diversification by property type

By property type (millions)

Retail 10.8% $ 622
Office 42.2% $ 2,423
Industrial 16.8% $ 963
Residential 26.8% $ 1,536
Other 3.4% $ 192

Diversification by region

By region (millions)

British Columbia 13.7% $ 784
Alberta 15.0% $ 859
Prairies 1.8% $ 102
Ontario 60.8% $ 3,495
Quebec 7.1% $ 409
Atlantic 1.1% $ 60
U.S. 0.5% $ 27

Quarterly Highlights

Q2 2019 CREIF Bulletin

The Great-West Life Real Estate Fund continued its strong performance through the second quarter of 2019, posting a
quarterly gross return of 2.3%, bringing the year-to-date total return to 4.1%. Performance at mid-year signifies a recent
highwater mark for the Fund, a threshold unsurpassed since 2013. The capital component of return (190 bps YTD) continues
to be led by the Toronto multi-residential and industrial sectors due to a favorable combination of robust investor appetite
and regional supply/demand constraints which are propelling rental rates north. The income story (220 bps YTD) through
the second quarter was highlighted by a decrease in the overall portfolio vacancy rate by 71 bps, ending the quarter at
6.1% and representing the lowest figure since 2008. A snapshot of second quarter activity for the Fund follows:

Vancouver Centre II, Vancouver, BC
5999 Monkland Ave, Montreal, QC
1350-1360 Rene-Levesque, Montreal, QC

Development Activity

Q2 marked a couple of noteworthy milestones for the Fund’s Vancouver Centre II development. Excavation of the site is now complete and the first below grade levels of concrete are being poured. The tower will now begin to rise at 733 Seymour, which puts it on track for completion in 2021. From a leasing perspective, B2Gold has signed on to occupy three floors of VCII’s premiere space, including an exclusive portion of the building’s Skyline Rooftop Deck. The transaction brings total pre-leasing activity to approximately 40%. In an extremely tight downtown office market, VCII will benefit from being the first new tower completed in the current cycle of development.

Financing Activity

Acquired in 2017, 5999 Monkland is a 165-unit multi-residential building located in the heart of Montreal’s Notre-Dame-de-Grâce district. In June, the Fund secured replacement financing for the asset. The $28M dollar mortgage is CMHC insured and features an attractive interest rate of 2.76% over the 10-year term. The Fund will to continue to look for opportunities to leverage its significant allocation to the multi-residential asset class by capitalizing on the achievable interest rate delta on CMHC insured financing relative to conventional mortgage debt.

Awards and Recognition

1350-1360 René-Lévesque West, a AAA class, 960,000 square foot complex in the heart of downtown Montreal, has won the "Building of the Year” Award at the BOMA Québec Awards Gala. The "Building of the Year Award” rewards commercial real estate companies that have shown notable management practices, provide quality infrastructure, and have demonstrated ecological consciousness. Further to this, management was presented with two awards at HOOPP’s annual LEAP (Leadership in Environmental Advancement Program) conference for initiatives at Vancouver Centre II and 840 Howe Street. The LEAP Awards honour outstanding sustainability achievements and leadership of management teams.

 

Forward Outlook

As equity markets have recovered from a slump at the end of 2018, trade tensions, growth prospects, and geopolitical risk remain items of potential concern. With a bleak investor sentiment on growth specifically, noted by recent inversions of the yield curve, the US Federal Reserve may move to reduce rates in the short to mid-term while the Bank of Canada continues to message a patient stance. Uncertainly abounds, though the Fund, with its inherent inflationary hedging properties, limited correlation to equity markets and predictable income performance, should continue to play a key role in a diversified investment portfolio.

Downloads

Latest annual report

Download PDF

Latest bulletin

Download PDF

Past Performance Reports

Quarterly Bulletins

Q2 2019 Bulletin PDF (1 MB)
Q1 2019 Bulletin PDF (1 MB)
Q4 2018 Bulletin PDF (1 MB)
Q3 2018 Bulletin PDF (1 MB)

Annual Reports

Canadian Real Estate Investment Fund - Annual Report 2018 PDF (2 MB)
Canadian Real Estate Investment Fund – Annual Report 2017 PDF (4 MB)

Want to Invest?

Contact a Great-West Life advisor to invest in the Great-West Life Real Estate Fund.