London Life Real Estate Fund

The London Life Real Estate Fund was launched in 1998 to create a vehicle for direct real estate investment. The Fund invests in 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

$3.0B

in real estate assets

$3.3B

in total assets

92

properties

Source of Return

2010201120122013201420152016201720182019
Income 5.8%5.8%5.1%4.3%4.3%4%4.5%4.4%4.2%2.1%
Capital (1.4)%12.5%14.1%4.3%1.7%0.4%0.8%0.9%2.1%2.0%
Total 4.4%18.2%19.2%8.6%6%4.5%5.3%5.3%6.3%4.1%

Compound rates of return

(gross of investment management fees)
Three Month – Q2 2.21%
Year-to-date 4.11%
One Year 6.70%
Three Year 6.15%
Five Year 5.67%
Ten Year 7.95%

Diversification by property type

By property type (millions)

Retail 14.2% $ 431
Office 44.2% $ 1,336
Industrial 17.3% $ 522
Residential 20.0% $ 606
Other 4.3% $ 130

Diversification by region

By region (millions)

British Columbia 23.6% $ 714
Alberta 13.9% $ 419
Prairies 0.8% $ 23
Ontario 50.0% $ 1,512
Quebec 8.7% $ 264
Atlantic 2.7% $ 82
U.S. 0.4% $ 12

Quarterly Highlights

Q2 2019 London Life Real Estate Fund Bulletin

The London Life Real Estate Fund continued its strong performance through the second quarter of 2019, posting a quarterly gross return of 2.2%, 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 (200 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 (210 bps YTD) through the second quarter was highlighted by a decrease in the overall portfolio vacancy rate by 125 bps, ending the quarter at 4.9%. A snapshot of second quarter activity for the Fund follows:

Vancouver Centre II, Vancouver, BC
1350-1360 Rene-Levesque, Montreal, QC
111 Jasper Ave, Edmonton, AB

Development Update

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

Jasper One-Eleven is a 237-unit multi-residential building located in the heart of Edmonton on Jasper Avenue. In June, the Fund entered into an agreement on a new 10-year, $26 million CMHC insured mortgage. 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 bulletin

Download PDF

Past Performance Reports

Quarterly Bulletins

Q2 2019 Bulletin PDF (1 MB)
Q1 2019 Bulletin PDF (2 MB)
Q4 2018 Bulletin PDF (994 KB)
Q3 2018 Bulletin PDF (2 MB)

Want to Invest?

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