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 December 31, 2019

$3.1B

in real estate assets

$3.5B

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%4.2%
Capital (1.4)%12.5%14.1%4.3%1.7%0.4%0.8%0.9%2.1%5.5%
Total 4.4%18.2%19.2%8.6%6%4.5%5.3%5.3%6.3%9.7%

Compound rates of return

(gross of investment management fees)
Three Month – Q4 2.70%
Year-to-date 9.72%
One Year 9.72%
Three Year 7.10%
Five Year 6.19%
Ten Year 8.62%

Diversification by property type

By property type (millions)

Retail 13.6% $ 426
Office 42.6% $ 1,341
Industrial 19.0% $ 596
Residential 19.7% $ 618
Other 5.2% $ 163

Diversification by region

By region (millions)

British Columbia 23.5% $ 740
Alberta 12.4% $ 388
Prairies 0.7% $ 23
Ontario 51.8% $ 1,630
Quebec 8.7% $ 274
Atlantic 2.6% $ 82
U.S. 0.3% $ 8

Quarterly Highlights

Q4 2019 London Life Real Estate Fund Bulletin

The London Life Real Estate Fund closed the book on the decade by rewarding investors with its strongest annual performance since 2013.  The fourth quarter marked the best period of the year, delivering 289 bps of return, contributing to the 9.7% twelve-month total.  Overall performance was derived from a balance between income and capital, as portfolio fundamentals strengthened across the board. 

Brewery Site Development, Edmonton, AB
Goreway Business Park, Brampton, ON
Grenadier Square Development, Toronto, ON
Income Return

Income returns are reliant on a well-leased portfolio of assets that are managed with a focus on net operating income (NOI) growth.  This component of return has been the cornerstone of Fund performance since inception, with 2019 proving to be no different in that regard.  Portfolio occupancy concluded the year at a robust 94.8% and helped lead the Fund to a 9% increase in Fund NOI.  The Fund’s income return for 2019 was 4.2%. 

Capital Return

Capital performance is the result of positive changes in asset values that stem from prudent capital investment, combined with overall market sentiment.  Though investment into Canadian commercial real estate was down in 2019 relative to a 2018 high, pricing for institutional quality assets continued to set new benchmarks.  We view the downstroke in deployment as a reluctance of owners to divest, rather than a lack of appetite to add product.  The industrial asset class paced capital performance for the year, helping to grow the value of the Fund by over 9%, to $3.4B.  The Fund’s capital return for 2019 was 4.9%.

Other Impacts

Total Fund returns combine income and capital performance from the underlying portfolio of real estate, with various structural impacts, such as cash and leverage.  Strategic management of each of these components is crucial in optimizing performance.  Over the course of the year, the Fund increased it’s leverage position by over 300 bps and reduced its overall weighted interest rate by 22 bps, to 3.3%.  Cash levels were maintained within their targeted range.

Forward Outlook

Development will form a large part of the narrative as the calendar rolls over.  Projects at Grenadier Square (2020) and Vancouver Centre II (2021) are moving toward completion while a series of new initiatives are scheduled to break ground.  Development will continue to play an important role in augmenting the portfolio as a primary source of risk adjusted return.     

The Fund is well capitalized, diversified by asset class and geography, occupied with term, has a significant development pipeline and is managed by a vertically integrated, full-service manager.  It is very well positioned to build off a long history of delivering investors predictable returns as we move into 2020. 

The London Life Real Estate Fund is one of the largest open-ended core real estate funds in Canada with a track record spanning over 20 years.  To learn more, please visit our website at www.gwlrealtyadvisors.com.

Downloads

Latest bulletin

Past Performance Reports

Quarterly Bulletins

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

Want to Invest?

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