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 March 31, 2023
$3.7B
in real estate assets
$3.8B
in total assets
86
properties
Source of Return
| 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
| Income | 4.3% | 4% | 4.5% | 4.4% | 4.2% | 4.2% | 3.9% | 3.4% | 3.4% | 1.0% |
| Capital | 1.7% | 0.4% | 0.8% | 0.9% | 2.1% | 5.5% | (1.1)% | 13.1% | 3.5% | (2.1)% |
| Total | 6% | 4.5% | 5.3% | 5.3% | 6.3% | 9.7% | 2.7% | 16.5% | 6.9% | (1)% |
Compound rates of return
(gross of investment management fees)
| Three Month – Q1 | -1.05% |
| Year-to-date | -1.05% |
| One Year | 0.49% |
| Three Year | 7.60% |
| Five Year | 7.90% |
| Ten Year | 6.75% |
Diversification by property type
By property type (millions)
| Retail | 10.6% | $ | 366 |
| Office | 29.7% | $ | 1,024 |
| Industrial | 33.3% | $ | 1,147 |
| Residential | 23.1% | $ | 796 |
| Other | 3.3% | $ | 113 |
Diversification by region
By region (millions)
| British Columbia | 22.1% | $ | 760 |
| Alberta | 9.4% | $ | 325 |
| Prairies | 0.6% | $ | 19 |
| Ontario | 57.6% | $ | 1,985 |
| Quebec | 8.0% | $ | 277 |
| Atlantic | 2.2% | $ | 74 |
| U.S. | 0.1% | $ | 5 |
Quarterly Highlights
Q1 2023 London Life Real Estate Fund Bulletin
In an attempt to curb higher than desired levels of inflation, the Bank of Canada (BOC) has now raised the overnight rate in eight consecutive sessions. Messaging has suggested that the 4.5% rate will hold, at least temporarily, to allow the central bank to observe whether their shift in monetary policy has been effective. Commercial real estate has traditionally been valued, on average, at a spread premium of 200-500 bps over a risk-free rate (10-year GOC bond). The spread accounts for return expectations from investors which generally includes the ability to accommodate debt to leverage performance. Bond yields have pushed out in response to the steps taken by the BOC, increasing the cost of debt and thus negatively impacting asset values. The income component of the Fund’s performance profile was able to partially offset valuation declines, resulting in a modest negative return for the first quarter of 2023.
Brewery Development Site, Edmonton, AB
1188 West Georgia, Vancouver, BC
Goreway Business Park, Brampton, ON
185 Enfield Place, Mississauga, ON
Fund Management has been actively resetting weightings across the portfolio for several years in order to continue to deliver on the core mandate of delivering consistent income performance. At the end of 2016 over half of the capital in the Fund was invested in office buildings. It was determined that a rotational shift was necessary to better diversify the portfolio by defensively tilting the asset mix in an effort to further improve return volatility. Fast forward to today, through a series of development and transaction activities, office exposure in the portfolio has been drastically reduced (30%). The Fund’s investment in the asset class now sits behind Industrial and slightly ahead of Multi-family amongst its place in the weighting of the four main categories. While challenges remain present in the near to mid term, significant conviction remains around the long-term viability of the core Office holdings in the portfolio.
Since inception, the London Life Real Estate Fund has been providing stakeholders with steady and generally predictable returns over time as evidenced over the past 3, 5, 10 and 15 year periods where total gross performance has been bound between 6.8% and 7.9%. The level of return over the past decade has exceeded REITs (S&P TSX REIT) and Bonds (FTSE TMX) and is similar in nature to Canadian equities (S&P TSX) yet with substantially less volatility and limited negative correlation to each, making the Fund a complementary holding for a multi-asset class portfolio. Real estate has also historically proved to be a reasonable hedge against inflation due to contractual rental rate increases on commercial leases and short-term duration contracts within the multi-family sector. Furthermore, rising replacement costs can create barriers to entry for new competitive product. The Fund takes a long-term approach to investing which discounts market cycles and benefits from compounding effects. Quarterly external appraisals combined with a monthly internal valuation process assures that values are current and representative of market conditions. To learn more about the Fund, please visit the following link:
https://www.gwlrealtyadvisors.com/invest-with-us/
The Segregated Funds described in this bulletin are offered through a variable insurance contract issued by The Canada Life Assurance Company.
Please note that unit values and investment returns will fluctuate, and past performance is not necessarily indicative of future performance.
For IVIC investors: A description of the key features of the segregated fund policy is contained in the information folder.
Downloads
Latest bulletin
Past Performance Reports
Quarterly Bulletins
| Q2 2023 Bulletin |
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| Q1 2023 Bulletin |
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| Q4 2022 Bulletin |
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| Q3 2022 Bulletin |
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Want to Invest?
Contact a London Life advisor to invest in the London Life Real Estate Fund.