Canada Life Announces Temporary Suspension of Canadian Real Estate Investment Funds
March 20, 2020
Readers are referred to the cautionary notes regarding Forward-Looking Information and Non-IFRS Financial Measures at the end of this release. All figures are expressed in Canadian dollars, except as noted.
Winnipeg, March 20, 2020. . . The Canada Life Assurance Company today announced a temporary suspension on contributions, transfers and redemptions for its Canadian real estate investment funds, effective close of business today at 4:00 pm ET. The decision to suspend dealing was made in the best interests of all unitholders.
The impacted funds are the Great-West Life Canadian Real Estate Investment Fund No. 1, the London Life Real Estate Fund 2.17G, the Canada Life Real Estate Fund (GWLRA) SF353 and the London Life Real Estate Fund 5.191G (the “Funds”).
The holdings in the first two of these Funds include office, retail, industrial and multi-family residential properties across Canada. The other two Funds hold interests in the first two funds and therefore their value is also tied to the value of those properties.
To calculate the daily share price of the Funds, the properties are valued in accordance with the Funds’ Investment Rules using recognized valuation standards, including accredited independent appraisals.
The COVID-19 virus has impacted the global property market and made it difficult to value the properties with the same degree of certainty as usual. This affects the company’s ability to calculate the unit price and creates a material risk that it may not continue to be valued appropriately. That in turn affects the company’s ability to ensure that unitholders may buy and sell units at a price that reflects their value.
To mitigate that risk, Canada Life is suspending contributions to, and redemptions and transfers from, the Funds. While the Funds continue to be in a positive cash position and have capacity to increase liquidity through operating cash-flow, asset sales and mortgage financing, there is the possibility of an extended period of redemptions pressure due to the current economic conditions. The current economic climate also raises concerns about the company’s ability to obtain fair market value on the disposition of real estate assets, should it become necessary to do so to meet liquidity demands, which would potentially be detrimental to the long-term interests of unitholders. The suspension of redemptions and transfers from the Funds will preserve the current liquidity position and protect our ability to satisfy redemptions when the suspension ends.
Therefore, in accordance with the terms applicable to the Funds, the suspension will remain in place until market conditions have stabilized enough to determine valuations with greater certainty and the company is comfortable with the Funds’ liquidity position.
The company, through its general account, intends to establish a process to facilitate hardship and certain other withdrawals, including minimum RRIF payments.
“Our Canadian real estate funds have performed well over many years,” said Paul Mahon, President and Chief Executive Officer, Canada Life. “The temporary suspension was put in place to protect the long-term interests of all unitholders during this period of economic uncertainty. We have managed real estate funds for four decades, and we continue to believe they are an excellent component of a well-balanced, long-term investment portfolio.”
About The Canada Life Assurance Company
Canada Life is a leading insurance, wealth management and benefits provider focused on improving the financial, physical and mental well-being of Canadians. For more than 170 years, individuals, families and business owners across Canada have trusted us to provide sound guidance and deliver on the promises we’ve made.
As of January 1, 2020, Great-West Life, London Life and Canada Life became one company – Canada Life, and today, we proudly serve more than 13 million customer relationships from coast to coast to coast.
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Cautionary note regarding Non-IFRS Financial Measures
This release contains some non-IFRS financial measures. Terms by which non-IFRS financial measures are identified include, but are not limited to, "operating earnings", "adjusted net earnings", "adjusted net earnings (US$)", "adjusted net earnings per common share", "adjusted return on equity", "core net earnings", "constant currency basis", "impact of currency movement", "premiums and deposits", "pre-tax operating margin", "return on equity – adjusted net earnings", "sales", "assets under management" and "assets under administration". Non-IFRS financial measures are used to provide management and investors with additional measures of performance to help assess results where no comparable IFRS measure exists. However, non-IFRS financial measures do not have standard meanings prescribed by IFRS and are not directly comparable to similar measures used by other companies. Refer to the appropriate reconciliations of these non-IFRS financial measures to measures prescribed by IFRS where applicable.
GWL Realty Advisors Inc. is a leading North American real estate investment advisor providing comprehensive asset management, property management, development and specialized real estate advisory services to pension funds and institutional clients. GWL Realty Advisors Inc. manages a diverse portfolio of office, industrial, retail and multi-residential assets as well as an active pipeline of new development projects.