Canada Life Real Estate Fund Property Valuation Has Resumed

On March 20, 2020 Canada Life suspended the Canada Life real estate fund as a result of the market volatility caused by COVID-19. This was done in the best interest of our investors, since there was uncertainty in the valuation of the properties held by the fund. During the temporary suspension, no transactions are allowed in or out of the fund.

Current state

We resumed valuing the properties in June. We’re seeing some developments in the marketplace, such as the gradual lifting of emergency orders and increased visibility on the cashflow implications for real estate, including rent collection levels, and government rent relief programs. One-third of the portfolio will be valued externally for the next three months, with the balance of the portfolio (two-thirds) being valued internally each month. This process will increase the frequency of independent valuations from annually to quarterly, aligning with industry best practices. Over the course of the three-month cycle, each property will have an external valuation together with two internal valuations completed.

While valuation visibility has materially improved, valuation certainty has not yet returned. There remains a lack of relevant comparable transactions to provide valuation indicators. This is leading the appraisal industry to continue to qualify their valuations as having “significant valuation uncertainty.” As a result, we’re not yet able to remove the temporary suspension on contributions, transfers and redemptions.

What this means for clients

At this point, the Real Estate Fund remains suspended and transactions are not permitted. The valuation of properties held in the fund is the necessary first step toward lifting the temporary suspension. There are a few steps that need to occur before we can lift the suspension. These include:

  • Valuing the properties held in the fund, using internal and external sources. This is currently taking place.
  • Returning to a state of appropriate valuation certainty to permit fund transactions to occur. This will occur as market conditions improve and meaningful real estate transactions are concluded.
  • Opening the fund for contributions.
  • We need to be comfortable with the liquidity position and our ability to satisfy redemptions when the suspension ends.
  • Accepting and processing requests for redemptions and transfers.

What’s next?

We continue to put customers at the centre of what we do. We’re offering a process to facilitate payments to those clients who have an urgent need and who do not have access to any other source of funds during the suspension. The value of the customer’s account/policy will be reduced by the amount of any payment made.

To learn more, visit the real estate investment funds section of the Canada Life website.

GWL Realty Advisors

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.