Office towers and nearby condominiums in downtown Toronto on Nov. 9, 2020.Fred Lum/The Globe and Mail
Blackstone Inc. BX-N is ramping up its Canadian real estate business and opening an office in Toronto as it expands from significant investments in warehouses into new sectors such as commercial and residential properties.
Blackstone, one of the world’s largest asset managers, announced Monday that it hired former Canada Pension Plan Investment Board executive Janice Lin as head of its real estate in Canada. For the past two years, Ms. Lin was chief investment officer at retirement home operator Revera Inc.
“I look forward to strengthening Blackstone’s strong presence in Canada and supporting businesses across a number of different sectors,” said Ms. Lin in a press release. “Canada’s population growth is the highest among G7 nations and is nearly double that of the U.S., and I believe that will continue to create exciting opportunities in the market.”
Blackstone currently owns about 450 properties in Canada, valued at $14-billion. The bulk of its portfolio is focused on logistics, such as warehouses. In 2018, Blackstone teamed up with Ivanhoé Cambridge Inc., a subsidiary of Caisse de dépôt et placement du Québec, to acquire Pure Industrial REIT for $3.8-billion, including debt. Last year, Pure acquired an additional 190 industrial properties as part of the Cominar REIT takeover.
More recently, Blackstone expanded its Canadian commercial and residential holdings. The fund asset manager bought Vancouver’s Bentall Center in 2019 for $1-billion. In 2021, it acquired three office buildings in downtown Toronto, a tech-focused property known as the Atlantic complex, for $240-million.
Last year, Blackstone and a partner also bought a 12-property chain of seniors homes in Quebec. In April, the asset manager purchased Montreal’s Air Canada-Altoria Tower, a building which combines offices and condominiums, for $230-million.
Nadeem Meghji, Blackstone’s New York-based head of real estate Americas, said the fund manager invests around major themes, which currently include owning industrial properties linked to e-commerce, rental housing, life science offices, and film studios which are benefitting from surging production for streaming services.
“We are long-term believers in the strength of the Canadian economy,” Mr. Meghji, a native of Vancouver, said in a press release.
Blackstone is one of the world’s largest property investors, with US$298-billion of real estate and US$880-billion of assets under management. A number of its major competitors are Canadian, including Brookfield Asset Management Inc.
Blackstone is bulking up as its institutional investor clients increase the amount of capital they earmark for real estate. A survey of pension plans, insurers and endowments published in April by British-based investment data service Preqin found that 26 per cent of investors plan to allocate US$300-million or more to real estate this year; just 9 per cent were setting aside that much capital one year ago.
Globally, fund managers have about US$4.1-trillion invested in the sector, according to industry surveys.
Part of the appeal of property is its perceived value as a hedge against inflation. Commercial real estate services firm Avison Young recently released a study that said “the relationship between real estate and inflation is much more nuanced than conventional wisdom would suggest.”
Avison Young looked at major Canadian, U.S. and British markets and found that over the short term – less than five years – property markets don’t offer much protection from spikes in inflation. However, once investment horizons move to five years or more, the sector outperformed. The study found “real estate’s inflation-protecting capabilities are best suited to long-term owners who are prepared to ride the fluctuations of multiyear economic and real estate cycles.”
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Andrew Willis