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OMERS strikes deal with Queen’s firm as Canadians storm London

These are stories Report on Business is following Tuesday, May 28, 2013.

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OMERS in London deal
One of Canada's major pension funds has struck a deal with the Queen's property company to overhaul an upmarket piece of London.

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The deal is between the Oxford Properties unit of the Ontario Municipal Employees Retirement System and the Crown estate, which is responsible for the Queen's property portfolio.

It's also the latest sign of how Canadian pension funds are moving in on key properties.

"The Canadians have been a major player in the global investment market, driven in part by the strength of their domestic economy through the global downturn," Mat Oakley, who heads up research at the property agency Savills, told the London Evening Standard.

"Now you would put them in the world's top five or six most active cross-border buyers, which is amazing compared to where they were 10 years ago. They've probably spent close to £40-billion outside Canada."

He was referring to recent deals not only by OMERS but also by the Canadian Pension Plan Investment Board and Healthcare of Ontario Pension Plan.

Today's deal is a 50-50 partnership worth £320-million, or about $500-million, that will see Oxford and the Crown Estate overhaul a two-block area between Regent Street and the Haymarket district, part of the London group's broader rejuvenation of St. James's Market.

OMERS will hold 50 per cent of the commercial piece of the deal, while the Crown Estate, which owns about half the buildings in St. James's, leads the redevelopment. Each will have 150-year leasehold interests.

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When complete, St. James's would be a major district for office, retail and restaurant operations.

"A run-down back street service yard and taxi 'rat-run' will be replaced by a fantastic new amenity for St. James's, revitalizing half an acre of public realm and creating a new 10,000-square-foot pedestrian square for world-class business, shopping and dining," the Crown Estate said in a statement.

OECD cites income disparity
A new global study cites a "considerable gap" between Canada's richest and poorest.

The findings by the Organization for Economic Co-Operation and Development are notable in that they don't look at how the ranks of the top 1 per cent compare to the rest, but rather how the top 20 per cent compare to the poorest 20 per cent.

The study also backs up recent findings from the Pew Research Center in the United States, which shows that three-quarters of Canadians believe income inequality is on the rise, The Globe and Mail's Tavia Grant reports.

The OECD pegs average household disposable income in Canada at $28,194 (U.S.), higher than the average among its member nations of $23,047.

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"But there is a considerable gap between the richest and poorest – the top 20 per cent of the population earn more than five times as much as the bottom 20 per cent," the OECD well-being study adds.

According to the Pew Center, which looked at 39 countries, 76 per cent of Canadians believe the gap between the rich and the poor has increased over the past several years.

Just 18 per cent think it is unchanged and just 2 per cent feel it has declined.

But less than half of those surveyed – 45 per cent – see inequality as a problem.

The OECD's Better Life Index looks at 24 measures, from income to health.

Canadians rank well over all, and their well-being is among the best in the world. Some highlights:

  • More than 72 per cent of people between the ages of 15 and 64 have paid work, compared to the OECD average of 66 per cent. We work on average 1,702 hours a year, below the average of 1,776, with 4 per cent working “very long hours,” again below the average of 9 per cent. Six per cent of men work such hours, compared to 1 per cent of women.
  • Some 88 per cent of those between the ages of 25 and 64 have a high school diploma, better than the average of 74 per cent. “Canada is a top-performing country in terms of the quality of its educational system,” the OECD says.
  • Life expectancy is 81, slightly better than the average of 80 years.

"In general, Canadians are more satisfied with their lives than the OECD average, with 82 per cent of people saying they have more positive experiences in an average day (feelings of rest, pride in accomplishment, enjoyment, etc.) than negative ones (pain, worry, sadness, boredom, etc.," The study says, comparing that to the average of 80 per cent globally.

Scotiabank profit jumps
Bank of Nova Scotia posted a 10-per-cent jump in second-quarter profit today, saying it's "well positioned" to meet its 2013 targets.

Profit jumped to $1.6-billion or $1.23 a share, diluted, from $1.46-billion or $1.15 a year earlier, The Globe and Mail's Tim Kiladze reports.

Both its Canadian and international banking businesses posted solid quarters, the bank said, as did its global wealth management unit. It got a notable pop from its acqusition of ING Direct Canada.

"With strong results in the first six months of this year and the continued execution of our focused strategy, we are well positioned to achieve our goals for 2013," the bank said.

Among those targets are an increase in earnings per share of between 5 per cent and 10 per cent. So far this year, growth is at 9 per cent.

The bank also aims for return on equity of 15 per cent to 18 per cent, and so far is at 16.4 per cent.

U.S. home prices up
The U.S. housing market is firmly in healing mode.

Home prices in the United States rose almost 11 per cent in March from a year earlier, according to the S&P/Case-Shiller index released today.

That's still down some 30 per cent from before the crash, but stronger demand and the gradual clearance of distressed sales are helping the market to rebound.

"Over all the data show that gradually improving demand and a lower supply of distressed homes for sale continue to support house prices, although they are still rising from very low levels," said Andrew Grantham of CIBC World Markets.

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