Ivanhoé’s billion-dollar warehouse wager
E-retail era prompts firm to increase assets by 33% through industrial spaces
Ivanhoé Cambridge Inc., the real-estate arm of one of Canada’s biggest pension funds, plans to increase its assets by a third with a bet on the booming warehouse space.
The unit of Caisse de dépôt et placement du Québec aims to expand its assets under management to $80 billion over the next five years by adding apart- ments, offices and industrial space, president Nathalie Palladitcheff said.
“Industrial is the most global thing that we could imagine doing,” Palladitcheff said in an interview at Bloomberg’s Montreal office. “It’s a natural hedge to shopping centres because of e-commerce and the evolution of the way people are consuming.”
Ivanhoé plans to double its industrial portfolio to more than $4 billion by the end of the year, Palladitcheff said. The Montreal-based company is already in talks to partner with Black- stone Group LP in a $2.48billion cash deal to take Vancouver-based Pure Industrial Real Estate Trust private, a spokesperson for Ivanhoé confirmed.
Warehouses are soaring in value amid a global shift to e-commerce and the need for logistics centres in the Amazon.com Inc. age. Canada’s industrial vacancy rate dropped to 3.9 per cent at the end of last year, the lowest since 2001, according to Cushman & Wakefield, and rents continue to soar.
Ivanhoé invested in Australia’s Logos Property Group to devel- op industrial premises in countries such as China and India, while exploring opportunities in Indonesia and Malaysia.
“We are following the tenants everywhere,” Palladitcheff said. “We didn’t have in our plans at the time of the transaction to go to India for example, but as soon as we saw that it made sense for the tenant to do that we have been agile enough to adapt to that.”
Ivanhoé, which owns several apartment buildings in San Francisco and Montreal, is also planning to expand its residential portfolio. It’s targeting the U.K. as well as the U.S., given its size and growing rental market since the 2008 financial crisis, Palladitcheff said.
Alot of American people don’t want to buy anymore, she said. “It has influenced a lot the way people are looking at their flat or the way they choose to live in terms of residential. This trauma is probably unique in the world.”
In Canada, Toronto is an attractive “deep, active liquid market” but Vancouver is far too expensive, Palladitcheff said. “It’s almost impossible to really justify the prices.”