Cadillac Fairview halves portfolio
Company sells 50 per cent stake in Vancouver properties
Cadillac Fairview announced Friday it is selling a 50 per cent interest in its Vancouver real estate portfolio, which includes downtown Vancouver’s Pacific Centre, to the Ontario Pension Board and the Workplace Safety and Insurance Board.
“It’s an interesting deal and it’s a great transaction,” said Kirk Kuester, Colliers International executive managing director for British Columbia, whose company was not involved in the transaction.
“It shows the confidence the market has in Vancouver in terms of the type of deal that was done and at what I would expect would be a fairly healthy valuation.”
The privately held Cadillac Fairview, which is owned by the Ontario Teachers’ Pension Plan, declined to disclose financial terms of the deal.
The OPB and WSIB are each taking a 25 per cent interest in the Vancouver portfolio, which includes in its four million square feet of leasable space, the 1.6 million square feet Pacific Centre and 12 office properties in downtown Vancouver.
CF also owns Richmond Centre but that was not included in the deal.
Kuester said the deal offered was for an interest on a non-managing basis, something he said investors wouldn’t have considered years ago.
He said prospective buyers are suggesting approaching potential sellers, who have historically low book value costs on their assets and asking if they aren’t prepared to sell 100 per cent, would they consider selling half or some interest.
“If you’re a buyer, and there are way more buyers than there are sellers, the buyers have to get aggressive,” said Kuester.
For Cadillac Fairview, Kuester said the deal allows the company to keep control of the portfolio from a management perspective, “but they monetize a 50 per cent interest at today’s values, which is brilliant.”
“They’ve owned it forever, they’ve done very well by the investment, so short of selling the whole thing and then trying to figure out what to do with the money, they sell half of it, they keep half of it and the other half they take and they redeploy somewhere, either at a high yield — a higher return — or in investments that may be more strategic with what they’re trying to do with their entire investment portfolio,” he said.
In a release announcing the deal, Cadillac Fairview’s president and chief executive officer John Sullivan said: “As a proud owner and developer of commercial real estate in Vancouver for more than 40 years, it was critical for Cadillac Fairview to find like-minded partners who share in our long-term vision.”
Mark Fuller, president and CEO of the Ontario Pension Board said the deal gives the OPB “the rare opportunity to gain direct exposure to the tightly held Vancouver real estate market.”
Cadillac Fairview has $29 billion in leasable space in 73 properties in Canada, including major shopping centres the Pacific Centre in Vancouver, Toronto’s Eaton Centre and Chinook Centre in Calgary.
Contacted on Friday, Cadillac Fairview said through a representative that it had no further details to release on the deal and declined to disclose financial terms.
It was critical for Cadillac Fairview to find like-minded partners who share in our long-term vision.