By Canada Life | Nov. 2, 2021
The Canada LifeTM Real Estate (GWLRA) segregated fund (the “fund” or “Canada Life Real Estate fund”) returned to normal operations in April after last year’s temporary suspension. Now, with vaccines and high vaccination rates, the economy is reopening and returning to normal. The question is, what will normal look like?
The answer? It’s up for debate, but we can agree people need places to live, work and play. The pandemic accelerated certain pre-COVID trends, including people’s comfort and ability to work and shop from their homes. Our requirements for residential, office, warehouse, industrial and retail spaces are evolving, not disappearing.
Real estate is predictable in an unpredictable world
History shows that real estate investing can be a solid strategy and key component of a well-diversified portfolio. Rent, mortgages and commercial lease payments are generally constant even when discretionary spending decreases.
Real estate provides:
- More predictable returns driven by contractual income.
- A natural hedge against inflation as rents and lease rates usually increase with inflation.
- Long-term compounding that helps keep investors invested through cycles.
Why the Canada Life Real Estate fund?
The fund’s core investment strategy focuses on high-quality, income-generating real estate with the potential for capital appreciation over time. Our research-based investment approach is shaped by key economic drivers, high-demand locations and a diversified asset class mix. We pursue a variety of tactical investments to achieve our portfolio’s targeted risk return balance. This includes development on a measured basis, allowing investors to directly benefit in the value created through carefully considered projects.
The Canada Life Real Estate fund owns a diversified portfolio of high-quality assets across Canada, with an investment strategy focused on cashflow growth with the potential for capital appreciation.
Diversified asset class with strong growth potential
As of September 2021, the expert team at GWL Realty Advisors (GWLRA) that manages the fund:
- Has high conviction to the multi-family and industrial sectors given their favourable market fundamentals. This has allowed the fund to establish allocations materially above benchmark weightings, significantly contributing to outperformance.
- Maintains a meaningful allocation to the office sector, believing in the collaborative value of the office. High-quality buildings with attractive amenities are likely to play a key role in the economic recovery.
- Employs a needs-of-life retail strategy focused on grocery-anchored community centres. These assets have performed well through the pandemic.
Location, location, location
The Canada Life Real Estate fund focuses on Canada’s seven largest markets: Vancouver, Calgary, Edmonton, Toronto, Ottawa, Montreal and Halifax. These centres have strong, diverse economies and infrastructure.
Direct investing versus publicly traded real estate investment trusts
The fund’s focus on direct investment provides investors with the economic benefits that accrue from real estate ownership, namely cashflow generation and valuation changes. The fund’s valuation is based on the underlying value of the real estate portfolio. Fund management assesses market conditions and emerging trends to pivot the portfolio to participate in these dynamics. In contrast, publicly traded real estate investment trusts (REITs) are often in part valued based on investor sentiment and recent trading activity, which may be disconnected from what is being experienced at the property level.
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GWL Realty Advisors’ full-service platform
Our fund adapts its investment program between acquisition and development opportunities, across a variety of asset classes. We assess market conditions and make investment decisions focusing on generating superior risk-adjusted returns.
Our multi-faceted approach gives us the flexibility to invest over cycles. Patience and foresight are critical when considering projects that may take five to seven years from initial vision to completion.
This active investment approach distinguishes us relative to pure allocators.
PwC Canada, Emerging trends in real estate 2021. Retrieved July 21, 2021.
Financial Post, Can REITs survive the downtown downturn? Jan. 29, 2021. Retrieved July 21, 2021.
Investment Executive, Timing is good to invest in industrial workspaces, June 29, 2021. Retrieved July 21, 2021.
The views expressed in this commentary are those of this fund manager as at the date of publication and are subject to change without notice. This commentary is presented only as a general source of information and is not intended as a solicitation to buy or sell specific investments, nor is it intended to provide tax or legal advice. Although we endeavour to ensure its accuracy and completeness, we assume no responsibility for any reliance upon it. This fund is available through a segregated funds policy issued by Canada Life. A description of the key features of the segregated fund policy is contained in the information folder. Any amount allocated to a segregated fund is invested at the risk of the policyowner and may increase or decrease in value.
Canada Life and design, and Canada Life Investment Management and design are trademarks of The Canada Life Assurance Company.