BGO has been named the property and asset manager for the Toronto Transit Commission Pension Plan’s (TTCPP) 1.7-million-square-foot commercial real estate portfolio.
Miami-headquartered BGO began its management services on Nov. 1 for the TTCPP’s wholly owned properties, with the priorities of asset performance and maximizing risk-adjusted returns.
“It’s really optimizing asset performance and finding ways to deliver that strong return — that is our ultimate guiding goal,” Chetan Baweja, a BGO managing director and portfolio manager, said in an interview with RENX.
BGO is the real estate investment and management arm of Sun Life Financial, the Toronto-based life insurance and investment titan. It now holds $28 billion in assets under management and 69 million square feet of assets under administration across office, industrial, retail and multifamily properties.
Over 40 per cent of BGO’s Canadian commercial property management business is devoted to third-party clients like the TTCPP, with the remainder being assets internally owned on behalf of its investment management clients.
TTCPP manages the retirement income of over 27,000 active and retired TTC employees. The market value of the TTCPP’s assets is $8.3 billion, with real estate making up 12 per cent of its assets as of year-end 2023.
BGO’s management of TTCPP
BGO Properties, the commercial property management brand, will perform portfolio and asset strategy development, transaction and financing services, and activities related to environment, social and governance under its managerial duties. Additional responsibilities include property leasing and construction management.
TTCPP’s portfolio consists of eight properties in Canada:
- three industrial, one retail and one suburban office in the Greater Toronto Area; and
- an Edmonton office building, Calgary open-air retail centre and an enclosed mall in Alberta.
A driving purpose for BGO Properties’ asset, property and portfolio management teams will be maximizing “value (in) each independent asset, and deliver strong, risk-adjusted returns” for TTCPP’s pensioners Baweja said.
“We come up with these asset strategies leveraging our full platform expertise. We do it asset by asset,” Baweja said, by capturing a range of data including the asset’s performance and condition. Then a holistic portfolio strategy will be presented for approval by the TTCPP, and executed if given the green light.
To deepen the BGO-TTCPP relationship, opportunities to grow TTCPP’s investments in Canada and around the world will be explored.
BGO will look to expand its asset management team to cover the TTCPP account and other institutional clients, Baweja said.
Buoyed by Canadian market fundamentals
Earlier this year, the BGO Living brand took over management of Oxford Properties Group’s 5,000-unit multifamily portfolio in the Greater Toronto Area and Montreal, consisting of 15 properties such as Residences on Bay in Toronto and LaCite Apartments in Montreal.
Unlike the TTCPP contract, Oxford’s permanent residential site employees transitioned to BGO. Another difference is that BGO will be performing more than property management for TTCPP.
BGO continues to have confidence in the Canadian real estate sector, Baweja said, hence its interest in the property management sector.
The industrial market has been showing strength over the past few years and normalizing recently into a balanced class, Baweja said. The TTCPP’s industrial assets are strategically located strong performers, he added, and there is an ongoing surge in tenant demand for Toronto industrial assets.
Retail buildings are appealing due to positive rent growth and leasing demand, especially for open-air retail.
“We expect TTCPP to benefit from the strong retail fundamentals and the lack of new supply in that space,” Baweja said.
With the office sector recovering from the COVID pandemic and work-from-home policies, he expects a better office absorption rate, resulting in improved leasing and fundamentals.
BGO will be focused on expanding its third-party property management services in Canada, Baweja said, with a particular focus on institutional investors where he said there continues to be interest in BGO’s platform.