London Life Real Estate Fund

The London Life Real Estate Fund was launched in 1998 to create a vehicle for direct real estate investment. The Fund invests in high-quality, income-producing properties diversified by type and location. The objective is to provide investors with strong income returns and the opportunity for long-term capital appreciation. 

 

Fund Performance

as of March 31, 2021

$3.2B

in real estate assets

$3.3B

in total assets

86

properties

Source of Return

2012201320142015201620172018201920202021
Income 5.1%4.3%4.3%4%4.5%4.4%4.2%4.2%3.9%0.9%
Capital 14.1%4.3%1.7%0.4%0.8%0.9%2.1%5.5%(1.1)%1.8%
Total 19.2%8.6%6%4.5%5.3%5.3%6.3%9.7%2.7%2.8%

Compound rates of return

(gross of investment management fees)
Three Month – Q1 2.76%
Year-to-date 2.76%
One Year 3.81%
Three Year 6.81%
Five Year 6.24%
Ten Year 8.14%

Diversification by property type

By property type (millions)

Retail 12.3% $ 375
Office 39.2% $ 1,201
Industrial 22.5% $ 689
Residential 18.4% $ 564
Other 7.6% $ 233

Diversification by region

By region (millions)

British Columbia 23.0% $ 704
Alberta 11.0% $ 338
Prairies 0.7% $ 20
Ontario 53.4% $ 1,635
Quebec 9.1% $ 279
Atlantic 2.6% $ 79
U.S. 0.2% $ 6

Quarterly Highlights

Q1 2021 London Life Real Estate Fund Bulletin

In January, contributions and transfers into the Fund resumed along with the creation of a redemption queue for the period between January 11th and February 19th.   All redemption requests received were satisfied on March 12th and the Fund subsequently announced full lifting of the suspension on April 19th, 2021. 

Home Depot Distribution Ctr, Calgary, AB
Goreway Business Park, Brampton, ON
The Shaughn, Montreal, QC
Performance

The London Life Real Estate Fund posted a 2.76% gross return for the first quarter of 2021, comprised of stable income and strong capital growth.   The income return (.92%) remained resilient due to strong portfolio occupancy (92%) and revenue collection (97%).   The capital return (1.84%) continued to be led by the industrial segment of the portfolio; an asset class that has benefited from accelerated e-commerce adoption and increased levels of institutional investment demand.  Unlevered capital returns for the industrial component of the portfolio were 6.03% for the quarter.  The direct real estate return for the Fund was ahead of the MSCI Property Fund Index (PFI) benchmark by 55bps for the quarter and now leads that index on a Gross Fund Return basis over the one, three and ten-year historical periods.  The broader Canadian Property Index (PI) returned -2.7% in comparison to the Fund’s 3.9% property level return on a rolling 12-month basis.  The Fund has now outperformed the PI index on a one, three, five and ten-year annualized basis. 

Disposition

Early in first quarter the Fund divested of its 30% interest in 99 Savannah Oaks, a 527,568 square foot industrial facility located on 26.9 acres of leased land in Brantford, ON. The asset was leased to four tenants with a limited weighted average lease term (WALT) of 2.04 years.  The Fund identified its interest as a non-core holding due to its location and leasehold nature. The Fund was able to benefit from the sector’s momentum, attracting strong investor interest and realizing a significant gain relative to appraised value. 

Forward Outlook

Investment activity for the Fund over the past year had been limited given the temporary suspension of the Fund and uncertainty associated with market values.  With those conditions improved, the Fund is poised to continue its growth by adding strategic assets to its core holdings through acquisition and development.  Re-investment into the Fund’s existing holdings, which had been focussed on essential spending, will similarly resume, targeting revenue generation through the improvement of the tenant experience.  Several new financing initiatives are underway, which will allow the Fund to take advantage of favorable debt market conditions and ultimately reduce its overall cost of capital to support performance. With the United States leading Canada in its response to the Covid-19 pandemic, we can optimistically look at it’s economic and social recovery as a proxy as to what Canada might expect in the months ahead.  The Fund has been resilient in protecting stakeholder capital, while delivering positive income returns and is well situated to participate in the recovery that Economists broadly project later this year. 

The Segregated Funds described in this bulletin are offered through a variable insurance contract issued by The Canada Life Assurance Company.

Please note that unit values and investment returns will fluctuate, and past performance is not necessarily indicative of future performance.

For IVIC investors: A description of the key features of the segregated fund policy is contained in the information folder.

Downloads

Latest bulletin

Past Performance Reports

Quarterly Bulletins

Q1 2021 Bulletin PDF (428 KB)
Q4 2020 Bulletin PDF (264 KB)
Q3 2020 Bulletin PDF (318 KB)
Q2 2020 Bulletin PDF (193 KB)

Want to Invest?

Contact a London Life advisor to invest in the London Life Real Estate Fund.