Sun Life Financial Inc. says its $560 million purchase of real estate investment manager Bentall Kennedy Group should be seen as a signal that it’s ready to grow the fee-based business in both Canada and the United States.
“We have a very clear intention at the very top of the house to grow in asset management,” said Steve Peacher, chief investment officer of Sun Life, in an interview. “One of the areas we want to grow is by taking some of the things that have worked for us on our balance sheet for decades, that have helped us back our liabilities, and bring those as an investment manager for other institutions that also have to meet liability streams.”
In Bentall, it will be acquiring an investment manager that has assets under management of $27 billion and provides real estate services across 91 million square feet of properties but also a company that is looking to expand in the growing U.S. rental housing market.
“You could go out and develop your own real estate team or just acquire somebody else’s team. This will give them access to expertise,” said one source, who asked not to be identified. As an example, Great-West Lifeco Inc., a Sun Life competitor, built its own real estate team in GWL Realty Advisors which now manages $16 billion in assets.
Combined with Bentall, Sun Life Investment Management will now have $47 billion in assets under management and service more than 550 institutional clients.
“When the opportunity came along to partner and combine with Bentall Kennedy, it was the perfect fit. It’s in the asset management space and it’s completely aligned with what I’ll call alternative asset classes that provide investors with more yield and return than they can get in the public markets,” said Peacher. “We were actively looking to expand in this area.”
Bentall is over 100 years old but more recently has been controlled by institutional shareholders, British Columbia Investment Management Corporation and the California Public Employees’ Retirement System. Both approved the transaction announced late Monday and have agreed to be clients of Bentall Kennedy under Sun Life’s ownership.