Why Omers’ real estate arm may treble its Asia allocation
The property investment arm of Ontario Municipal Employees’ Retirement System (Omers) intends to relocate its Asia Pacific head to Singapore and expand its five-strong team there with a view to as much as trebling its allocation to the region.
Asia Pacific accounts for 8% of Toronto-based Oxford Properties' global assets of C$60 billion ($44.8 billion). That figure could rise to as much as 25% in the next five to 10 years depending on the opportunity set, a spokesman told AsianInvestor. This could mean Oxford adding at least C$10 billion to its C$4.8 billion in Asian real estate holdings, as it looks to diversify its portfolio regionally and globally into new markets.
The property developer and investor’s plans reflect Omers' expansion in other areas in Asia, such as the buildout of its capital markets desk and intention potentially to double its regional infrastructure allocation in five years. They also reflect moves by other Canadian public pension funds to get their expansion in Asia back on track as the world gradually recovers from the Covid-19 disruption.
Cadillac Fairview – the property investment unit of Ontario Teachers’ Pension Plan – aims to put its first staff in Asia this year. OTPP also hired David Crane from Omers as its first Asia Pacific head of infrastructure and the first executive in its new Singapore office this month.
David Matheson, who heads Oxford's Asia Pacific business, intends to move to Singapore, but there is no firm timeline for when that will happen, said the spokesman. “And obviously Covid makes it a little more complicated at the moment”.
Omers, which has C$109 billion under management, has had an office in Singapore since January 2018 and in Sydney since 2014. Oxford has five staff in each location.
Australia accounts for all of Oxford’s direct investments in Asia Pacific so far, but the firm also has indirect investments in the region via its 16% stake in pan-Asian logistics developer and manager ESR. Oxford became a cornerstone investor in ESR in November last year with a 9% stake, then bought a further 7% in July to become the firm's largest institutional investor stakeholder.
INDIA FOCUS
Investments in India have become a major focus for Oxford Properties, as it is for Omers’ infrastructure investment team.
“We are reviewing a number of opportunities in India,” said the spokesman. “It’s a big growth market with very favourable demographics and offers the opportunity to get in pretty early.”
Oxford is focusing strongly on logistics in India – as it is globally – and on projects in cities with a high-growth technology sector such as Bangalore, Pune and Hyderabad, he added.
The firm tends to target large-scale property deals of at least $500 million in size, as is also the case for Omers' infrastructure team. Such transactions are more cost- and time-effective from a due diligence point of view than investing in smaller deals, the spokesman said. Yield-wise, Oxford expects to achieve 9% to 10% annual returns on new investments it enters into, he added.
Oxford's Asia Pacific buildout plans are supported by a leadership reshuffle. Paul Brundage, executive vice president of Europe and Asia Pacific, is to become deputy chair of investments at Omers on October 1, and his role will be replaced by two positions.
Already managing director and head of Asia Pacific, Matheson will become EVP of Asia Pacific, while Europe head and managing director Joanne McNamara will take over as EVP of Europe. These changes reflect the growing size and importance of Oxford’s Asian and European businesses, the firm said in a statement.
Europe accounts for 17% of the global portfolio, Canada for 44% and the US 31%, the spokesman said.
SWIFT ASIA BUILDUP
Matheson has led Oxford’s push into Asia since 2018, overseeing some £5 billion ($6.37 billion) in transaction activity. That includes its late 2018 acquisition of the Investa Office Fund platform in Australia for A$4.5 billion ($3.2 billion) – its first direct investment in Asia – and the subsequent sale of £1.5 billion of non-strategic assets.
This capital is being recycled into new opportunities such as the new development above Pitt Street metro station in Sydney, comprising a commercial office tower and a build-to-rent residential tower. Matheson also led Oxford’s £850 million investment into ESR.
He had joined Oxford in 2013 from Goldman Sachs initially to lead the European investment team, a remit that expanded to include Asia Pacific in 2017. Under his leadership, Oxford grew and diversified its London platform, built a £1.4 billion portfolio in Paris, entered Berlin and expanded its strategic partner co-investment business.