Ontario Teachers’ Real Estate Subsidiary, Boreal IM Launch Europe Logistics JV with West London, Rotterdam Acquisition

By Mario Marroquin

A joint venture by the real estate arm of the Ontario Teachers’ Pension Plan, Cadillac Fairview, and Boreal IM made inroads into European logistics this week when it closed on the acquisition of two industrial parks in the U.K. and the Netherlands.

Cadillac Fairview and Boreal acquired 1.1 million square feet (109,000 square meters) in West London and in Rotterdam for €250 million (US$268 million) as part of a venture to assemble a €3 billion European logistics portfolio.

“The acquisition of these assets marks the first step in our mandate with Cadillac Fairview,” Louis-Simon Ferland, founder and partner at Boreal IM said. “We will be focusing on assets across core European locations where fundamentals support outsized demand for logistics assets.”

In London, the JV acquired four warehouses from portfolio manager abrdn while the acquisition in Rotterdam comprises six industrial buildings in the Port of Rotterdam. The venture partners said that as part of a forward Environmental, Social, and Governance (ESG) strategy, all properties will be measured for benchmark carbon footprints and upgraded.

The European logistics portfolio under construction will target existing and new development developments in the U.K., Germany, France, Netherlands, Spain and Italy according to Cadillac Fairview.

News of the European logistics portfolio comes six months after the Ontario Teachers’ Pension Plan reported an underperformance, relative to the local benchmark return, for its real estate assets which are wholly managed by Cadillac Fairview.

The pension plan attributed the underperformance in real estate to an overexposure to the portfolio’s office and industrial real estate in Canada.

Ontario Teachers’ reported a 2.5% return in real estate, which consists of 52% Canadian retail and 29% in Canadian office.

The asset mix selection listed in the pension’s annual report for 2021 states real asset exposure increased 16% from $44.9 billion to $52.3 billion with the majority of exposure coming from the infrastructure portfolio.

Ontario Teachers’ committed $11 billion in 2021 towards diversification efforts in Europe.

RELATED: Blackstone to Purchase California-based Logistics REIT for $7.6B