Toronto real estate

The Ontario Teachers’ Pension Plan is establishing an in-house real estate arm, bringing Cadillac Fairview and its team of 37 investment professionals into the organization.

The pension group announced the change, which will take effect at the beginning of next year, in a release on Monday that also said Cadillac Fairview (CF) president and CEO John Sullivan is retiring.

Sullivan will step down on Nov. 1 after 13 years in the role and 25 with CF. Salvatore Iacono, currently executive vice-president of operations, will take over as CEO, with Sullivan moving to an advisory role.

Ontario Teachers’ will be hiring a global head of real estate to lead the new group, it said.

The pension fund acquired CF, its real estate subsidiary, in 2000. Under the model to be in place by Jan. 1, 2024, Ontario Teachers’ will focus on global real estate investing and portfolio management, while CF will manage its real estate portfolio in Canada, the release said.

The model aligns the real estate investment approach to the pension fund’s other asset groups, it said, “where investment capabilities are embedded to enable information sharing, co-sourcing, and best practices across its global platform.”

The shift in strategy and Sullivan’s retirement comes after the Covid-19 pandemic, the “most challenging period in modern history” for CF, the release said, as office work and retail shopping were upended during lockdowns and changing habits.

Last year, Ontario Teachers’ $28-billion real estate portfolio declined by 3.5%.