SEATTLE-The California Public Employees' Retirement System's recent $100-million ownership investment in Bentall Kennedy was a good fit for several reasons, Gary Whitelaw, the real estate investment advisory firm’s CEO, tells GlobeSt.com. Among them are the pension fund’s long-term compatibility with Bentall Kennedy, its commitment to environmental, social and corporate governance, and its agreement that the firm should stay focused on operational excellence at the property level.
This week, CalPERS became a one-third owner in Bentall Kennedy, acquiring an ownership interest that had been held for the past two decades by Ivanhoe Cambridge, the real estate subsidiary of the Caisse de depot et placement du Quebec. The remaining two-thirds limited partnership ownership is evenly split between the British Columbia Investment Management Corp. and Bentall Kennedy’s senior management team.
“We’ve had this model for over a decade now where we’ve had two significant institutional partners that are members of the firm: bcIMC and Ivanhoe Cambridge,” Whitelaw tells GlobeSt.com. “Cambridge’s involvement was a successful relationship for us both, but their strategic plan had changed. We wanted to continue to extend that model with another strategic partner who was like-minded in strategy, core goals and values. We wanted to learn from them and be better managers.”
CalPERS was the firm’s first choice when Ivanhoe Cambridge exited, says Whitelaw. “We had worked with CalPERS as a manager for 15 years and were well known to them with close personal connections. We saw them as very compatible.”
Environmental, social and corporate governance, known as ESG, has become very important to Bentall Kennedy, to the point where the firm wishes to be a leader in this discipline. ESG encompasses the three main areas of concern that have developed as the central factors in measuring the sustainability and ethical impact of an investment in a company or business. According to Whitelaw, Bentall Kennedy was selected as #1 in the Americas and #5 globally in ESG by GRESB, the Global Real Estate Sustainability Benchmark, an initiative to assess the environmental and social performance of public and private real estate investments. This achievement resonated well with CalPERS, which also holds high ESG standards.
“This element has also grown bigger and bigger with our clients as they have their own ESG imperatives,” says Whitelaw. “In the discussions with CalPERS, it was a big deal—the fact that Bentall Kennedy has this standing and these practices.”
Bentall Kennedy also enjoys learning from its partners their views on fiduciary culture and fiduciary conduct, including how they expect their managers to act at all times. “To have those discussions at the board level, when forming our annual business and strategic plans, makes it all very real,” says Whitelaw.
He adds that since the financial crisis, clients are looking more for fiduciaries—stewards of their capital. “How that manifests itself day to day is very interesting.”
Bentall Kennedy also saw compatibility with CalPERS in its commitment to being focused on operational excellence at the property level. “We try to keep operating costs as low as possible,” says Whitelaw. “As we got deeper into discussions with CalPERS, we were in agreement about our real estate focus being on operational excellence at the property level.”
As GlobeSt.com previously reported, at the end of 2011 Bentall Kennedy closed on a mezzanine loan and JP Morgan closed on a construction loan that the way for J.H. Snyder Development Co. to break ground on the Vermont, a 464-unit high-rise apartment complex with retail space and dedicated public open space along Wilshire Blvd. in Los Angeles. The two-acre property at the southeast corner of Wilshire Blvd. and Vermont Ave. will be the largest residential development to be built in L.A. since the beginning of the latest real estate downturn. Washington Capital Management is the lead equity investor in the project, and Snyder also infused equity into the project.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
