MONTREAL, TORONTO (Reuters) - Sun Life Financial SLF.TO said Monday it is acquiring North American real estate investment manager Bentall Kennedy Group for C$560 million, as part of the financial services group’s larger strategy to expand its capabilities in commercial property.
Through the deal, Bentall Kennedy, which provides property management, real estate investment and leasing services in Canada and the United States, will become a unit of Sun Life Investment Management, Sun Life said in a news release.
The deal will position Sun Life to capitalize on growing demand by pension funds and other asset managers for higher-yield real estate assets, said Sun Life Chief Investment Officer Steve Peacher in an interview on Monday.
“We think the demand for real estate among institutional investors is only going up. By owning Bentall Kennedy, we position ourselves to take advantage of that trend,” Peacher said.
Bentall Kennedy will retain its brand and become Sun Life’s real estate investment management platform.
Sun Life acquired Bentall from pension funds British Columbia Investment Management Corporation (bcIMC), the California Public Employees’ Retirement System (CalPERS) and Bentall management, all of which held a one-third stake.
The two institutional shareholders said in the release they will remain Bentall Kennedy clients under Sun Life’s ownership.
Together, the real estate and mortgage teams of Bentall Kennedy and Sun Life Investment Management will have C$47 billion in assets under management in Canada and the United States, and serve over 550 institutional clients and investors.
As of March 31, Bentall Kennedy had C$27 billion in assets under management and provided real estate services across 91 million square feet of properties.
Following completion of the deal, which is expected to close in the third quarter of 2015, Bentall Kennedy will continue to be managed by its current team led by Group Chief Executive Officer Gary Whitelaw.
Upon closing, the transaction will be immediately accretive to earnings and return on equity, Sun Life said.
Reporting by Allison Lampert and John Tilak; Editing by Cynthia Osterman