Developer of the year

Developer of the year

Albert Warson

THE CONSTRUCTION COMPANY THAT BUILT MUCH OF Vancouver’s older downtown core came under the control of the dynastic Bentall family in the early part of the 20t17 century.

Over the years, it was one of those steady, solid campanies that goes about its businesses without being noticed particularly or exciting much interest beyond its own regional playground. Then the west really did meet the east a few years ago when financial superstar Caisse de depot et placement du Quebec became the company’s major shareholder.

If it seemed odd at the time that a Quebec government-controlled pension fund would go to the edge of the country to gobble up a real estate company, it doesn’t seem odd any more, given the rising domination by pension funds on a national scale of Canadian real estate. The new ownership of the company raised the self-assurance level, not to mention financial cachet, that trickles down from a parent with $100 billion in managed assets to play with. Today:

Bentall’s revenue property portfolio has nearly 30 office properties in Seattle, Vancouver and Southern California, three of them representing half of the portf)lio’s appraised value – the U.S. Bank Center in downtown Seattle; the four-tower Bentall Centre in downtown Vancouver and the seven-building Newport Corporate Center office complex in Bellevue, Wash.

Occupancy across the portfolio has consistently outperformed the market in recent years and was 97 percent overall at the end of 1998.

Bentall’s owns a net 5.5 million-square-foot interest in a 7.8-million-square-foot portfolio and manages more than 25million-square-feet of space owned by third parties: The market value of the property portfolio and other assets is more than $1.6 billion.

For the year ended December 31, cash flow from operations increased 9 per cent to $59.9 million, compared to $54.9 million in 1998. Revenue was up from $189.5 million last year to $213.3 million.

Those kinds of results don’t happen spontaneously or in a vacuum. it takes financial clout and credibility, but it also takes talent, and the wellspring of Bentall’s talent is a galvanizing mix of development professionals who know the business inside out. They have set dawn along the U.S. west coast, but also ramped up the company’s progress east across Canada by acquiring investment management and retail services companies.

Mark Shuparski, Bentall’s president and chief executive officer, describes the durable cohesion of the company’s development team as Bentall’s “absolutely distinguishing characteristic” – all the more notable in an industry where executive careers tend to be short, whether by choice or by having employers sink beneath their feet.

Keeping the Bentall team intact, he says, “has paid dividends because we have the development expertise in place which other companies are scrambling to put together as we head into another development cycle in Canada.”

Shuparksi emphasizes the team-playing culture, that its success is not his personal success, that “the development business is all about having the right people.’ (If you can find them. lie lamented the industry’s lack of attraction for the best and the brightest at the Real Estate Forum in Toronto in December.)

Not only the right people but the right track records. Shuparski, for example, has an MBA from the University of Western Ontario and a Bachelor of Environmental Studies (Honours Urban and Regional Planning) from the University of Waterloo. When he went to Bramalea Limited in 1982 he was put in charge of developing, marketing and leasing Bramalea’s 3.5-million-square-foot Canadian office portfolio.

In 1988. he moved to Markborough Properties, still in Toronto. where he was responsible for the company’s North American and U.K. land, office and industrial portfolio. Four years later, he was sitting in the president’s chair at GWL Realty in Calgary. an advisor to Canadian pension funds (and last year’s Developer of the Year), and stayed until Bentall beckoned.

He’s never far from a closely-knit management bull pen, all involved with relevant university degrees, a breadth of professional skills and basically the smarts that it takes to put together deals and turn visions of gleaming towers and sophisticated business parks into bricks and mortar, glass and steel, etc.

Jonathan Rees, executive vice-president and chief financial officer, had previously gone from DAON Development Corporation, which morphed into BCE Development

Corporation, to Pan Pacific Development Corporation and a final fling as a real estate financial consultant.

Gary Carpenter, executive vice-president and chief operating officer, Seattle operations, was a partner in a real estate development company in Seattle before joining CB Commercial Real Estate Group (now CB Richard Ellis) as executive managing officer responsible for the overall management of all real estate services in the Seattle region.

Stephen Laver, executive vice-president and chief operating officer, Canadian operations, responsible for the company’s owned and managed Canadian and Southern California operations, was a national partner and managing director at Trammell Crow Company, then chief operating officer of Brookfield Management Services, Toronto, and president of Brookfield Johnson Controls.

They obviously aren’t the only ones keeping the engine revved up. There are about 1,000 staff scattered throughout the Vancouver head office and regional offices in Bellevue, Wash., where Bentall U.S. LLC> a development, management and leasing subsidiary, handles office and residential developments, and in Huntington Beach, CA.

Another related company, Continental-Bentall LLC, Seattle, develops multi-family residential rental buildings for sale in that market, with a lineup of developments in the pipeline through 2001.

While 55 per cent of its revenue properties are in the U.S.; the company still has a formidable, and growing, presence in Canada. And not just out west.

“We have a property management and development service infrastructure across the country,” says Shuparski, through subsidiary Penreal Capital Management, Vancouver, a real estate investment and asset management company, with an office in Toronto, Penreal, which operates independently, manages about $1.8 billion of assets in segregated funds, pooled funds and equity lending pools on behalf of more than 70 Canadian pension funds and institutional investors.

“We’re providing all the development services for Penreal in Eastern Canada, so we’re building a fair bit of stuff for them,” adds Shuparski. And there is more stuff to manage. In late January, Penreal acquired the 1.2-millionsquare-foot Glenview Corporation portfolio in Ottawa, which Bentall will manage.

Then there is Pioneer Equities Inc., a real estate management and leasing firm concentrating on retail properties. Acquiring Penreal and Pioneer has increased Bentall’s real estate services portfolio to more than 32-million-square-feet of office, retail and industrial space.

The company isn’t a passive owner of these two subsidiaries, but rather actively engages in projects with them. Bentall, for example, put up $10 million and Penreal raised $40 million from clients to start a fund reviving ailing retail properties. Guess who delivers the requisite leasing, development and property management services.

“It’s the first one we’ve launched and a great example of how we’re working with Penreal to acquire undervalued properties and create some value, and with the former Pioneer team to de-mall shopping centres, or replace Eaton’s stores, for example;” he adds.

Collaboration is apparently a way of life at Bentall. The company is a partner with Great-West Life Assurance Company; Winnipeg for example, in Bentall Centre in Vancouver and Hillside Shopping Centre in Victoria. “There

have been partners in every one of the company’s major assets since 1925, most recently the U.S. Bank Center in Seattle,” says Shuparski, where Lend Lease, the world’s largest pension fund advisor, brought in the Abu Dhabi Investment Authority as a partner,

What’s next? More of the same, especially in Seattle and California. If a great office portfolio (not unlike the CIBC or Royal Bank deals) in growth markets such as the Greater Toronto Area were to be shopped around and at a decent price, Bentall would be in there pitching. Individual properties don’t interest them,

Are there that many portfolios left? “There are still lots to come from the banks and life insurance companies,” Shuparski says. In the meantime, Bentall’s development program on both sides of the border, possibly the largest among Canada’s public real estate companies, keeps growing. “We’re always building at least one office building somewhere,” says Shuparski, “whether on a speculative basis or pre-leased, and that can represent up to 20 per cent of the company’s balance sheet.”

Copyright Crailer Communications Jan/Feb 2000

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