After a hugely active 2015 in which Quebec’s Fonds immobilier de solidarité FTQ kept adding to its growing portfolio of development projects, the labour investment fund looks poised to repeat the performance in 2016 even as it shifts focus.
That’s the word from Fonds immobilier vice president of investments Claude Meunier, who laid out a plan for the fund to diversify from its large residential base in a recent interview. But what won’t change, he indicated, is that aggressiveness with visibility will continue to be the way the fund does business. He will still be looking to make good development deals anywhere he finds them, as long as they create construction jobs.
"If I see a good piece of dirt that no one is stepping up to buy, I buy it," said Meunier who came out of retirement five years ago at the age of 62 to join Fonds immobiliers. "For example, I have two pieces of dirt in downtown Montreal that we are roaring to start building on, we are just looking for tenants."
The fund, guided for many years by Normand Belanger, still its president and CEO, was created in 1991 as the real estate arm of the more broad-based Fonds de solidarité FTQ. (The FTQ is the Quebec Federation of Labour; the French word immobilier translates as property). Investors receive a tax credit as well as an appreciating investment. Last year, the broader FTQ fund earned a 7.1 per cent return.
The current portfolio of Fonds immobilier, as of Dec. 31, included 41 buildings under management, 18 million square feet of land for development, $54 million dedicated to social housing and 37 real estate projects underway, valued at $1.9 billion and representing 16,300 construction jobs. In every case, projects are joint ventures.
Meunier says the fund aims for quick turnover in projects so that it can keep injecting money into the economy.
"The inventory is always changing," he says. "I always tell my partners, don’t fall in love with the building, we want to be out in five years."
The Fonds immobilier had significant announcements almost every month in 2015. The ventures ranged from the high-profile, icicle-styled Tours des Canadiens 2 highrise condo in downtown Montreal — the Montreal Canadiens are among its partners — to the purchase of an apartment complex in the same city that it billed as the acquisition of a "run-down building on Goyer Street."
Two major projects unveiled last year will be built on property in Laval for which the Fonds immobilier once had a development plan with another partner, but the deal fell through. Meunier says he got busy and made some calls. The two projects Meunier put together were the Urbania 2 residential build that when complete will have 1,150 condos in six buildings; and the adjacent Espace Montmorency mixed-use project featuring a futuristic-looking design that may consist of 10 buildings offering retail, office, hotel, entertainment and public services. Both were built close to the Montmorency Metro stop.
A third Laval project announced in 2015 centres around the next Laval subway stop down, the Concorde. At that site, the Fonds immobilier is teaming up with developer Habitations Trigone on 1,400 units of condos. Combined with another industrial project, the fund is involved in four projects in Laval that are valued at $1 billion and will create 8,000 construction jobs over eight years.
Other major ventures announced in 2016 include the four-storey Le Meridiem complex to be built in Longueuil with 121 apartment units; the acquisition of 4.3-million square feet of land in the city of Contrecoeur for industrial and commercial projects valued at $200 million; the launch of an eight-storey condo project in St. Lambert that will have 50 units; and the construction of a "next-generation" data centre in Montreal involving the conversion of an existing building along with the construction of an adjacent 10-storey structure.
That last project, valued at $70 million, will be completed in early 2016 and was estimated to create close to 600 jobs when it was announced.
Fonds immobilier has had the same essential goals since 1991 — to create jobs, make money and achieve certain social aims — but its methods have evolved, especially in recent years, says Meunier. At the time, the fund was invested in around 20 old age homes, Meunier said, but the fund has divested itself of most of those assets and broadened its base.
Looking ahead, Meunier says that the fund will aim to add institutional projects to its portfolio, which currently, he says, is a bit heavy with residential.
Meunier said the fund will be looking at spending on such projects as arenas, parking lots and other longer-term holdings. "Because we have a lot of money and the market is changing…now we are looking at something a little bit different," he said.