Desjardins Global Asset Management’s new real estate chief is making calculated moves in these uncertain times.
Richard Dansereau, who took up the role last month, said with fewer players competing for deals, there may be opportunities. The industry veteran is eyeing established, cashflowing assets that generate good recurring returns and revenue to enhance DGAM’s portfolio.
Green Street News spoke with Dansereau about his priorities for 2025, his vision for DGAM and succeeding in uncertain times.
Can you tell us about your real estate portfolio and some of your objectives?
First and foremost, the primary and perpetual objective is to continue to manage an existing portfolio of high-quality real estate, which has a national footprint.
We’re exclusively invested in Canada. We don’t have real estate assets outside Canada. Our portfolio includes the four major food groups: office, retail, industrial and residential purpose-built rentals.
In the office component, many of the properties we own have Desjardins as a tenant, if not the sole tenant. This complex that we’re in, which is Complexe Desjardins [in Montréal], is actually bigger than Place Ville Marie in square footage and is a big part of [our] portfolio.
Continuing to manage the existing portfolio, to be proactive in our approach, is key and fundamental, and the team has been doing a great job doing just that for the past 30, 40 years.
The other objective is to invest strategically and continue diversifying the portfolio. We’re a little heavy on Québec as a geography, light in British Columbia, a little light on retail, so getting some diversity strategically is something we’re keen on doing.
Where do you see opportunity today, and concern?
We’re privileged in having access to capital, which allows us to continue to deploy into the market. Many of our peers who also may have capital are concerned about the uncertainty that reigns in the market. We share that concern. But we’re doing this in a very calculated way.
We believe that because there isn’t much activity, the pricing can become interesting compared to where pricing may have been for certain assets in certain markets. And with fewer players competing for deals, there may be some opportunities. So, we’re certainly interested in investing ourselves in underwriting deals where others may say, ‘We’re on pause for the time being.’ So we think that, notwithstanding the dynamics, which admittedly are not great whether you’re a buyer or a seller because of the uncertainty, there could be some opportunities where we can unlock value.
Our focus is on core, core-plus, established, cashflowing assets that generate good recurring returns and revenue to enhance the portfolio we already have.
You’re heavy in some geographic areas and light in others. Does that mean you’re going to look for balance?
There’s nothing in cement, and in this business, you need to be nimble and adjust to new cycles. What was good three months ago might not be so good today. If we had a magic wand, we’d like to own perhaps more retail. By retail, I mean destination, food-anchored, service-oriented strips in good residential neighbourhoods.
The markets we’re looking at and focused on are the growth markets in Canada, which are Vancouver, Calgary, Edmonton, Toronto, Ottawa and Montréal.
From a diversification perspective, if there were opportunities in Western Canada, where we’re lighter than we are in Québec, for instance, that’s something that would get us a little more excited. But if there was a great deal in Montréal, our backyard, nothing prevents us from looking at that.
Can you share broad details about your spending plan for this year?
Our budget this year could be, in gross dollars, anywhere between $200m to $400m. The big difference there depends on leverage. We have an ability to use leverage, but we do this in a conservative way.
We will consider leverage, particularly for residential assets, where CMHC financing gives us an edge as it relates to interest rates. Commercial real estate will typically have interest rates that are higher than residential. We’ll go higher on the leverage front for residential assets. We tend to be more conservative on other commercial assets.
If we invest [the spending plan], that’s great. If we don’t – no harm, no foul. The deal has to make sense.
What are your disposition plans?
Managing a portfolio the size of ours, we have a disposition plan, and I would say the bulk of it has been executed. We did one important transaction in the GTA in the month of May, [the Drew Kimbel industrial portfolio], which was strategic for us.
That was the lion’s share of this year’s plan.
Are you taking steps to recession-proof your portfolio?
We think about all of the elements that can affect real estate, and the investment in real estate. There are some variables that we have little or no control over, and we’re cognizant of the fact that the environment we’re in has a few minefields in it, and it’s something that we’re sensitive to and being very cautious about.
If there was a strip centre in a great municipality that’s in growth mode, where there’s good residential development all around it, great disposable income, anchored by one of the top food stores, on a recent lease paying $20-plus/sq ft and having ancillary retail that compliments the food store – I think that’s kind of recession-proof. It certainly proved to be Covid-proof.
That’s the kind of stuff, at least for now, we’re going to favour on a go-forward basis. There are ways to mitigate things you can’t control, and that’s the kind of approach we’re taking.
Speaking of minefields, how has the market changed in recent months?
From my personal perspective, the market was sending signals that were so much more positive in December than they were in January.
From a capital-markets perspective, from a transactional perspective, budgets had been approved, people had their marching orders to start tackling 2025. It just felt as though the worst was behind us.
Unfortunately, with all of the tariff discussions that ensued early in the year, people started to press pause, and more and more people followed suit to a point where a lot of people are on pause right now as a result.
What’s your vision for DGAM as its real estate chief?
The vision is to continue to grow our portfolio in a very strategic way. We have a great base of assets. We have a great team of people that have done a great job managing those assets, and we have the expertise in-house.
Being strategic, being careful, but being ambitious as well; I’d say the fundamental driver for us is growth. We want to grow our portfolio in a strategic way.
We believe there are great opportunities currently for us, and we’re going to pursue those that make sense.
