Sun Life Financial to Grab Bentall Kennedy

Top U.S. and Canadian real estate and mortgage investment teams are about to merge to serve a global client base.
Amy Price

Amy Price, Bentall Kennedy

Sun Life Financial Inc. will acquire the Bentall Kennedy Group for $560 million, with the deal expected to close in the third quarter of 2015.

“The acquisition of Bentall Kennedy is a perfect fit with Sun Life’s four pillar strategy,” Dean Connor, Sun Life’s CEO, said in a company statement. “It expands and diversifies our asset management pillar, with one of the most respected names in real estate.”

Bentall Kennedy is considered one of the premier real estate investment managers operating in Canada, and also has some business in the U.S. As of the end of the first quarter 2015, Bentall Kennedy had assets under management of $27 billion and provided real estate services across 91 million square feet of properties.

“Bentall Kennedy is a 100-year-old firm and over that 100 years the firm has succeeded because it’s continued to evolve,” Amy Price, Bentall Kennedy’s COO told Commercial Property Executive. “If you look at our business 10-15 years ago, we were much more narrowly focused, serving a few select clients, who oriented around our ownership. We have evolved into a well-diversified, multi-client investment manager serving over 550 clients and investors today from around the globe.”

The ownership team said it felt that while its current ownership structure served it well through the evolution, the timing seemed right for a more conventional ownership structure—one aligned with a strong, stable, financial services firm that would best serve the business and clients today and going forward.

“We went to market quite selectively and Sun Life emerged as the party that we felt would best meet our objectives and goals for our business,” Price added.

Although Bentall Kennedy will retain its brand name, it will combine its real estate investment management team with its new owner and will serve as a unit of Sun Life Investment Management.

Combined, the real estate and mortgage teams of the two will have $47 billion in assets under management, serving more than 550 institutional clients and investors.

“The purchase of Bentall Kennedy complements Sun Life Investment Management’s expertise in asset-liability management, fixed income and alternative asset classes by extending our real estate and mortgage investment capabilities,” Steve Peacher, Sun Life’s president & CIO, said in the statement. “The two companies also share a common focus on customers, quality investments, strong governance and a commitment to sustainability. Together, we are well-positioned for future growth to meet the needs of pension funds and other institutional clients.”

Once the deal is complete, Gary Whitelaw, Bentall Kennedy’s CEO, will continue to manage the current team. He will also now report to Peacher and will join the Sun Life Investment Management leadership team.

Bentall Kennedy’s institutional shareholders, the British Columbia Investment Management Corp. and the California Public Employees’ Retirement System, have both approved the transaction and will continue to be key clients of Bentall Kennedy under Sun Life’s ownership.

Following the announcement of the deal, a report released by analyst Gabriel Dechaine from Canaccord Genuity maintained a Buy rating on Sun Life Financial, as the company’s shares closed at $34.19.

“We believe SLF’s acquisition of this business offers several strategic enhancements, namely the expansion of the company’s third-party asset management business functions that are capital light and higher valuation,” Dechaine said in the report. “Sun Life Financial has an analyst consensus of Strong Buy.”