May 11, 2020

BentallGreenOak Investment personnel update

Plan sponsors may wish to consider whether this investment news has any implications for the investment options available within their plans. Sun Life Assurance Company of Canada purchases units of the fund listed below, which is established as a segregated fund in accordance with the Insurance Companies Act (Canada).

In April 2020, BentallGreenOak (BGO) informed us of several changes to their senior personnel:

  • Michel Cormier, managing director, portfolio management, has resigned from the firm, effective May 31, 2020;
  • Gary Whitelaw, CEO, has announced his plans to depart the firm effective December 31, 2020;
  • Paul Mouchakkaa joins BGO as head of Canadian investment management, effective June 1, 2020.

BGO formed from the merger of Canada-based Bentall Kennedy with U.S.-based GreenOak in 2019.

Michel Cormier was the sole portfolio manager on the BGO Canadian Real Estate Plus Fund (“BGO Plus”). He was also an associate portfolio manager on the BGO Prime Canadian Property Fund (“BGO Prime”). Cormier joined BGO almost twenty years ago as a junior analyst. BGO was developing him into a future leader of the firm. BGO think highly of him and acknowledge his departure is a loss for the firm.   Cormier wanted to spend more time with family and travel less. 

BGO plans to find a replacement for Cormier. This may take some time due to the disruption of Covid-19.  BGO intends for Shishir Nigam to assume Cormier’s role as the lead portfolio manager on BGO Plus.  Nigam joined BGO in 2017 and supports Cormier on BGO Plus.  BGO also expects that Kevin Palovic, an analyst, will take on more responsibility on BGO Plus.  Cormier’s role for BGO Plus does not include property or security selection.  BGO Plus invests mostly in units of BGO Prime, as well as a REIT index fund and cash. 

Malcolm Leitch and Kristen Ede continue as lead managers of BGO Prime.  John McFadden, a long-time member of the portfolio management team, will continue to support Leitch and Ede.  Associate portfolio managers, analysts, and a property management team also support BGO Prime.  Cormier’s responsibilities on BGO Prime  will be distributed among the remaining team members.  

As CEO of BentallKennedy, Gary Whitelaw’s oversaw the merger and formation of BGO.  He will hand off CEO duties to Sonny Kalsi effective June 30th. Kalsi, based in New York, is the co-founder of GreenOak.  BGO also indicated that John Carrafiell will become co-CEO of BGO effective December 31, 2020.  Carrafiell, also a GreenOak co-founder, is relocating from the UK to the U.S. 

Paul Mouchakka replaces former chief investment officer, Paul Zemla, who departed from the firm in January 2020.   Mouchakkaa is experienced managing real assets and was most recently with the California Public Employees Retirement System.   He will have overall responsibility for all Canadian investment management activities. There are no plans for him to take a direct role on BGO Prime. 

Our View

 Bentall Kennedy has undergone several major changes in recent years:

  • Acquisition by Sun Life in 2015;
  • bcIMC transaction in which some BentallKennedy employees joined QuadReal in 2017;
  • Merger with GreenOak in 2019.

Bentall Kennedy has shown resiliency in the past in managing these events with little disruption.  While there is more bench strength in the newly formed BGO, we have concerns about the amount of change that is taking place.  The departure of long-tenured Canadian real estate professionals and a re-orientation of leadership to the U.S. may result in less focus on Canada. Malcolm Leitch takes on greater importance for the Canadian strategies following the departures.

We take some comfort that none of these departures suggest a cultural problem:

  • BGO initiated the departure of Paul Zemla;
  • Michael Cormier’s departure was for family reasons
  • Gary Whitelaw’s retirement was not unexpected due to his age

We have placed BGO Prime and BGO Plus “On Watch” effective March 31, 2020. We will continue to monitor the integration of the new firm, personnel changes, and the new leadership.  We will provide you with updates as necessary.