Sun Life Financial announced Dec. 19 that it intends to merge Bentall Kennedy, its North American real estate and property management firm acquired in 2015, with GreenOak Real Estate, a global real estate investment firm with approximately $14 billion in assets under management.
Sun Life will buy a majority stake in the combined Bentall Kennedy and GreenOak entity that will be named Bentall GreenOak and be part of Sun Life Investment Management. The transaction is expected to close in the first half of 2019, subject to receipt of regulatory approvals and satisfaction of customary closing conditions.
Broadening its asset management pillar
"This transaction is right on strategy, broadening our asset management pillar by expanding the capabilities of our alternatives manager, Sun Life Investment Management," said Dean Connor, President and CEO, Sun Life Financial. "Combining the strengths of two leading and globally respected real estate investment managers will bring clients a broader range of investment solutions that include core, core plus and value add real estate, plus senior and tactical real estate debt strategies across North America, Europe and Asia."
Sun Life Financial will contribute its interest in Bentall Kennedy and pay GreenOak shareholders $195 million in cash in exchange for a 56% interest in the combined Bentall GreenOak entity, with GreenOak shareholders holding the remaining interest.
An option to acquire the remaining interest in Bentall GreenOak
Sun Life will also have an option to acquire the remaining interest in Bentall GreenOak approximately seven years from the closing. Sun Life Financial will also be acquiring the right to a portion of the GreenOak shareholders' share of Bentall GreenOak net income in exchange for a fixed amount to be paid in quarterly installments. This will result in Sun Life having the rights to approximately 90% of Bentall GreenOak earnings prior to the company exercising its option to increase its ownership level.
"Combining Bentall Kennedy with GreenOak extends our capabilities in real estate investment solutions, in a complementary way and increases Sun Life Investment Management's total assets under management to $75 billion," said Steve Peacher, President, Sun Life Investment Management. "Bringing together these two highly experienced teams provides a breadth of strategies and market reach which will uniquely position Bentall GreenOak to serve its clients."