Real estate portfolios at Greystone are built and managed on a property-specific basis (bottom-up), using a disciplined investment philosophy and process.
Greystone believes its organization and approach offer the following advantages:
- Independence and freedom from conflicts. The firm’s business is solely that of investment management; consequently, it receives no income or other benefits from property development and management activities, and its self-interests are not potentially different from those of its clients. Greystone manages real estate from a total-portfolio perspective, managing risk and return in a manner, consistent with the processes applied to all asset classes within Greystone.
- Close integration with the total Greystone investment team for better research & analysis. The firm’s real estate team is actively represented on the senior Asset Strategy Team, which offers macro-level input for real estate and other asset classes. Additionally, the real estate team maintains tight working relationships with all asset classes, allowing an integration of other knowledgeable perspectives into the assessment of real estate opportunities.
Greystone is as an income/growth style manager in its real estate investing. We believe income and income growth come from stable rental revenue from the leases of companies occupying space. Therefore, the investment process seeks to identify a property’s income and how it is derived. Capital appreciation also accompanies income growth.
Stringent due-diligence accompanies each step of Greystone’s three-stage buy, hold and sell process. Extensive modeling is used to create and actively manage a broadly diversified portfolio of properties. Also, key to effective performance is team-based decision-making.
Acquisition includes a top-down view to how the asset is valued within its market and the conditions material to its valuation. Properties undergo rigorous income risk/return analysis, and physical inspections to ensure that structural, mechanical, electrical and environmental standards are met. Purchase decisions are made from the bottom-up.
Asset management is an active process at Greystone, to ensure the investment maintains its expected yield and value. The real estate team participates in all key decisions affecting the property. This includes market reviews, property budgets and physical inspections. Should a property no longer meet investment criteria, it is immediately targeted for divestiture.
Divestiture applies much of the same disciplines as the acquisition process, together with a view to best positioning the property for sale to maximize value.
Independent accounting firms and appraisers are employed to review each property. The audit process includes reviewing the valuation process and the appropriateness of the values used in the financial statements. Properties in the fund will typically have an annual independent appraisal, in full compliance with all standards set by the Canadian Institute of Chartered Accountants and all pension laws.
Diversification: in Greystone’s process, diversification by property type, location and sector are all key to limiting portfolio risk. Additionally, single-asset size limits and financial leverage restrictions are also applied.