Caisse de dépot CEO sees ‘substantial’ job cuts coming in real estate

Article content

Quebec’s public pension manager plans to cut a significant number of jobs as part of a reorganization that will see two real estate units brought in-house to improve efficiency.

“It’s inevitable that there will be job losses” in real estate, Caisse de dépôt et placement du Québec chief executive Charles Emond told reporters Thursday after CDPQ reported its 2023 results.

Article content

Article content

CDPQ unveiled plans last month to bring real-estate subsidiaries Ivanhoé Cambridge and Otéra Capital under a single umbrella “to enable greater focus on investment expertise and generate agility and efficiency gains.”

The integration drive, which should be completed by the end of 2025, is expected to generate annual savings of about $100 million from processes, resources and systems. Nathalie Palladitcheff, the Caisse’s top real-estate executive, will leave CDPQ in late April.

“Are we talking about dozens of job cuts? No. We’re talking about something that’s more substantial,” Emond said Thursday. “The $100-million figure won’t all come from job reductions, but it will probably be the most important factor. It’s about maximizing our performance for our depositors, at better cost.”

Emond declined to give specifics on the magnitude of the cutbacks because the restructuring process is continuing.

Ivanhoé Cambridge has 570 employees, compared with about 185 for Otéra Capital, the Caisse said Thursday. Excluding those two units, CDPQ itself has 1,560 employees.

Article content

Real estate was the worst performing of the Caisse’s major asset classes in 2023, posting a negative return of 6.2 per cent, according to a statement issued Thursday. CDPQ’s overall return was 7.2 per cent. Property holdings amounted to $46 billion at year-end, or about 11 per cent of CDPQ’s $434-billion asset base.

The restructuring has nothing to do with the current economic downturn, Emond said.

“This is not linked to the economic context at all,” he said. “This is strategic. There will be a greater potential as a result of this process.”

Folding Ivanhoé Cambridge and Otéra into a single entity will eliminate the obligation for some Caisse executives to sit on multiple boards and management committees, Emond said. Data collection is less than optimal now because each unit uses different systems, he added.

“It’s about freeing up hours and focusing on essential things,” the CEO said. “We are not doing this primarily for costs. Real estate is a people business. We will be less tied up in governance matters.”

CDPQ will acquire all the interests held by minority shareholders in the share capital of Ivanhoé Cambridge and Otéra Capital as part of the restructuring — thereby becoming the sole shareholder. Minority investors currently own about three per cent of each real estate unit, Emond said.

“I want to be very clear. We are not dismantling Ivanhoe Cambridge or Otéra Capital,” he said. “These are organizations that have a good brand.”

ftomesco@postmedia.com

Article content

Article content