At arm's length and, soon, several blocks away
New Alberta money managers moving off legislature grounds to their own offices
BY GARY LAMPHIER, THE EDMONTON JOURNALFEBRUARY 10, 2009 6:55 AM
The stock markets stink, the global economy is reeling, some forecasters say a depression can't be ruled out, and the longer-term outlook remains murky at best.
Given that bleak backdrop, Leo de Bever hasn't exactly had the wind at his back since he was recruited as the first CEO of Alberta Investment Management Corp. (AIMCo) last August (see story, page E2).
But de Bever isn't easily rattled. The veteran money manager has seen several recessions come and go during his 34-year career, which includes stints at the Bank of Canada, Manulife Financial and the Ontario Teachers' Pension Plan.
Since he gave up a plum job in one of the world's most beautiful and temperate cities -- Melbourne, Australia -- to move to Edmonton, de Bever has also had to adjust to the harsh realities of an Alberta winter.
On top of that, AIMCo -- which was spun off as a Crown corporation last year to manage $75 billion of public sector financial assets, including the Alberta Heritage Savings Trust Fund -- doesn't yet have a permanent home.
Despite its new, arm's-length relationship with the province, AIMCo's staff continue to work out of spartan quarters in the Terrace Building on the legislature grounds. But that will soon change.
AIMCo recently signed a deal to lease the top four floors of the former Professional Building, a half-century-old downtown landmark at the northwest corner of Jasper Avenue and 108th Street. AIMCo plans to move into its new quarters by next January.
Procura, a Calgary-based developer with several projects on the drawing board in the downtown core, expects to complete its extensive, $70-million reconstruction and exterior facelift of the once-dowdy building this fall.
Roughly 70 per cent of the 11-storey structure's 236,000 square feet of available space has already been pre-leased, says Randy Ferguson, Procura's Edmonton-based COO.
"In addition to the seven floors of office space that have been leased (to AIMCo and ING, a Dutch insurance and banking giant) we have retailers such as Rexall, Second Cup and Subway who will occupy some of the main floor space, facing onto Jasper," Ferguson says.
"This project is for all intents and purposes a new building. The original building had a floor plate half the size of the one we're putting in. We've expanded it south to Jasper and east to 108th Street, so our average floor plate is a little over 20,000 square feet."
De Bever says AIMCo seriously looked at two other downtown sites before settling on Procura's building. Between 180 and 200 AIMCo staffers will eventually work out of the new head office.
"Of course, when you create a new company and you want to be separate from government, one of the things that's logical to do is to find your own space," he says, regarding the symbolic importance of the move. "There were three locations in Edmonton we could have gone to, but once we looked at it more closely, either because of the size or the configuration of the space, this is the only one that really worked."
Besides its proximity to the financial district and the legislature, the location is well served by transit, with access to the Corona LRT station directly across the street, he notes.
Once the reconstruction project is done, the sleek new glass-clad structure will bear little resemblance to the one it's replacing. It will feature elegant, rounded corners, state-of-the-art heating, cooling and mechanical systems -- designed to meet LEED Gold Certificate standards -- and a new building core.
De Bever says he's not sure if AIMCo will seek naming rights to the building, however.
"We haven't tried to negotiate it so far. But the question is, does that really pay? I hate to spend money on stuff that (doesn't generate a return). You could say it's advertising, but do we really need the advertising?"
As for his outlook for the stock markets, De Bever says he remains cautious. Despite the massive sell-off that occurred last fall, he says a final bottom may still lie ahead.
"When I say that the market may not have hit bottom yet, that doesn't mean we're out of the market. That just means we're (hedging) our bets a bit, because we feel that it hasn't gone down all the way," he says.
"The other thing is, if you look at the fair value of stocks . . . historically, market bottoms have occurred at lower price-earnings ratios than we're seeing today. So you have to be really, really careful about how and when you jump in."
Although AIMCo's returns suffered in 2008 along with virtually every other pension fund, mutual fund and hedge fund on the planet, it did better than most, posting a loss of 16 per cent. Major market indexes were down by roughly 40 per cent, and many large pension and endowment funds saw similar declines.
"Obviously, even at minus 16 per cent I'm not happy, but there's a limited amount that a manager can do to go against the overall market," de Bever says.
On a happier note, he says the adjustment to Edmonton's winter weather hasn't been as rocky as some might have thought.
"It's actually been remarkably mild here," he says. "Now, I went to school in Madison (Wisconsin) and I lived in
Ottawa for a while, so cold winters are really not that foreign to me. But this one has been pretty mild. I haven't had to wear my parka that often."
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