Morguard Corporation

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Morguard Corporation

55 City Centre Drive
Mississauga, Ontario L5B IM3
Telephone: (905) 281-3800
Fax: (905) 281-5890
Web site:

Public Company
Incorporated: 1905 as D. Ackland & Son Ltd.
Employees: 1,100
Sales: $343.4 million (2005)
Stock Exchanges: Toronto
Ticker Symbol: MRC
NAIC: 531190 Lessors of Other Real Estate Property

Based in Mississauga, Ontario, Canada, Morguard Corporation is a multifaceted real estate company involved in the ownership, management, and development of commercial and multi-residential properties. The company's CAD 6.5 billion portfolio includes some 44 million square feet of residential, office, commercial, industrial, retail, and mixed-use properties. Morguard's operating subsidiaries include Morguard REIT, a real estate investment trust that owns more than ten million square feet of shopping centers (accounting for about 60 percent of the portfolio), office buildings, and industrial facilities. The REIT's units trade on the Toronto Stock Exchange, where another Morguard subsidiary is also listed: Revenue Properties Company Limited, owner of more than two million square feet of retail, residential, and office properties, mostly located in the Toronto market. Morguard Residential Inc. is also active in the Greater Toronto area, acquiring, developing, and managing multifamily rental properties. Morguard Investments Limited is Morguard's portfolio management services' operation, which works with a number of pension funds in Canada and has about CAD 5.6 billion in assets under management. Although Morguard is a public company with a listing on the Toronto Stock Exchange, Chairman and CEO K. Rai Sahi owns a 42 percent stake.


The corporate lineage of Morguard was unrelated to real estate and dates back to the formation of D. Ackland & Son Ltd. in Manitoba, Canada, in 1905. Its founder was Dudley Ackland, a blacksmith who started his business 16 years earlier in Winnipeg. The company made such items as buggy whips, carriages, wagons, carriage parts, and farm machinery. With the emergence of the automobile the company began producing auto parts and accessories around 1919. Over the years other products lines were added, including industrial and safety-related products. In 1960 the company changed its name to Acklands Ltd. and over the course of the next decade the business expanded through a series of acquisitions that added auto supply, industrial supply, and hardware supply companies. The pace continued in the first half of the 1970s when Acklands acquired such companies as Regent Automotive Products and Britannia Automotive Products, both Toronto-based automotive wholesale dealers. Edmonton-based Kagan Mufflers Installations Ltd. and the Ontario auto parts supply group Moto-Rite Ltd. were also added. Along the way, the company became involved in such diverse areas as the distribution of tractors, marine engines, boat trailers, and fishing tackle. Primarily, though, Acklands was a wholesale auto parts distributor, a business which began to struggle in the mid-1980s, leading to changes at the top ranks of management in the final years of the decade. Sahi became a major investor and in late 1990 he was named president and CEO and began taking the steps that would transform Acklands into a real estate company.

Born in India, Sahi immigrated to Canada with a degree in economics, arriving in Montreal in September 1971. He went to work for Prudential Insurance of America and began selling life insurance and mutual fund products. In 1977 he took a position with the Bank of Montreal, mostly involved in commercial credit. His work took him to Toronto. It was here in 1982 that he invested in a small manufacturing company and quit his post to run the business. He was able to double revenues and two years later sold the company at a profit. He invested in a number of companies, including Consolidated Fastfrate, Kingsway Transport Group, Carquest Canada, and Acklands.

After taking the reins at Acklands, Sahi attempted to grow the company's auto parts and industrial and safety-related distribution businesses. Eyeing the U.S. market, he acquired the 96-store Rose Auto chain in Florida. Not only was the deal intended to provide Acklands with a toehold in the United States, Rose was supposed to help Acklands refine its retail experience, which was limited to operating a few Bumper to Bumper stores in western Canada.

Sahi also built up other aspects of Acklands' business, including the 1996 purchase of a New Jersey company, Reynolds Fasteners Inc. Before the year was done he began repositioning the company. Acklands' industrial distribution business was sold for CAD 367 million in cash and stock to Illinois-based W.W. Grainger Inc., the largest industrial distributor in North America. As a result Acklands' largest remaining business was auto-parts distribution.

Sahi decided to sell the Grainger stock to add to Acklands' bankroll and begin to invest in income-producing real estate. After an extended slump, the real estate industry was starting to show signs of recovery, and with property values depressed, this was the ideal time to buy. Real estate investments also looked inviting compared to what was happening with the company's auto parts business. The attempt to crack the U.S. market and build a retail auto parts chain out of Rose Auto did not pan out. Unable to sell Rose, Acklands began closing stores in 1996 and finally declared the operation bankrupt and tried to salvage what it could, ultimately selling Rose's operating assets in late 1997. In the meantime, Acklands reached a deal in March 1997 with General Parts, Inc., of Raleigh, North Carolina, to sell its Canadian automotive group to a joint venture called Carquest Canada Ltd., receiving CAD 102.3 million and a 50 percent stake for its contribution.


With plenty of cash on hand, Acklands began the transition to the real estate field in earnest. Because the company lacked the necessary organizational structure to manage properties, it initially avoided buying individual assets. Rather, it decided to take significant positions in established real estate companies, to eventually gain a controlling interest, and in this way patch together an organization that it could refine into an efficient real estate operation. The first step taken in this plan came in April 1997 with the CAD 36 million purchase of a 40 percent stake in Goldlist Properties Inc., a medium-size public company that developed, owned, and managed multi-residential properties. Because of the evolution it was undergoing, Acklands changed its name in September, becoming Acktion Corporation.


In the real estate business, you differentiate yourself by the quality of your thinking. At Morguard we've aligned our thinking around finding opportunities, by knowing how and where to look, then acting decisively.

Next, in October 1997, Acktion acquired a minority interest in Morguard Real Estate Investment Trust at the cost of CAD 25.2 million up front and another CAD 16.9 million due one year later. The newly formed REIT grew out of Morguard Investment Services Limited, a company launched in 1966 to serve Canadian pension funds by marketing and servicing NHA (National Housing Act)-insured mortgages. Morguard Properties Limited was then established in 1975 to make real estate investments for pension funds. The Morguard family of companies then expanded in the 1980s and 1990s. The Morguard REIT was created in 1997 when one of the managed portfolios, Pensionfund Properties Limited, was packaged for a public offering of units. In that same year Morguard also launched Morguard Financial Corporation to provide real estate investment advisory services.

In addition to investing in Morguard REIT, Acktion bought a 20 percent stake in Revenue Properties Company Limited in the fall of 1997, as well as a 28.5 percent interest in MFP Technology Services Ltd., a Mississauga company that provided financial and technology management solutions for the real estate field. As a result of these transactions, Acktion assembled a balanced portfolio of properties, with Morguard providing residential real estate properties and Revenue Properties a stake in shopping centers.

Acquisitions continued in 1998. In July, Acktion added to its investments in shopping centers by picking up Devan Properties Limited, which acquired, developed, leased, financed, and managed Canadian shopping centers. All told, Devan operated 11 shopping centers with a total of 3.1 million square feet of retail space. Later in the year Acktion acquired another Morguard company, Morguard Investments Limited. With 31.1 million square feet of space under management, it was Canada's 8th largest property management firm. In addition, in 1998 Acktion acquired about 20 percent of Acanthus Real Estate Corporation, which owned residential and midsized commercial income-producing properties throughout Canada, including some 5,000 residential suites and 1.8 million square feet of commercial space.

Now that it was fully committed to the real estate field, having invested more than CAD 354 million, Acktion in 1999 began to completely severe ties to its previous existence, while raising funds to pay down debt. The company sold its 50 percent interest in Carquest Canada as well as the shares it owned in its joint venture partner, General Parts, raising about CAD 31.7 million. Acktion also agreed to sell Reynold Fasteners in a deal that closed in 2000 and raised an additional CAD 40 million. At the same time, Acktion continued to build its real estate portfolio and establish itself as a significant player in Canadian real estate. The company gained control of Morguard REIT by selling Devan's properties to the REIT and purchasing units on the open market and through private transactions, thereby increasing its stake to 50.15 percent. Acktion also achieved control of Goldlist, increasing its interest to more than 66 percent. When 1999 came to a close, Acktion boasted real estate assets of CAD 1.15 billion. Revenues topped CAD 100 million, resulting in net earnings of nearly CAD 23 million.

Acktion began the new century by attempting to consolidate its position on key assets. Another 20.1 million shares of Revenue Properties were acquired in 2000, giving Acktion a 40.7 percent interest in the company. It also moved to acquire the rest of Acanthus, but when it was outbid Acktion agreed to sell its shares for CAD 37.3 million, resulting in a net gain of CAD 4.8 million. In 2000 Acktion increased its assets to CAD 1.7 billion through a series of acquisitions: the $267 million purchase of the Parkland Mall in Red Deer, Alberta, a pair of apartment complexes, a 50 percent stake in the Mississauga City Centre office complex, and the half-interest of the St. Laurent Shopping Centre held by a joint venture partner. Revenues improved to $260.4 million in 2000 and increased to more than CAD 321 million in 2001, while the company recorded net income of CAD 39.4 million in 2000 and CAD 36.3 million in 2001.


With much of its business conducted under the Morguard brand, Acktion in 2002 changed its name to Morguard Corporation. As a result, Goldlist became known as Morguard Residential Inc., which also became 100 percent owned by Morguard in 2002. Revenue Properties, on the other hand, retained its well-established name. Over the course of the year, Morguard increased its stake in Revenue Properties to 76.42 percent. Moreover, through its subsidiaries Morguard invested CAD 231 million in new acquisitions in 2002, adding 13 industrial properties, five office properties, and one residential property. Another CAD 119 million was invested in development projects.


Company is founded by blacksmith Dudley Ackland.
Company begins supplying auto parts.
Name changes to Acklands Ltd.
Morguard Investment Services Limited is formed.
K. Rai Sahi is named Acklands' chief executive.
Acklands is renamed Acktion Corporation; company sells auto parts business to become involved in real estate.
Company changes name to Morguard Corporation.

In 2003 Morguard achieved a longstanding goal of unifying its companies to realize operational efficiencies. In addition, MFP Technology Services was sold because it was no longer considered a core asset. The year 2003 also saw Morguard devote much of its attention and resources to development projects. A 252,000-square-foot office tower was built in downtown Ottawa, subsequently occupied by the Canadian Broadcasting Corporation and the Department of Public Works. In addition, construction began on a 292-suite multi-residential building in downtown Toronto.

Morguard took advantage of low interest rates in 2004 to finance about a third of its CAD 1.2 billion in mortgages. The company also continued to fine-tune its operations, making investments to improve such areas as risk management, property accounting, human resources, and information technology. Morguard REIT also invested more than CAD 81 million to acquire a fully leased, 222,500-square-foot Vancouver office building, and Revenue Properties took a 50 percent stake in a fully leased, 231,000-square-foot Mississauga office building.

Morguard continued to grow its portfolio in 2005, increasing assets to CAD 6.5 billion. The company also made further improvements to the efficiency of its operations. A major step was to relocate the Residential Group to the Mississauga corporate offices. Morguard also began to devote more resources to promoting the Morguard brand. At the close of the year, sales increased to more than CAD 400 million and net income totaled CAD 21.2 million. The company also began looking to the south, the United States, the largest real estate market in the world. Some of the venture funds managed by Morguard expressed an interest in making investments in the United States. Mostly to accommodate them, Morguard opened an office in New York City in Rockefeller Center. For the time being, Morguard was a well diversified company that was willing to accept modest growth in the short term as it waited for an inflated North American real estate market to drop before resuming aggressive expansion.

Ed Dinger


Morguard Real Estate Investment Trust; Morguard Residential Inc.; Revenue Properties Company Limited; Morguard Investments Limited.


Brookfield Properties Corporation; The Cadillac Fairview Corporation Limited; The Rose Corporation.


"Canadian WD Acklands Buys Florida's Rose Auto," Automotive Marketing, November 1994, p. 33.

"Grainger to Acquire Unit of Acklands Ltd. in $251.8 Million Deal," Wall Street Journal, September 11, 1996, p. C22.

"Grainger to Buy Industrial Business of Acklands," Industrial Distribution, October 1996, p. 15.

Jordan, Heather Madill, "One Stop Shopping," Winnipeg Business Month, Summer 2001, p. 4.

Srinivasan, Kirsten, "A Full Scope," US Business Review, March 2006, p. 210.