podcast. Blake offers his perspective on OMERS in the face of
global economic and political turbulence, and why a strong pension fund
matters to every Canadian:
Celine Chiovitti (VO): Hello, and welcome to our exciting new season
of "The Pension Blueprint." I'm your host Celine Chiovitti, Chief
Pension Officer at OMERS. In my day-to-day work, I have the privilege of
seeing how our various teams work together to deliver the pension
promise for our 640,000 members across Ontario. This season, with
insight from both internal and external experts, we take a deeper look
at issues that impact all of us regarding pensions, personal finance,
the gender pension gap, AI's impact on retirement, and more.
To
get us started, it felt appropriate to sit down with a captain of our
ship, President and CEO at OMERS, Blake Hutcheson. Blake is an appointee
to the Order of Ontario and a former recipient of Canada's Top 40 under
40, as well as a graduate of the University of Western Ontario. In this
one-on-one with Blake, we talk about how he and the rest of the OMERS
leadership team are charting a course through the current economic and
political environment, and keeping the security of our members as
priority number one. We also get to know him a little more as a person
outside the walls of OMERS.
So without further ado, my conversation with Blake Hutcheson.
Celine Chiovitti: Hello, Blake, welcome to season three of "The Pension Blueprint."
Blake Hutcheson: Good morning, Celine. Thanks for having me.
Celine:
It's so hard to believe that we are actually in season three. You've
been here three times already, and I don't want this to go to your head,
but you're a bit of a fan favourite.
Blake: Well, put me to work, my friend, anytime. Anytime. And I think you do a great job, so it's fun to be here with you.
Celine: Thank you. Well, you were the most downloaded and listened-to episode in season two, so let's get right into it.
Blake: Okay.
Celine:
So when you think of OMERS books, your investment strategy, we have
about 50% of our assets invested in the US, again, going back to
tariffs, and we've got 28 billion, I believe, invested in Canada. Are
you seeing anything different? What are you watching for right now?
Blake:
If you look at the strength of OMERS, it actually goes back to our
foundation because for the first 30 or 40 years, OMERS was a small,
Ontario-based plan, primarily focused on hiring others to invest its
money, primarily stocks and bonds, but around 1990, we started to build
our own private muscles. So we started getting into the infrastructure
business, we bought Oxford Properties in 2001, we set up our own private
equity business soon into this century so that we had a diverse
portfolio and a diverse group of people deploying our capital. And then
for the last 15 years, we've diversified globally, and a very wise
investor told me many years ago, "If you want to get wealthy, put all
your chips on one square, and if you want to stay wealthy, you
diversify." So OMERS just keeps broadening its shoulders, first by asset
class, then building the strength of our investment teams, and then
going global.
And today, Celine, we have really 10 global offices.
We have more than that, but 10 primary ones, 14 time zones. We've got
roughly 30 big infrastructure assets representing $30 billion, roughly
25 big and powerful private equity businesses invested here, primarily
in this continent, some in Europe. We have 850 real estate assets
through our portfolio Oxford, and at any given day, we have between 30
and $40 billion in credits, fixed instruments, private and public
credits, and equities. Today, our equity's roughly 140 billion and our
balance sheet's roughly 250 billion, which includes debt. And when you
layer in third-party capital, we're fast approaching 350 billion. So it
is a sizable enterprise, Celine, and we think between now and 2030,
we'll be four to 450 billion of assets under management, almost a half a
trillion dollars.
Celine: Almost a half a trillion dollars.
Blake:
On behalf of our members. Yeah. Incredible. So in the US today, we have
a little more than 50, it ranges between 50 and 60% of our exposure to
the United States, and so on a balance, it feels right to deploy about
that much in America. And notwithstanding the noise and notwithstanding
how one might feel temperamentally about what's going on there at this
particular time, it is still the strongest economy. It is still
providing us with extraordinary opportunities. If you look at our
Canadian GDP, it's less than 3% of the global GDP. It's probably 6% of
the investible universe of the countries we invest in, but it's
actually, for us, we hover somewhere around 20% of our portfolio in
Canada, and we like the currency. We have a home-court advantage, we
have deep relationships. We understand the rule of law, and we own
extraordinary assets in this country. And when anyone criticizes pension
plans for not investing enough, that's not directed at OMERS.
Celine: Yeah.
Blake:
To our members, you out there, you own Yorkdale, Square One,
Scarborough Town Center, all with partners, Shadow Lake Louise, Jasper
Park Lodge.
Celine: The most iconic hotel.
Blake: Iconic hotels. Great office product.
Celine: What about the Maple Leafs, Blake?
Blake: A small piece of the Maple Leaf Sports and Entertainment, the Raptors, the Leafs.
Celine: We're not going to hold the loss against you this year, but next year might be our year.
Blake: Oh my goodness, let's hope so. It's only been 59 years.
Celine: Yeah, there you go.
Blake:
But Bruce Power, we own 50% of Bruce Power. We own Ontario's land
registry system. So I like our diversification. It is serving OMERS
well. I like our global reach, I like our exposure to Canada. Our
exposure to the United States is sensible. I think we're really well
positioned to see through this period. So the truth is the
diversification is real, it's complicated, and yet that's what allows us
to see through cycles is having, if one market's down, the other
market's up, if one asset class is weakened, there's often an equal and
opposite effect to strengthen the balancing of our portfolio. We have a
strategy that's really clear.
Celine: So can you speak a little
bit more then about, I'm going into the minds of our members of
listeners and the world feels uncertain, the economy feels uncertain.
We've had a number of years now of economic uncertainty. If I have my
own portfolio that I'm trying to manage, it's hard not to pay attention
to all of the noise. You talked a little bit about high-quality
investments and diversification. What sets us apart? Why is our plan so
resilient than the other sort of Maple Eights? Speak a little bit to the
fundamentals around that for Ontario.
Blake: I think we're doing a
really credible job for the plan. And the beauty of a pension plan is
we can think long term, and so many people with their private portfolio
need immediate cash flow, and they're trying to time the market and
trying to get it right, which is impossible in an environment like this
one with leaders waking up and changing the rules of the game every day,
and you see the volatility that that creates.
And so what we do
is we see through cycles, I often say a quarter for us is not three
months, a quarter is 25 years. In years like this, when great equities,
for example, are hit hard because of one tweet or one comment or one
sort of series of decisions that affect economic stability and certainty
and confidence, we've been loading up and buying those very equities
with great dividends. Stocks that last year were 30 or 40% higher than
they would be this year, and so we've been very strategic in thinking
about the future, thinking long term, not worrying about this quarter or
next, will those equities come back this year? And so by year end, will
that prove to be a spectacular decision? I don't know, but do I think
buying at deep discounts some of the greatest securities and companies,
by the way, that we could possibly buy in a down cycle? Do I think that
they'll stand the test of time for us? 100%, I do. It may not happen
this year, it may not happen next year, but over time, we have the
advantage of thinking that way, which is part of what makes us
resilient, which is part of what gives us purpose, and which is part of
what allows us not to try to time cycles to precision, but make good
decisions over the long term.
Celine: I think that's great and I
think it really speaks to, we started off by saying we've been paying
pensions for over 62 years, and that is the value of the defined benefit
plan.
Blake: Doesn't matter, you don't need to worry about the
noise and paying attention to it. We are doing that for them. Your team
is doing that for them. And as a result of that, it doesn't matter how
old you are, we will continue to pay pensions for the rest of your life.
That is our pension promise. A promise is a promise, last time I
checked. That’s real to us. And I've often said, Celine, a pension
doesn't know what happens to the economy on a given week. Interest
rates, inflation, what a politician may add or not, a pension just knows
one thing and it knows it needs to get paid. And when it needs to get
paid, it makes our life really simple. That's why we go to work in the
morning to make sure that people are looked after. They've paid in in
good faith, they have earned it, they deserve their pension. And you and
I, as I say, will do everything we can, not only for the next 10, but
for the next several decades to ensure that our good members are looked
after exquisitely as they deserve.
Celine: Yeah, 640,000 strong right now.
Blake: Amazing, right?
Celine:
So you talk about the resilience of the plan and the fact that we've
been paying pensions now on time and as planned for over 60 years. Our
youngest member is 14 years old. Our oldest member is 109 years old and
has been receiving a pension for over 40 years. When you think about
resilience and being there for the 14-year-old, what does that mean to
you?
Blake: Well, first of all, heart goes out to the
109-year-old. Let's hope it's 110 soon. Yes. And we can celebrate,
'cause you send out cards.
Celine: I do. I just signed a whole slew of them. We have 335 centenarians in the plan today.
Blake:
Amazing, amazing. Great story. Yeah, listen, when we plot the
resilience, we always have a strategy that's consistent for the times.
And so up until recent history, we've been taking in more from our
pensioners than we pay out, so we've had a surplus. In recent years,
that's reversed. So that we do have a negative money in/money out delta
that we have to cope with. As we look at it for the next five, 10, 15,
20 years, and we've modeled it, it'll never be greater than 2% of the
asset base. So while the number may grow, it's a very manageable
outflow, and it doesn't mean we are concerned about it in any way. It
just means we will design our portfolio with a little more income to
provide for that than we historically have, where we've usually had more
capital appreciation. So it's good information for us to plan for. It's
not daunting. Okay. I'm confident we get there, and as we see through
the decades ahead, it's highly manageable, and we may have to morph our
strategy from time to time for more income and a different asset class
model than we currently have, and that's life when you have
multi-generational pressures and new obligations as the different
cohorts roll through. And certainly, you live with the various
generations that are affecting the plan in different ways. Our actuarial
teams and scientists model that all into the mix.
Celine: So talk
a little bit about 2030. You've recently got our OMERS 2030 strategy
approved by the board, and I know you talk about the one, two, three,
four, five. Can you tell us what the one, two, three, four, five is?
Blake:
Well, everybody needs a strategy, right? And, whether you're a
government, whether you're a company, frankly, I've always had a
personal strategy for five, 10, and 15 years so that I know when to say
no and I know what to focus on. So we have, with a very thoughtful group
within our organization and deep input from you and your team with
gratitude, Celine, put together a strategy that I think makes absolute
sense for us between now and five years hence, and so the north star of
that strategy, as we say, is one, two, three, four, five. So that all of
our 3,000 employees know exactly where we're headed. I would submit to
you that all 3,000 could give the one, two, three, four, five.
So
one stands for 100% funded plus. We think we'll be greater than 100%
funded between now and 2030. In the last few years, we hovered just
under 100%—call it 97, 98, 99—and where we're headed clearly is 100%
funded plus, goal number one.
Goal number two will be 200 billion
of equity. So two stands for 200. Today, we're a shade under 140,
depending on what day you look at it, billion of equity. We believe with
reasonable, thoughtful processes and procedures and strategies between
now and five years hence, we will then be 200 billion of equity.
Three
stands for three continents, and those are the 12 countries that I've
referred to. And really within those countries, one or two cities, and
so when people talk about the general economy of the UK, for example, it
doesn't matter to me what the general economy of the UK has in store.
It matters to me what's really happening in city center, London, in a
few ports, in a few of the strategic areas that we've invested in that
city. And we can study it, study it, study it so that we understand
those fundamentals. So three stands for three continents.
Four
stands for 400-plus billion of assets under management, and that
includes our equity with some modest leverage plus some third-party
capital. And as I say, we think it should be approaching four to 450
billion of assets under management. Half a trillion dollars. Four stands
for 400 billion.
And five, when we deliver a 5% real return, and
real return means without inflation, so that's more akin to a 7.5 to 8%
nominal return with inflation, but five real. Five plus inflation. 100%
funded, $200 billion, three continents, 400 billion-plus of assets under
management, 5% real return, delivering an unbelievably healthy story
for the pensioners for the next decade to follow. That's the story.
Celine: I love it. It's simple. You can understand it. It's ambitious.
Blake: And you know what? I find that almost the best part about a plan is you know when to say no.
Celine: Yeah.
Blake:
When people throw ideas at you, when you're focused on what you're
great at and what the team is great at, we know where we're headed. We
don't waste any time getting sidetracked by things that aren't on
strategy. Yeah. And that utilization of our time allows us to be
focused, allows us to really be disciplined about where we're headed,
and when we are all those things, I like our odds.
Celine: So
Blake, I want to bring our conversation back to Canada, and I was in the
audience when you delivered a letter to Canada at the Toronto Region Board of Trade dinner. I know it’s been all over social media; it’s been
in various publications. I had the honour of sitting in the room and
listening to it. And I can tell you especially in that moment in time it
was truly remarkable to sit in the audience that day, and you delivered
something I haven't heard you do before, which was a letter that was
raw, that was vulnerable, that was very honest, and that gave us some
really tough truths about Canada. I wanted to read a few excerpts from
it and then ask you about it. And so it starts off like this: “I am a
guy who grew up in the small town of Huntsville, Ontario. An idyllic
typical Canadian community that reflects the values and virtues of our
nation. I could not have asked for a more wholesome and hopeful
upbringing we were a humble community and admittedly we had a lot to be
humble about yet we knew what a neighbour was how consistent friendship
and allyship worked how any local success enriched us all. A town where
kindness meant strength not weakness by your example Canada we were each
other’s keeper.” You went on to talk about your father and grandfather
and their entrepreneurial lessons and how they built their business from
the ground up and supported the local community. You go onto talk about
some of the things we need to do better. You say “although I’d like
this speech to begin and end as a love letter to you Canada the reality
is we all have some hard work at hand we have a real conundrum on our
hands and we must admit despite our many advantages we find ourselves
falling behind.” You actually end with three calls to action that I
love: the first draws from you grandfather and is about trust and having
the tough conversations so it’s easy to criticize our friends in the US
but instead of doing that let’s tell our story and bring people
together the second comes from your father’s favourite word which it’s
“finitiative” so let’s figure out what we can control and get it done.
And the third I call this a Blake ism it’s about fiercely competitive
and incredibly humble. I welcome anyone to read this letter and speaks
to how we should be living our lives right now. I wanted to ask you what
was going through your mind at the time and what did it feel like to
deliver this to Canada.
Blake: Well, first of all, I was asked to
speak, it was the 135th anniversary of the Board of Trade and I was
asked to be one of the keynotes, and it was a big dinner. I don't know
how many, at least 1,000 people. There were a lot of people in there.
And so, like many times when you speak, you start to think about it a
week in advance as opposed to a month in advance, and I sat down that
weekend, and I kid you not, my pen just felt compelled to write and my
heart just started to flow. And I sat back and thought, you know what,
I've never thought about writing a letter to Canada, I've never seen
anybody else take that lead, but to me, the speech just took the form of
a letter to Canada. It was, at the time then, when the rhetoric around
the 51st state was very high. It was around the time that the idea of
secession was not impossible. My entire life, it's been a zero
percentage chance. And I think we all needed to come together and show
our strength and our solidarity.
So it kind of drew on a lifetime
of my experiences. I did grow up in a little town where the handshake
meant something, and allies weren't to be dismissed and mutually
beneficial relationships were patently beneficial to all those who were
involved, and it's not a zero-sum game in life. And that's how I roll
and that's how Canada rolls. And it's not the message we are getting
from south of the border, and so we had to frame the context.
I
wish it could be a love letter, but it isn't, Celine, 'cause there's a
lot of hard messages that have to be delivered to our country right now
to get our act together, and one of the things that I said, which I
fundamentally believe, is our great wealth in this country isn't just
the oil and gas and the strong financial system. It is, in fact, our
people. It is, in fact, the great Canadians and the grit that they
possess that are going to get us from here to where we need to get as a
nation. So it was just one of those moments in time, I thought it was a
message worth sending. I hope if you make it available to people, they
can interpret it in their own way, and it happened to coincide with a
moment in history where our very sovereignty was in question.
I
think it also said, 'cause I mean it, there are a few nations that wear
their pride and their patriotism on their sleeve perhaps better than we
do. Doesn't mean that they are more proud or patriotic than we are as a
country. We just don't celebrate it the same way. And our patriotism is
intact and we are not for sale. And it's a message that's worth
resonating. And now, let's pivot, let's recognize the strength that this
country has, let's recognize that we have as its citizenry. And let's
pick up and make sure that we use this time to the advantage of all
Canadians and use our platforms and invest in This country and invest in
each other and not sit idly and let anybody try to abuse us in
unfriendly and unneighborly ways. It's not our style.
Celine: It's
a great message, Blake, and I really appreciate you sharing it with
everybody. Okay, we're going to end with a series of fast five
questions, which are just fun short questions to allow people to get to
know you better. You're up for it?
Blake: Go for it, my friend.
Celine: Okay, first thing you do in the morning.
Blake: Well, historically, I exercise.
Celine: Good answer.
Blake:
I try my best to do it. It's probably five days a week. It's not seven.
I have a fitness person that I patch into at six twice a week for sure,
and I've been a runner. I hurt my knee playing lacrosse last summer,
and so this is the first year in my time on the planet that I haven't
been running as much. I did go for a run this morning.
Celine: Oh, there you go.
Blake: I'm starting to get back at it.
Celine:
Great. So the one thing I try to do is I try to exercise. Why? Because I
can control the time at six in the morning. And once I get my day
started, no matter how much I'm ambitious to find a time during the day,
somebody else's priorities usurp mine. So exercise every morning. And I
also, and I'm really grateful, I still love a real newspaper, but I
have the digital. There are three papers that I patch into, and I can't
say that I read them, but before I go anywhere during the day, usually
with a cup of coffee, I do my exercise, I get my coffee, and I start to
pour over the papers so that I don't get shocked when I go to the office
and someone trumps me on some news that I missed.
Celine: I love a real paper. To me, that's a Sunday.
Blake: Yeah, me too. Sunday morning delight.
Celine: Me too. Is a real newspaper.
Blake: I designed a kitchen table so that my dear bride and I had enough room to both read our newspapers.
Celine: I love that.
Blake:
Once upon a time, so we could have our coffee and we could wake up in
the morning, and now with the digital stuff—It's not the same. It's not
getting as much use, but I do love it too. Yeah, that's a Sunday morning
treat.
Celine: Okay, last thing you do at night.
Blake: I
have a half great Dane and half husky. Her name is Boo. She's
sensational. She and I go for a walk, so whenever I'm ready, even last
night I was working 'til quite late, and Boo comes and tells me when
it's bedtime and we go for a little walk.
Celine: She keeps you honest.
Blake:
And so that's my last, and to the extent we get to bed at the same
time, I've been with my dear Sue for 35 years, so we usually have a
little chat, just touch base.
Celine: That's lovely.
Blake: Remind each other how lucky we are.
Celine: That's so good.
Blake: And I pat my beast of a dog and off to bed.
Celine: I love that. Okay, favorite restaurant in Toronto and what's your order there?
Blake: Well, there's only one choice, right? 'Cause we happen to own it. So we own the—
Celine: I know where you're going.
Blake:
The Park Hyatt. It's pretty. And that means you, the members, own the
Park Hyatt. And we bought it, well, just before COVID. We renovated it,
in my view, exquisitely. It's doing great as an investment for our
members. And it has a restaurant at grade, which is pretty simple called
Joanie's, which is great, and as importantly, the 17th floor. And if
anyone hasn't been there, get there. 17th floor, there's a
bar/restaurant with the best views of the city.
Celine: Best views of the city.
Blake:
I don't care what other hotel thinks it can hold a candle to us, they
can't. The hotel that we own is the best in this city and those views
are the best in this nation. And they both got good restaurants,
reasonably simple food. Usually when we go there, it's family style, so I
can't say what I like the most, but it's great. And by the way, we own a
lot of malls and a lot of office buildings. Any one of our Oxford
owners' food courts, I'm kind of partial about those. That's the rule of
thumb, any Oxford property's best. If I can create more wealth for our
members with my own eating habits, that's not so bad. And the same is
true for everyone out there, by the way.
Celine: Yes, I agree.
Yeah. Okay, you have 48 hours, excluding travel time, to go anywhere in
the world. Where do you go, what do you do, and who do you bring with
you?
Blake: No, I'm really simple. It's back to my roots, back to
Huntsville, Ontario. My grandfather always used to say about Toronto
that the only thing decent that ever came out of the city of Toronto was
the highway to Huntsville. It often goes over well when we talk to our
members in any place but Toronto.
No, listen, I've got a cottage
up there, happens to be beside my dad's cottage, and many of our family
are in and around that same little lake just outside Huntsville. So I'd
go there anytime. I'm most at peace there. I have lifetime friends
there. I have lifetime family there. My dad, I don't think I've ever
been there for the last 50 years without hanging out with my dad, so
quite blessed to do that. So that's home for me. That's where my heart
is in many ways.
Celine: That's great. Thank you so much, Blake.
Honestly, thank you for being here. Thank you for everything you do on
behalf of 640,000 plan members. Really appreciate you and I appreciate
you being on our podcast today.
Blake: Well, Celine's now been
doing this for three years, and this is a small sampling of the
leadership that this incredible person and special person and executive
shows for us, for all of us. I know you care deeply about our members. I
know you come to work every day in service of the right thing, showing
the right values. This is another indication of that. I can't thank you
enough. You're a great partner and a great friend. So thank you for
staging this for us.
Celine: Thank you, Blake. Thank you.
The thing with Blake, he's a natural communicator, people love listening to him talk because he's very knowledgeable, always optimistic but isn't afraid to tell it like it is, even it ruffles some feathers.
The way he speaks below in the podcast in the way he speaks when you talk to him one on one, always sincere, supportive and always thinking about delivering great results for OMERS' 640,000 members over the long run.
For Blake, having the right team and culture at OMERS is extremely important, he takes that very seriously and wants to make sure everyone is aligned, ready to perform and have fun while doing so.
Anyway, take the time to listen to the podcast below, it's well worth it.
As far as top Toronto restaurants, a buddy of mine who is a radiologist always raves about Jacobs Steakhouse but warns me it's "insanely expensive". Another friend of mine in Toronto prefers Harbour 60 which is equally expensive but "owned by Greek-Canadians."
Alright, let me wrap it up there, I wanted to bring this podcast to your attention again and always enjoy listening to Blake.
Earlier today, OTTPP announced it has launched a joint venture with Sagard Real Estate to acquire and industrial facility in Houston: 
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