Blake Hutcheson: President and CEO of OMERS

November 20, 2020

The Empire Club of Canada Presents

Blake Hutcheson: President and CEO of OMERS

Chairman: Antoinette Tummillo, President, Board of Directors, Empire Club of Canada

Distinguished Guest Speakers
Blake Hutcheson, President and CEO of OMERS
Brian Porter, President & CEO, Scotiabank

Introduction
It is a great honour for me to be here at the Empire Club of Canada today, which is arguably the most famous and historically relevant speaker’s podium to have ever existed in Canada. It has offered its podium to such international luminaries as Winston Churchill, Ronald Reagan, Audrey Hepburn, the Dalai Lama, Indira Gandhi, and closer to home, from Pierre Trudeau to Justin Trudeau; literally generations of our great nation's leaders, alongside with those of the world's top international diplomats, heads of state, and business and thought leaders.

It is a real honour and distinct privilege to be invited to speak to the Empire Club of Canada, which has been welcoming international diplomats, leaders in business, and in science, and in politics. When they stand at that podium, they speak not only to the entire country, but they can speak to the entire world.

Welcome Address by Antoinette Tummillo, President, Board of Directors, Empire Club of Canada
Good afternoon, fellow directors, past presidents, members, and guests. Welcome to the 117th season of the Empire Club of Canada. My name is Antoinette Tummillo. I'm the President of the Empire Club of Canada, and your host for today's virtual event, featuring a Canadian titan, and someone who I've had the privilege of working with, Blake Hutcheson, who was recently named President and Chief Executive Officer of OMERS. He has lots to share with us about confidence, resilience, and patience during COVID.

But before we get started, I'd like to take a moment to thank our sponsors, who generously support the Empire Club and make these events possible. Our Presenting Event Partner today is Scotiabank, and we have lots of Supporting Sponsors: Stikeman Elliott, Goodman's, Torys, KPMG, McCarthy Tétrault, CPA Ontario, Ernst & Young, TD Securities, and our Season Sponsors are the Canadian Bankers Association and Waste Connections Canada. I also want to thank our Event Partner, VVC, and LiveMeeting.ca, for webcasting today's event.

Now, there's a few logistical items I need to go over with you. First, if you're finding your internet feed is slow, please see below and click the "Switch Streams" button, and don't hesitate to press the "Request for Help" button, if you are experiencing technical difficulties. Our team will be more than happy to assist you.

It is now my pleasure to call this virtual meeting to order. Today, Blake Hutcheson will share his observations and reflections from his first hundred days as President and CEO of OMERS, one of Canada's largest defined pension plans. Blake took on this role during the COVID-19 pandemic, which gave him new insights into what it means to lead an organization managing direct investments on five continents, on behalf of its more than 500,000 members.

Now, before Blake shares his fascinating story with us, let me prime you with some essential facts. I met Blake in the early '90s, when he left CIBC Development Corp to join CB Richard Ellis. Blake quickly took over the reins of the Canadian business, and became Chairman and President of the Canadian operation, and then added Latin American and Mexican operations to his empire. He grew CBRE's brand and profile in Canada to what many considered to be the number-one real estate services company in Canada. He then joined his good friend Mark McGoldrick at Mount Kellet Capital Management, an international private equity firm, based in New York, that was a three-billion-dollar private equity firm at the time. And that was just about, around, after my experience of commuting back and forth from New York to Toronto, when I worked for CBRE in the Tri-State Area. And Blake had something to do with that. We shared many stories on the trials and tribulations of commuting back and forth.

Oxford Properties came calling in 2010, where he served as President and CEO of the group, until 2018, when he became the—what was it, Blake? You became OMERS President and Chief Pension Officer. Hard to keep up with all those moves, my friend. On June 1st, 2020, Blake became President and CEO of OMERS, responsible for the overall leadership and performance of OMERS enterprise. So, that was a quick rise up the ranks, there.

Just a couple of other tidbits I'd like to share with you—and I'm sure there'll be more that comes through our conversation a little later on—Blake is a former recipient of Canada's Top 40 Under 40, and a member of the Young Presidents Association. He's also played top-level Junior and Major lacrosse and continues to play Master lacrosse for his hometown of Huntsville, as captain of the team.

Now, before I invite Blake to speak, I just want to remind everyone on this call that this is an interactive event. So, please take advantage of the question box to the right of your screen, and send in your questions. Now, Blake, a very, very warm welcome back to the Empire Club. We are very much looking forward to hearing what you have to say. I'm very much looking forward to our conversation as well. And the stage is now yours, Blake.

Blake Hutcheson, President & Chief Executive Officer, OMERS
Thank you so much, thank you, Antoinette. Listen, Antoinette and I've had the privilege of working together, competing against each other, negotiating for each other, against each other, over my career. And I learned one thing early: if the answer to a question that she poses is no, you obviously didn't understand the question. So, when she told me I was to show up here today, I didn't have much of a choice. But it is a privilege, it's an honour, it's nice to share the stage with you. I wish it were in the same room. But such is our life.

And by the way, Antoinette's no slouch. In addition to doing what she does out of her, in her free time to be president of this esteemed club, she has been the President of CN Real Estate, she has led Colliers, a formidable real estate firm, their property management team, in this country. Philip Raikman and I started a facilities management company years ago; we tapped her to lead it at a very difficult time—so we went through the war together, there, my friend—and she ultimately set up the city's newest real estate arm and was the Interim CEO for it to get it off the ground. So, you're a great Canadian, my friend, and it's nice to share the stage with you.

I also wanted to say thank you to the sponsors. I won't name them—you know who you are—when you're at home and you see all those names, their nice logos, the truth is, we have the privilege of knowing the people behind those names, and you, all of you are dear friends to Oxford, dear friends to OMERS, and so many of you are a dear friend of mine. So, I know who you are, who stepped up to support today. Thank you.

And I'm just reflecting on the 1903 commencement of this great club, 117 years of discourse, of debate, reflections, of refutations. It's an amazing story in resilience. Good for you to reimagine this program; very impressive. But—and two of my idols, Margaret Thatcher, and Indira Gandhi, are there. So, I just want to lower everybody's expectations, when you look at that list of some 3,500 superstars. But I'll do my best to try to keep you entertained, here. I think the order of the day is, I'm to talk for 15 or 20 minutes. And then we're going to have a Q&A with Antoinette and me, and then we're going to have a Q&A for the greater audience. And we'll just try to keep the flow. That's the order of the day. And as a fairly newly, freshly minted CEO of OMERS, I thought, rather than make a speech of sorts, I would just try to address in the time I have just sort of the 12 to 15 questions that keep getting asked of me during this period. Maybe they'll help tell the story that can lead into our conversation, Antoinette. So, that's the drill. That'll be the order of the day. I have a few slides.

So, the first question: how was my night? I actually had the privilege, last night, to stay out overnight. Generally speaking, Covenant House, I think, I'm sure many of you know it, it's just one of the great gifts to the City of Toronto. And the work they do for our street youth is absolutely formidable. They raise somewhere close to 35 million dollars annually, to look after people in our community who need it most. I think there's six thousand young people that would be sleeping in the streets last night. So, out of solidarity for them, a number of us from the community do this. I've done it now three years in a row. The previous two years, we would meet Downtown, we would get a tour of the facility, and we would sleep in lockstep with several others from our community. Last year, of course, because of COVID, we did it in our own homes. So, what an opportunity—and by the way, they raised 1.15 million dollars last night, the collective of us out there. And so, I'm so proud of the work you're doing. And if I look a little sleepy today, it, that's the reason why. But wow, is it worth it.

The next question I get asked is: you sure can't pick your timing, can you, Hutch? Well, the truth is, Michael Latimer, who is the outgoing CEO, who's been a friend and a mentor to me, was technically to leave June 1st. When the pandemic broke, he basically locked arms with me and said, "Let's, let's go through this time together." So, the, the majority of this year, we've been rowing together, and then I technically and officially took over on June 1st. So, it's been quite a run. It's been quite a story. And by the way, none of us get to pick our timing, right? I mean, we don't get to be told when we're going to be born, we don't get to be told when we're going to die. In our careers, I think the Dickens expression says it best, "it is the best of times, it is the worst of times." Most of my career has had a little bit of both of those things. This is no different. And so, no, you can't pick your timing. But to me, this is the greatest opportunity, in addition to the greatest challenge, that I've ever had.

I think all of us, I remember back in the 1929 crash and the leadership of FDR, when he said that he had a rendezvous with destiny. I think all of us have that same sense of destiny today. If you have the opportunity to lead, it's not a burden, it's a real privilege, really, right? To be able to help make a difference when people need it most. So, I'm not lamenting the timing at all. I'm just trying to find my sixth gear, and whatever I can to help with an amazing team lead our organization during this time. I've been reminded of something that I've known my entire career, which is leadership is not a title. And so, you know, you can't expect to get anointed, you have to earn leadership with every interaction, every day. And along with my team, I just try to do that each and every day. Luckily, we're supported by an amazing board, luckily I'm supported by amazing people. Is it easy? No, it's not easy. Not for any of you out there. And so, let's get on with it. Let's do our very best in a difficult time.

The next question is: how's the OMERS and Oxford family? From my hometown of Huntsville, we're doing good, would be the expression, and we really are doing that for our 500,000 members. We're getting our pensions paid, we're doing our best to deliver on their needs and requests. Everybody will get paid this year, and next, and next. And we're doing the best we can with the portfolio, as well. But when you have a big family, let's, you know, it's I wish I could say it's great. I don't think it's great for any big family out there, during these times. But we're doing really well. And I am incredibly proud of the team. When you think about it, we have a thousand employers, we have 444 municipalities, we have 500,000 members, we've got 30 various unions, agencies, sponsors, we have 3,200 people directly, who work for us, in our investing companies, there's hundreds of thousands more. We have a portfolio of over 100 billion dollars, which, when you split it out, sort of half of that is in equities and credits, the other half is in private equity, real estate, infrastructure, growth equity, and ventures. So, that means, what? 30 infrastructure companies, 450 real estate assets, 20 private equity companies, and so, you get the drill. It's a pretty far-flung story. Today, we operate out of five global offices, effectively 50 various cities, and I think 16 time zones. So, when you have a family that size, to say things are great would be misleading. To say things are eventful would be factual. And every day, like so many of you, we have good news stories and not so good news stories. But we just do the best we can to nurture this OMERS-Oxford family and get it through this period of time.

How's the global community doing? I won't spend long on this slide. I think we could all talk about it. I'm no doctor, I'm not going to pretend to be a doctor. I'll say just a few things. And that is, our in-house medic—who's terrific by the way, and has been a real coach to our senior team—keeps reminding us: the cavalry is coming. And yet, we have to learn to live with this. And I think that those two lines characterize our take on what's going on. You have to believe that the best medics in the world are all trying to work on a solution. There has been a lot of great news in recent weeks. But the truth is, we're going to live with this for a long time. There are a couple hundred countries in the world, close to eight billion people in the world. To roll out anything, even when it is first served to the front lines, will take months and years. I think back to the AIDS pandemic, the AIDS issue, disease that were, I think, 25 years now, we've had a cocktail that can help mitigate those symptoms. And yet, a million people, today, die a year, 31 million, since it became known to all of us. So, let's face it, we are going to have to live with this for a long time. But there's lots of good news on the horizon. And to me, the governments that are getting it right are those that are defining success, and they're not measuring just new cases each day, but they're measuring our kids back to school, our economies back in, you know, and flowing. You know, are we zealously protecting our elderly? Are we getting the right amount of capital to our hospitals, so that they can deal with the inflows, not just from this, but from other things¬? And oh, by the way, there's also this thing called daily case count. And if they put dimmer switches on each of those things and try to measure what success looks like, they seem to be the ones that are getting it right. Including, in my view, here in Ontario.

In terms of: what's the global economy doing? Again, I won't spend a lot of time. I've been incredibly impressed, as I'm sure you have, with the global community—not only central banks, but governments—how quickly they moved, in lockstep, in coordinated fashions, recognizing that they had to flood liquidity through this period of economic suspension. It's been incredibly impressive. You can see from one chart that the fiscal stimulus has really plugged a nine-to-ten percent hole, and the actual monetary stimulus has done better than that in most Western democratic countries. And so, lucky us, that the fabric of the economy doesn't get torn when both of those entities can think quickly, move quickly, and react. CPI has stayed more-or-less in check during this period. And I think the most notable point, here, is global economies' GDPs are off about five percent. And if you think about it, it sure doesn't feel that when you walk in Downtown Toronto—or whatever you, in whatever city you reside in, right—but if it's off five percent, that is not the end of the world. And when you talk to the central bankers, they would tell you, though they don't want it to happen, if we had another year of a five percent diminution in GDP, that still would not tear the fabric of the global marketplace. So, let's hope that's not true, but I think it's worth noting. We also expect, you know, interest rates will stay low, we expect inflation to be on the horizon, which bodes well for those of us with hard assets. We expect that, we hope that austerity measures don't get enacted too soon. But then again, the longer we wait, the more future generations have to pay the price.

In terms of the recent political news and reactions—this is a fun slide our economics team put together, I won't take credit—but here's Mr. Biden, fully expecting to have a massive Blue Wave. And the truth is, that wave was more of a ripple. So, there he is, he's winning, he's ahead of the curve. He has this massive shoal in front of him that doesn't look particularly friendly, called the Republicans. And there, he's heading towards that shoal. And one might wonder why he's smiling at all this week, except he sees that helicopter in the sky that's sort of flashing good news, maybe, on the horizon. And so, what we expect is all of this, you know, in confluence to happen. I think the good news is, there will be vaccines going into people's arms, hopefully by the end of this year or early next, and the frontline workers first. That's good news. We know that for a period of time, any of the democratic moves to get fiscal stimulus moving will be stultified. But ultimately, when you have someone in the White House who is a conciliator, who tries to work on both sides, maybe there's some movement there. So, we do expect turbulence in the short term. But we are starting to believe there are some reasons to get optimistic about the future sometime next year, as vaccines roll out, austerity measures get in place, and we all have confidence in tomorrow.

In terms of the investment market, how is it doing? We really look at it in three different disciplines. There are those of our investments, those investments from all those around the world that are weak, some are very strong, and then there are the weakest. Clearly, most of the trends that would accelerate economic behaviour have been accelerated at a breakneck pace during this time. So, things like retail, where we knew there was more and more dislocation with the digital world, that's been accelerated, that's a good example. Obviously, you know, entertainment, we have a cinema company with others in Europe, those 40 operating boxes have been closed for, now, close to eight months. So, that gives you an indication. We know where the weak areas in the economy are. The flip side of that, is there are many areas with massive opportunity, with accelerated growth during this period, when 5 of the top technology stocks can be 20 of the, you know, 500 S&P Index. Pretty impressive. Industrial real estate's doing well. Housing stock, because of the cheap money, is doing very well. Lots of examples that are clear on the other side.

As an investor, what's most interesting to us is that middle space where, you know, some others may think that certain sectors should be counted out indefinitely. And we think there's real opportunity in believing in tomorrow, and maybe investing in some of those areas where there may be a dislocation today, but that they can come back. Office buildings may be a good example. Some of the best high-quality stocks. Does it make any sense that some of our best high-quality stocks are off 20 to 30 percent during this time, when they're doing pretty well as organizations with high dividends? So, we're very much focused in that middle area, and really finding new opportunities to, to invest into that cycle. It's easier in the capital markets, frankly, at this particular window, because the bid-ask spread on privates is too great. But it helps give you an indication of what we're seeing. And we're staying focused on diversification and staying focused on quality.

In the interest of time, I won't go through our book in total. I'll just say our infrastructure group, roughly 20 billion dollars of our equity, has been an extremely resilient asset class during this time. Roughly 30 big infrastructure enterprises we own—including Bruce Power, that provides 31 percent of the power here in Ontario—we own with others the biggest port in Australia, the Port of Melbourne; doing really well. Things like London City Airport, not so well. But infrastructure, on balance, is doing extraordinarily well for us and for others. Many of you know the Oxford story. Today, it's about 60 billion dollars of assets under management, about 20 billion of our equity, 20 billion of debt, 20 billion of third parties, and 450 assets around the world. And it's got some of everything, right? Like most real estate companies. The industrial portfolio is doing incredibly well, the multifamily portfolio is doing incredibly well. Hotels and retail are on the opposite side of that coin—although we own, you know, Banff Springs, Château Lake Louise, Jasper Park Lodge, for example, with a partner. It's actually faring pretty well, notwithstanding what's going on. So, it all depends on the assets.

And the area in the middle, again, would be office. Where, you know, in our view, great office buildings with great mechanical, electrical systems, will weather this. I wouldn't want to have a portfolio with a lot of weaker B and C office product. But that's not what we're all about. Just take a quick look at Hudson Yards and Leadenhall—because I think Antoinette has a few questions about that later on—our private equity book is about 12-and-a-half billion dollars of our portfolio. When you have 20 companies, you have some that are doing extremely well, some that are getting hit hard during this time. We think that about 70 of our businesses will be back to where they were pre-COVID by Q1 of next year. And we just keep investing in the most, you know, sort of COVID-insulated opportunities we see. We just bought a company called Turnpoint, out of Kentucky, in recent weeks, which is in the mechanical and electrical service area, which we think we'll see through any cycle. We're investing a lot in healthcare, getting in the way of trends. Touch Bistro has done well, as we digitize the eating experience. So, those are a few of our private equity assets.

And again, in the interest of time, I won't spend a lot of time. But our team has sat down and said: what does this new abnormal look like, post-the pandemic? And here are some themes I think just to focus on: this do-whatever-it-takes attitude that governments have had, while great, will have long-term implications, clearly. When you spend at the rates we've had to spend to get through this period, it has implications with tax, it has implications with regulation. We will see bigger governments—bureaucracies tend to spawn bureaucracies—so those are all symptoms of tomorrow. There will be strains on pension plans, when Ontario's budget's 38.5 billion dollars this year, for example, you know, they can either—the future either means more tax, or do you find savings elsewhere? So, we're very focused on the strains it may put on our municipalities, for whom we work. Bigger geopolitical tensions, we're seeing it play out in real time, every day—particularly if you read, if you watch CNN. The reversal of globalization, where there's a more protectionist mindset than anything we're used to in recent decades. The winners and losers don't only apply to businesses and investments; the winners and losers apply to certain countries in certain regions. So, you really have to take a 200-country global view.

And what's a business plan? It's about what are we great at? How do we get in the way of a trend, given limited resources? So, you have to really be more focused around the world, not only on investments, but regions, and geographies, and asset types. Online for good. Get used to it. And a new social contract. This has been a year where we're reminded, quite properly, about the importance of inclusion and diversity in all that we do, and the importance of ESG in all that we invest in. It's here to stay. To ignore it or not make it a priority would be at your peril, in our view.

In terms of the road ahead, I think all of us have a job in life, when you have the privilege to lead something, to make the campsite better than how you found it. And that's certainly the way I look at the opportunity set that I have. It was something I, our grandfather told us early in life, and I've always believed it. I think when any leader comes in with their team, it's odd to sort of measure the day they arrived and the day they left, because most good decisions translate into success—or failure, if it's the wrong decision—you know, one, two, three years hence. And so, you really have to do your best, as a custodian of really important platforms, during your time, to just do everything you can to leave the campsite better than how you found it. There's a great book by Simon Sinek lately that just came out, called "The Infinite Game." And his point is none of great businesses, these great businesses, stop and start on a day, and they're all living organisms. Our plan happens to be 58 years old. In my view, it'll be around for another 158 years. And so, let's not try to measure our period today in a finite minute from our leadership team; let's ensure that everything we do is in service of the future.

To flash the view, this comes right out of our strategic plan. We hope to be—and this has been a year of a little setback, but we remain optimistic—a 200-billion-dollar enterprise by 2030, fully-funded. Today, we're 95 percent-ish, 95-to-97 percentage-ish, depending on the year. We have three thousand employees today we think we can double in size, or thereabouts, with about twenty percent more people; hopefully, six hundred thousand members we would serve, by that period of time, with a reasonable discount rate. And we believe, with the wind at our back, that we can be the envy of not only the industry here in this country from a pension plan perspective, but in a global context.

And how will we deliver? People often say, "You know, isn't your job to administer the plan and make money?" And having run companies for more than 20 years, I figured out a long time ago: if your goal is to make money, it's never going to happen. If your goal is to put your people first, they are your most important asset. Get behind them, be very thoughtful, very supportive. If your goal is to jealously protect your brand—in our case, we have Oxford and OMERS, two brands, but we have one reputation—if your goal is to really focus on culture and to get it right, in our view, it's fiercely competitive. Incredibly humble, we need to stay incredibly humble, but focus with the same values, and the same purpose, focus on our relationships, and look forward, not back. We stand on the shoulders of the giants that got us here. Could we point back and say somebody didn't do this right, or somebody did do this right? There's no point. Let's take the starter set we have, and the cards we've been dealt, and look forward. And if you do that, focus on your people, your brand, your culture, relationships, and you look forward, the results will come, in my experience.

So, that's our focus today, as an organization. We are fortunate enough to be rallying around one single purpose. Teddy Roosevelt put it best when he said, "Far and away, the best prize that life has to offer is the chance to work hard at work worth doing." And not everybody gets the opportunity set that our leadership team has, which is, we are here not to go make some billionaires some more money, or not to make it all about the math; we are here to service 500,000 people. That motivation for all of our people, young and old, is a great unifying cause that I think resonates, particularly in these times, more than ever when we just want to get it right.

And I'll just pass it back to you, Antoinette, in a second. I think, in summary, these times aren't easy. It isn't supposed to be easy. It's not easy in people's personal lives, it's not easy in their business lives. From our perspective, we've got an amazing team, we've got amazing support from our board, we have a plan, and we're headed in that direction. We're gonna, you know, chip away at it every single day. We happen to believe in Ontario, we happen to believe in the country, and I know our organization very well, I believe in it. So, back to you, Antoinette, if that's helpful.

Antoinette Tummillo
Thank you, Blake. It's nice to hear words of confidence. It's nice to see how resilient you and your organization are. And hopeful, as well. I mean, these times are really hard for all of us. But I got a lot of questions to ask you, and I'll try to—I'll try to be gentle. We'll try to have fun, okay?

Blake Hutcheson
Okay.

Antoinette Tummillo
We've gotta have fun, right?

Blake Hutcheson
We've gotta have fun.

Antoinette Tummillo
And there are questions pouring in already, just so you know. So, we have to save time for the questions. But...

Blake Hutcheson
Okay.

Antoinette Tummillo
...I want to go back. So, here you are, you grew up in Huntsville. What's a guy from—or a kid, you're a guy—from there doing running a 100-billion-dollar enterprise?

Blake Hutcheson
Good question. Next question. Listen, it is a little bit improbable. And I would say, if I'm honest, I pinch myself, occasionally. But I'm, I've just been incredibly blessed. I've been incredibly blessed by a family who has been supportive. I've had amazing mentors. My grandfather, who, you know, with his brothers built a lumber company in that small town to an international state, was a total optimist. My dad has been my hero. At 94, he's been a serial entrepreneur. He's always taught us to believe in tomorrow, believed in his family. My siblings are among my best friends; they've been supportive. So, from the earliest age, I've had tremendous influences. And I've been lucky in my career to have people who took an interest, who believed in me. And without that, it would never have happened. But it's maybe a little improbable, and I feel quite blessed. Home is still Huntsville, to me. Some of my best friends, I still, as you pointed out, play lacrosse with. Some of my best friends are members of our plan. And they never cease to remind me who I work for. And, you know, it's a pretty nice community. And I've also, because I grew up there, I've never been motivated by money, for whatever reason. If I'm up there with my family around me, I can be happy day in, day out. So, anyway, I just feel blessed to be from there. And I've had so many people who've paved the way for me.

Antoinette Tummillo
Thank you. And then there's your dad, as you said, who's 94. He still snow skis, water skis—love that video you posted of him on LinkedIn, by the way, thanks for sharing that with all of us—your brother, he was on the Canadian National ski team. You are no slouch in lacrosse, still playing, have been doing so for the last 25 years, captain of your team. How does that competitive nature serve you in the rough and tumble of the street, you know, Bay Street, New York, London? How has it helped you deal with all of that?

Blake Hutcheson
Well, my Dad's the best athlete in the family, still—he's probably watching; I'd better say that—and he is still snow skiing and water skiing. And my brother, too, like, amazing. Anyway, listen, I think sports, I think any organized—not just sports, but so many of the things that we all have the privilege of doing—are great teachers. And individual sports teach you to be disciplined, to be fiercely competitive, team sports teach you to get along with people, how to get the best out of your teammates, things of that nature. So, they have definitely informed my approach. And my team around me would tell you as much, because I often draw on those experiences.

I remember Paul Maurice, one time, who's been a long-time coach in the NHL, back in the days I was running CB Richard Ellis, I remember he said to me, "Blake, coaching a team is like leading a business." He said, "Let me tell you how I look at it." He goes, "My first line love me. Why? Because I give them enough ice time. They get 20 or more goals a year. I keep them on the power play. They love me. They can't get more ice time." He said, "I'll tell you who else loves me. My third line. They're happy to be on the team, they laugh at my lousy jokes, they show up on time for practice." He goes, "Let me tell you who doesn't love me. My second line. Because, but for a decision I took, they're not on the first line. If they don't get 20 goals, they don't get the incremental amount of money." So, I think leading, you know, that alone, I know when you run an organization, it's the middle group of people that I try to focus on the most, so that we don't hold them back. And that's just a good, you know, again, metaphor for how sports teaches us to be competitive in those ways. But I think it informs all of us, and you can't take the competitiveness out.

Those cities you mentioned, they're all very different, by the way. They're all different sports. You know, Canada, you know, it will play by the rules. It's competitive on Bay Street, as you all know. But there's a certain set of rules, and we kind of all know those rules, and we play within those confines. You know, New York, the rules, if it's expedient to honour contracts, you do, and if it isn't—and I'm generalizing, I'm sorry—but if it's not expedient, you're seeing it play out with the election, you take things to the courts. So, it's a different sport altogether. London is more ballroom dancing. Your handshake means something there. It's a more elegant way—at least our experience—to partner with people. So, they're all very different. And so, athletic background helps in understanding that too, I think.

Antoinette Tummillo
Great. So, you talked a bit about CBRE, and you've spent a lot of your career in real estate. So, I just want to maybe ask you a few questions about that area of your life. Now, you talked about our careers crossing—you know, you left CIBC Development Corp, I was still at CN, you were going at CBRE, then I joined CIBC. And we butted heads a bit, then we hugged, and we worked together. You partnered with Philip Reichman and started [indiscernible] CB Richard Ellis, which I believe is now the largest facilities management company in Ontario, and possibly all of Canada. And I came and worked with you to head that division, after you had sent me off to work in the states for three years with your friends there—remember that little phase of our lives?

Blake Hutcheson
I do. I do.

Antoinette Tummillo
So, tell us the story about when I came to work with you in Canada. We went through a, wasn't an easy time. And give us your reflections on that time.

Blake Hutcheson
That was an amazing time, Antoinette, and you were so helpful during those times. I mean, Philip Reichman was a longtime friend from the industry. His dad, many of you would know, is Albert Reichman—and Albert's still healthy, by the way—and Philip's great. So, one day, we recognized in Canada there was a big property management business, but there wasn't much of a facilities management business. And the facilities management business is different. Property management is managing third-party assets with multi-tenants. Facilities management is managing portfolios for single tenants. So, Philip and I said, okay—and Stu Legere was there at the time. We cut a joint venture agreement over three days—I remember we didn't go to sleep for three straight days, because we needed to respond to a Request for Proposal for CIBC to take over all their real estate—within six months, that little startup, we had the contracts to run all of CIBC's real estate, all of Royal Bank's real estate, all of TD Bank's real estate, Canada Post, Imperial Oil. So, we went from zero to, I forget, 2,500 people in a year. And Sarbanes-Oxley hit. And Sarbanes-Oxley all of a sudden said, you have to fall within four corners of an operating contract. And we had all these disparate operating contracts. We pretended we were a company. But we were really a roll-up of all the acquisitions of the in-house teams. And so, it was a battle. And I remember, there were all kinds of red lights for Sarbanes-Oxley. When you run the real estate for one of the major banks, you don't want to make mistakes, because it's a small country. You were on the front line. Your enthusiasm keeping the team going was critical.

And I remember I reported to the CEO of the US company—and he kept phoning every day, saying you're growing too fast, I'm worried about it, I might have to send up the, you know, the troops from the US to tell you Canadians how to run the business. And I remember I just called him. I go, "Hey, listen, Brett, I need a year. I'm here with Antoinette. We're bailing water. In a year, if you leave me alone, I will fly down to California, and I will tell you three words: it is fixed. Or you can tell me three words: it is fired. But anything in between, I can't handle it. Because I can't have you micromanaging us when we're trying to build something." So, we did weather the storm. We did get through it. It was fixed. Brett remains a good friend, our friendship has never been anything but terrific since those days. So, it is a little-known story, and it's kind of fun we get to tell it here in front of our country.

Antoinette Tummillo
And we can still smile about it. We weren't smiling many days during that time. I remember, I think there were a lot of tears, and....

Blake Hutcheson
And that's what startups do, right? I mean, it was, we started with nothing...

Antoinette Tummillo
Yeah.

Blake Hutcheson
...we started with nothing.

Antoinette Tummillo
Yeah. Yeah.

Blake Hutcheson
And now it's an amazing story.

Antoinette Tummillo
Yeah.

Blake Hutcheson
And it's a good reminder how entrepreneurial efforts require some blood, sweat, and tears.

Antoinette Tummillo
Yeah. So, like, tell us the difference between managing a company like CBRE and moving over to Oxford Properties, you know. What was that transition like for you, you know, going from a global services company versus, you know, to running a big principal business?

Blake Hutcheson
Yeah. It's not, it's, they're actually—it's funny, right? We all know this. You are all about your customer. And that's life. And so, they're very similar. So, CBRE, you're running a P&L, but it is a service company, and you get on the treadmill every January, and you have to make ends meet. You're not investing. But it's all about your customer, it's all about your clients. And if you can build relationships and build trust, you build a great organization. Technically, when you go to an Oxford, you say, "Yes, it's a big principle." But the truth is, it's about looking after the customer. Because in order to be true to our balance sheet, and true to our owner, which is OMERS, it doesn't work to say you're my owner, therefore I'm a big principal, I'll give you results. The only way you get results is by focusing on your customer, and by dealing with your tenants, and being better at it than your biggest competitors. And so, really, they're both service companies. One happens to invest for a living and manage assets, one happens to be in the service side. But I don't look at them much differently. I don't look at OMERS much differently. Our members are the reason we wake up in the morning. That's who we serve. That's why we do everything we do. If you're. You know, I remember hearing, you know, one of the big titans in the US bought a newspaper. And they said, "Okay, your customers are now advertisers." And he goes, "No, no, my customers are the readers. Because if I appeal to the readers, advertisers want to be in papers with the most number of readers." So, it's all about the readers." For us, it's always been about the customers. Whether it's CB, whether it's Oxford, whether it's OMERS, and you can't ever lose sight of that.

Antoinette Tummillo
Okay, I want to ask you about those two mega-projects that you guys should be really proud of, Hudson Yards—I watched that being built and just was fascinated, given my railway background, as well, just watching it all come together, it was just amazing—and just wondering how it's doing, especially now, as we're living through this time. And then you've got the Cheese Grater in London. Another magnificent project. I'm sure you're proud of it. But tell us how you're feeling these days, and how things are going?

Blake Hutcheson
So, in the interest of time, I think I arrived at Oxford in January 2010. It was roughly 17 billion dollars of assets under management. It was roughly 90 to 95 percent Canada. Fast forward to today, it's roughly 60 billion dollars, it's probably closer to 35 or 40 percent Canada. And over that decade, it's really, we really had an opportunity to set up a global story. And so, among the fun projects we are involved in are the two you've cited, Antoinette. And so, Hudson Yards was a handshake in June of 2010, so, I was relatively new to Oxford. So, it took courage to be a partner in the largest single development in the, in American history. And I think the Eastern Yards, alone, it's a—we built over a 13-acre track that cost us about a billion three to build over the track. And the only way you could make sense of it when you do the due diligence is, when you spend that money, you still have the cheapest dollar of land-foot on the island of Manhattan. And so, it seems like a big check to cut, and a leap of faith. But we had the cheapest land on the island of Manhattan, and we had the only greenfield development site left on the island of Manhattan. And the Eastern Yards alone has been approximately 25 billion dollars of development over the last 10 years. We've been in the general partnership with the Related Group of Companies, so they've been our true partner. And it's been extraordinary.

And so, in the interest of time, what we thought when we went into it was the retail and the multifamily/condo product would be where we'd make the most money, and maybe not office. When you flip it over, this, you know, as a student, the office product has done extremely well. The multifamily is doing fine—although it's super suspended because of the economy—and the retail right now, like all retail, is troubled. But it is still probably the most written about project in world history. It's still something we are extraordinarily proud of. And I think I like our odds long term, both not only on that site but, but the Western Yards. And it's fun for a Canadian pension plan to have a piece of that history, and that story, and that success.

And again, to be brief, Leadenhall was a building we built in London. It's about 620,000 square feet, designed by Sir Richard Rogers, who did the Pompidou Museum, the Lloyd's of London building. One of the great architects of our generation. We built it with our partners British Land. And we took a leap of faith. And it cost about 500 million pounds to build. And then post-the Brexit vote, we decided, actually, to sell. So, and we sold it—a long story—but we sold it for a profit of about a billion-and-50-million dollars. So, we got out before all of this happened. It was, it's a, it broke our heart to sell it, in a way, because it's such an iconic asset, and it was really our iconic, it was really the beacon for OMERS and Oxford in Europe. But sometimes, when it's too good to be true, you take those opportunities. It was really the right thing to do for our pensioners. We'll always have pride in having developed it, but it's paid a lot of pensions. So, that's a good news story, too.

Antoinette Tummillo
That's great to hear good news stories. We need those today, especially.

Blake Hutcheson
We need those.

Antoinette Tummillo
So, you talked about, you know, you don't get to pick your time, when you started at OMERS June 1st. Just curious, you know, what surprised you, what have been your challenges? And, you know, coupled with that, you know, I've heard you say that 2020 won't define OMERS. Like, what does that really mean?

Blake Hutcheson
Yeah, I mean, I don't think anybody could have anticipated this faceless foe, as we like to call it. And I don't think anybody who's got a large enterprise has been without black eyes. And so. We were hit hard early. We are still recovering. Our returns won't necessarily coincide with year-end. But we've had to move really quickly to adjust to these times, to adjust where we have our, you know, opportunity sets in the three disciplines that I've talked about. And so, I think all of us were, to some extent, on our heels. Our risk group would model things. But there are no risk groups in the world that could model this. So, the extent of the pandemic, as we know it, and the extent of the economic damage as we know it, clearly put all of us into a period of, you know, in the initial days, you had about 48 hours to be in shock, and then get on your toes and start to fix it. So, I have to say, that was a surprise. I think, you know, my initial surprise was how quickly the governments, and the central banks, came rallying to the cause, to make sure that they restored confidence not only in Bay Street but Main Street. That was a pleasant surprise. And on a personal note, my, you know, to my—not necessarily surprised, but to my great pride, how our organization, how our board backed us unconditionally, how our people came together to work as a team. Those were just pleasant, maybe not, maybe not, not to be predicted. But how great were those? And to live with that team has been incredibly bonding. I could go on, but I think you have more questions to throw my way.

QUESTION & ANSWER

Antoinette Tummillo
I do. And there's a lot of questions coming. So, I'm going to start asking questions that are coming in, Blake...

Blake Hutcheson
Perfect.

Antoinette Tummillo
...because we're going to have to wrap up in a few minutes...

Blake Hutcheson
Okay.

Antoinette Tummillo
...here's a question from Leo. He wants to know, Blake, vaccines are coming and that is great news. But Bill Gates recently stated that more than 50 percent of the business travel will disappear, and over 30 percent of days in office will go away in a post-Coronavirus world. What are your thoughts on this?

Blake Hutcheson
Yo, Bill's a pretty smart mind. And he does, you know, it's amazing how he's pivoted his commercial business to try to solve some of the great problems of the world. But he isn't always right, Antoinette. So, from an office perspective, our take is, there probably is 30 less demand for office product, maybe it's closer to 20. But there's also probably a, you know, a need for—because the pendulum swung too far, for per square foot per employee. So, there's probably 10 percent more demand. And so, the net diminishing in demand for office, I don't think it'll be anywhere close to 50 as he would flash. It's probably closer to 10 or 20. And, and by the way, most leases are 5 years, and so, that's 2 percent a year, if it's 10. And better buildings will fare better than worse buildings, so. And Oxford, for example, has A quality buildings. So, I think that, you know, as a general conversation, yes, there will be a diminution for a period of time for office space. I don't think it will be nearly to the extent that he does. Travel, he may not be all wrong. I think people will travel—certainly, our organization, rather than go to England 12 times a year, you might go once for 4 weeks, and settle in that time zone, and work with the team in that time zone. So, sadly, he may be correct for the foreseeable future. But forever's a long time. The next two or three years, he probably isn't far off, in my view.

Antoinette Tummillo
That makes me sad, because I'm at a point in my life where I've got a list about this long of all these places I want to go visit.

Blake Hutcheson
You [indiscernible], personally, you and John. Get on an airplane, we need it. Keep going, we need to do it.

Antoinette Tummillo
Yeah, we need to do it, but we're wimps too. We follow what the scientists say, you know, and read all that stuff. Great question from Charlotte, here. You mentioned the focus on ESG, inclusion, and diversity. What are some of the initiatives OMERS is taking to further these goals both internally and in relation to investment decisions?

Blake Hutcheson
So, they are very top of mind. It's a very good question. Taking them one at a time, ESG has been, if not the priority, a priority for us for the past couple of years. We genuinely believe that the economy is going to a low-carbon world and footprint. That creates opportunities; it also creates some risks. And so, we have actually put in a sustainable investing policy. We have a sieve that we put every single investment we make through, our ESG sieve, in all of the important elements of both E, S, and G. And we are focused on the opportunity set that the new globe is presenting to us.

Oxford's a global example of how thinking that way is a win-win-win. I don't know how many awards Oxford has won. Bruce Power is a global example of how to do it right to keep your carbon footprint down. The OMERS footprint, even with our investment companies, is actually, on a relative basis quite great, and we're incrementally going to make it better. So, I could go on, but I think that gives you an idea as to how big a priority it is for us. And ING, it's kind of about time. But it is a massive priority for us as, it is, fortunately, for most of humanity this year, for some of the unfortunate reasons we're all aware of.

I actually personally chair our Inclusion and Diversity team at OMERS. We have made it a huge priority for our entire organization. I've sat through so many multicultural community sessions this year, and the litany of programs that we're rolling out in support of just making sure everybody can come to work and be their best self, that our own employee base reflects the plurality of the cities and the countries in which we work in, and really just trying to get it right. Have we got more to do? A hundred percent we do. But it matters to me personally, as a custodian of this campsite for this period of time, and it matters to the organization.

Antoinette Tummillo
Okay, great. I've got one question, because I cut my questions short on your personal style and advice, and then Cat sent a perfect question that summarizes it. So, you'll have to do this rapidly, okay Blake?

Blake Hutcheson
Perfect.

Antoinette Tummillo
What would be the three key fundamental principles, values that drive Blake's success, which people can pick up and implement?

Blake Hutcheson
Whose question is that? That's your question?

Antoinette Tummillo
That's a question.

Blake Hutcheson
Okay.

Antoinette Tummillo
I think it's a great question.

Blake Hutcheson
I try to be my best self; everybody else is taken, so I can only be my best self. So, I try to be authentic. I do believe in tomorrow; my father taught us early in life, if you don't believe in tomorrow, you shouldn't be in business. So, I think I'm an optimist. And I fundamentally believe we should treat everybody fairly and kindly, but not necessarily equally. I think you have to let people who are your superstars rise in an organization, but that doesn't mean everybody doesn't deserve a fair crack. Those might be three off the top of my head.

Antoinette Tummillo
Okay, thank you. So, I'm going to move to the appreciation, and you have a good friend wanting to do the appreciation remarks today, who was a great sponsor, so a good friend of the Empire Club, as well, Brian Porter, President and CEO of Scotiabank. Over to Mr. Porter—and it's a video, because he couldn't be here in Zoom world with us today.

Blake Hutcheson
Okay.

Note of Appreciation by Brian Porter, President & CEO, Scotiabank
Good afternoon, everyone. It's my pleasure to bring greetings on behalf of the Scotiabank team, and to offer my thanks to you, Blake, for your very thoughtful comments. You've given us a great deal to think about, and OMERS is certainly fortunate to have you at the helm during this time of profound and lasting change. Scotiabank is also very proud of our longstanding partnership with OMERS. The work we have done together spans decades and crosses many asset classes and geographies. OMERS has a bright future ahead of it. And as you continue to build your platform, we look forward to growing with you. My sincere thanks to the Empire Club, and to each of you for joining us. I hope you and your families continue to stay healthy and safe.

Concluding Remarks by Antoinette Tummillo
Wonderful. So, we've been informed by the audio-visual company that they accidentally played the wrong sponsor reel preceding today's discussion. Not good. So, to ensure appropriate recognition for your support of the Empire Club, Blake, Oxford, and OMERS, we will play the appropriate reel following today's event. So, thank you again for all your support.

I just want to take a moment to let you know about our upcoming events, and we've got quite a few—we've been very busy at the club. On November 26th, I've got my friend, another friend, Sean Finn, who's the Executive Vice-President, Corporate Services and Chief Legal Officer at CN. The Honourable Doug Downey, Attorney General of Ontario, on December 3rd. We've got, on December 4th, a Roadmap for Canadian Black Youth, defining recognition and development under the UN Decade for People of African Descent and UN-75. And our signature event—which OMERS, thank you for being a sponsor of as well—on December 10th, for the Nation Builder of the Year award. We are thrilled with who we've named as a Nation Builder this year. It's frontline workers, who else? And we've got a great event planned with lots of celebrities and VIPs, so we hope you will join us for that event. We're also encouraging people to submit a testimonial for a frontline worker—whether you are a frontline worker or know of one—and it would be a good thing to do, because there's going to be a draw for five thousand dollars for that lucky person.

So, the registration for all these events is free, again thanks to our sponsors. I want to thank you all for joining us today, and look forward to "seeing" you all at our next virtual events. This meeting is now adjourned. And before I fully adjourn it, Blake, thank you for your time, thank you for all you've shared with us. We know OMERS is in good hands. I had one question about knowing what gets you going every morning, and that's, you talked about it, it's your membership, your 500,000 members that's going to grow to 600,000. So, I know lots of them are happy that you're at the helm. So, thank you. This meeting is now adjourned.