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Sun Life CEO shares real estate outlook, says 'people are coming back to the office'



Sun Life Financial Inc.'s President and CEO, Kevin Strain, remains optimistic about the long-term prospects of the office real estate sector, despite facing challenges in the current economic climate. In a recent television interview with BNN Bloomberg, Strain acknowledged the headwinds in the industry but expressed confidence that the sector would eventually rebound.


According to Strain, the office real estate space is expected to "right itself" over time and resume its growth trajectory. Despite the ongoing economic uncertainties, he believes that people are gradually returning to the office, signaling a positive trend for the industry. However, Strain noted that a full-time return to office work may not happen immediately, but there is a noticeable increase in activity within office spaces.


Sun Life reported a 3.8 per cent decrease in the total value of its investment properties to $9.7 billion last year. The most significant decline was observed in the company's U.S. office investments, dropping from $647 million in 2022 to $476 million in 2023. Despite these challenges, Strain emphasized that Sun Life has experienced strong returns from its real estate assets over the long term.


Strain highlighted Sun Life's proactive approach to the anticipated changes in the real estate industry, mentioning that the company had started offloading some of its office spaces even before the onset of the pandemic. He emphasized the company's commitment to real estate as a long-term investment class, with a focus on continually assessing and adjusting its real estate portfolio.


While Sun Life faced a decline in real estate value, it managed to offset this with robust insurance policy sales in both the U.S. and Asia. Strain pointed out the strength of the company's business in the U.S. group benefits space, which is evolving into a health-focused segment. The overall performance of this business was highlighted as strong, with a significant lift in earnings during the past year.


In Asia, Sun Life experienced a six per cent increase in underlying net income to $143 million in the fourth quarter, primarily driven by a remarkable 49 per cent surge in individual sales. Strain expressed satisfaction with the company's performance in Asia and emphasized the positive experience in both the U.S. and Asian markets.


Overall, Sun Life reported a 10 per cent increase in underlying net income in the fourth quarter, reaching $983 million, surpassing estimates from an analyst survey conducted by Bloomberg. Strain's positive outlook on the real estate sector, coupled with the strong performance in insurance sales, reflects Sun Life's resilience in navigating the challenges of the current economic landscape.


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