Canada Real Estate May Be Good Investment, Watsa Says (Update2)

Nov. 12 (Bloomberg) -- Canadian commercial real estate may be a profitable investment in coming years, Fairfax Financial Holdings Ltd. Chief Executive Officer Prem Watsa said.

“Commercial real estate is interesting, because of course it’s got the refinancing risk that’s coming in, particularly in the United States,” Watsa said today at a private-equity conference sponsored by ACG Toronto. “In the next few years, we think that might be an area that you might want to invest in.”

Watsa, 59, said there are fewer investment opportunities now than there were a year ago, when stock markets had dropped by about 50 percent and there were “many, many opportunities.” The head of Toronto-based Fairfax since 1985, Watsa has patterned his company after Warren Buffett’s model of value investing.

“Value investing means trying to figure out what a company’s worth, and buying it significantly at a discount,” Watsa said.

The Toronto-based owner of Canadian and U.S. insurers including Crum & Forster is 75 percent owned by about 10 individual shareholders, Watsa said. Most of those have been with the company “for a long time,” he said, without naming the investors.

Fairfax has about $1.3 billion in cash and marketable securities, Watsa said. He said the company will look at all “opportunities” for potential acquisitions, and wants to always keep about the same amount of cash on its balance sheet.

Fairfax fell C$1.46 to C$374.84 at 4:10 p.m. trading on the Toronto Stock Exchange. The shares have fallen 3.9 percent this year.

To contact the reporter on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net.

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; Dan Kraut at dkraut2@bloomberg.net.