Leitao Sees Caisse Proceeding With Montreal Rail Projects

  • Quebec Finance Minister Leitao cites sufficient returns
  • Caisse's Ivanhoe Cambridge to oversee real estate operations

Quebec Finance Minister Carlos Leitao said he expects the province’s public pension fund manager to proceed with two Montreal-area rail lines that together represent investments of about C$5 billion ($3.7 billion).

Potential returns on the projects -- a public transit system on Montreal’s new Champlain Bridge, and a rail line from the downtown core to the city’s main airport -- are sufficient to guarantee the Caisse de Depot et Placement du Quebec will go ahead with the investments, Leitao said Wednesday at Bloomberg LIVE’S Canadian Fixed Income Conference in New York.

Premier Philippe Couillard’s government appointed the Caisse to plan, finance and manage infrastructure projects in January, and passed a bill authorizing the asset manager to create a new venture in June. As of June 30, the Caisse oversaw net assets of C$240.8 billion.

Cost Control

“The Caisse has all the necessary legislative authority to proceed, and they are now as we speak into the planning stage for these two new projects,” Leitao said. “This will work because it is profitable.”

Caisse executives are continuing to evaluate the rail links, and no decision has yet been taken, Maxime Chagnon, a spokesman, said Wednesday in an e-mail from Montreal. The Caisse will be in a position to make its recommendations to the government within 18 months, he said.

The Caisse’s experience as an investor in Vancouver’s Canada Line will allow it to "very closely” control construction costs, with land development around the rail lines further buoying returns, Leitao said.

“The Canada Line was built on time and on budget,” the finance minister said. “If you build something on time and on budget, you are already a long way towards ensuring the profitability of the project.”

Ivanhoe Cambridge, the Caisse’s C$48 billion property unit, will oversee real estate operations for the Montreal projects, the minister said.

“Along the rail line there will be train stations and commercial developments,” he said. Ivanhoe Cambridge “has got experience in this field, so they will be able to generate real estate value from their transportation link, and that will contribute to the profitability.”

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