Groceries helped the billionaire Weston family amass Canada’s third-biggest fortune. Now, after four generations making and selling food, the Westons are paying more attention to the land underneath their stores.

George Weston Ltd. said last week that it would sell off Weston Foods, the commercial bakery business that gave the company its start in 1882. In turn, the company said it will focus more on its real estate portfolio, which it cobbled together through decades of building out new grocery stores and keeps growing in value as Canadian property prices boom.

“Right now we probably have more potential development sites than anybody,” Mario Barrafato, chief financial officer of Weston’s publicly traded property vehicle, Choice Properties Real Estate Investment Trust, said in an interview. “When you look at the amount of properties we have in the Greater Toronto Area, Greater Vancouver and Montreal, there’s a long, long-term potential over time.”

With its plans to transform some retail locations into mixed-use developments, including residential towers, Weston joins major North American shopping-mall operators like Simon Property Group Inc. and Brookfield Asset Management Inc. in trying to wring more value from their existing real estate assets. Weston’s core properties are anchored mostly by supermarkets and pharmacies that have done well during the pandemic -- in contrast to enclosed shopping malls, which have been clobbered by e-commerce and government-ordered shutdowns.

Weston executives and public officials appeared together Tuesday on a videoconference with reporters to discuss the site of a new neighborhood under development on Toronto’s east side. The $1.5 billion (US$1.2 billion) project will redevelop a shopping mall with local developer Daniels Corp., with the first phase of the 19-acre project to include two condominium towers, one block of rental apartments, offices, retail and educational space in partnership with the University of Toronto.

Executives say the redevelopment of the Golden Mile Shopping Center in Toronto’s Scarborough area is emblematic of its ambitions for some of the 700-plus properties it controls in cities where housing costs and property values are soaring.

Long View

The new strategy is years in the making, led by family scion Galen G. Weston. First the real estate assets were spun out from Weston-controlled grocery chain Loblaw Cos. in 2013. Five years later, Choice acquired a competitor and is now Canada’s biggest REIT by market value.

Although Loblaw still accounts for the vast majority of George Weston’s annual revenue, Choice Properties’ plans to redevelop more sites and add tenants beyond its own grocery stores are intended to increase its weight within the group.

“We are ultimately owned by a family and therefore we can take a very long view,” Rael Diamond, Choice Properties’ chief executive officer, said in an interview. “It’s taking land in a well-located area which generally has retail uses, and densifying that land. And residential will be the most significant part of that mixed-use community.”

The strategy has its risks. By moving away from food-making and toward real estate, George Weston is trading a largely recession-proof business for a more cyclical one. This may be particularly true in Canada, where frenetic condo development in Vancouver and Toronto in recent years has fueled fears of a bubble. At the same time, a shortage of housing supply overall has pushed home prices across Canada to record highs.

Choice Properties’ development pipeline includes four other mixed-use projects like the one in Scarborough, 15 projects on land that’s currently empty, six projects dedicated solely to residential use and 17 sites devoted to expanded retail.

“The existing footage will increase significantly, and therefore you can generate far more income, and therefore the property will be worth significantly more in value,” Diamond said. Speaking of the Weston family, whose net worth is more than US$10 billion, he said: “That particular family, as you know, has a very, very long term view and a very long term horizon. Therefore we’re investing for the long term.”