CI Financial of Canada and Florida Governor Ron DeSantis announce plans to make Miami the U.S. headquarters of $ 77 billion cumulative in 2023
The Sunshine State has used tax incentives to lure business from Toronto to Miami, where the state has attempted to establish a Wall Street South for decades with some success
The most acquired RIA rollup in the United States is Canadian, but it now looks more American after investing money in luxury Miami offices – much to the delight of exuberant Governor Ron DeSantis.
“Their move is the latest example of our welcome business climate at work – something we continue to see from Miami to Pensacola,” the state’s high-level general manager said.
“We appreciate CI Financial’s commitment to our state and wish them every success.
Florida is positioned primarily as a friendly business by allowing high incomes and high net worth individuals to minimize their tax exposure.
DeSantis has also made it a place where businesses can avoid being inconvenienced by COVID-19 protocols like warrants for vaccines and masks.
CI Financial promises a U.S. headquarters by 2023, though Toronto RIA, with $ 77 billion in assets under management, makes no promises about existing C-suite leaders.
CI has committed to lease 20,000 square feet of office space at 830 Brickell Plaza, a 55-story building still under construction. Rates in the building vary from $ 75 to $ 90 per square foot. or about triple the rate in downtown Toronto, which averages $ 39 Canadian (US $ 30.76) per square foot.
A medium-density office typically requires 150 to 250 square feet per employee for a total of about 80 to 130 employees, according to office rental company Aquila. In contrast, CI has approximately 777 employees in North America.
Want to expand
Microsoft has just signed a lease to create a 50,000 square foot regional headquarters at 830 Brickell.
WeWork, which offers shared and temporary office space, is the alleged primary tenant. More than 100,000 square feet are needed which will be used for temporary and daytime offices. WeWork is headquartered in New York.
“Miami is an incredible place to establish our headquarters in the United States and support our rapidly growing US business,” Kurt MacAlpine, CEO of CI Financial said in a statement.
“This is the next logical step in our expansion plans as we work to create the country’s leading wealth management platform for high net worth individuals. “
CI Financial’s desire to expand is unquestionable.
Two years ago, no one had heard of it. But since November 2019, he’s been hovering with vengeance, purchasing 17 RIAs – many of which are considered among the biggest and best in the United States, and tackling four sub-acquisitions. See: Leading Canadian CEO Tears RIA Market Like the Polar Vortex, Sweeping $ 16 Billion in Assets Under Management and Ringing the Bell on NYSE Listing That Could Fuel Even More Transactions
It just announced its latest purchases of $ 5.2 billion Portola Partners and Budros, Ruhlin & Roe. See: CI Financial buys Budros to seize $ 74 billion in U.S. assets – if pending deals are made – but rival Focus Financial just surpassed $ 300 billion globally, CEO says
Portola is not yet counted in its $ 77 billion in assets under management.
Snow birds
Typically, the offices of a CEO and other senior executive staff establish a location as “headquarters”. External public relations spokesman Trevor Davis declined to answer if MacAlpine would move to Miami. The CEO plans, for now, to split his time between Miami and his current Toronto office.
Many CI executives will also be splitting their time between Miami and Toronto, he adds.
Davis said the Miami headquarters is key to centralizing oversight of a highly decentralized wealth management company that will only continue to grow and expand at a rapid pace.
“CI believes it is essential to have a dedicated central office to oversee the execution of its strategy and support its rapidly growing wealth platform in the United States,” he said.
Miami ranks fourth out of 15 cities for bankers on the basis of “their need to travel, eat, dress, impress their customers and try to have a little fun every now and then,” according to BusinessInsider. It is dominated only by No. 1 New York, San Francisco and Los Angeles.
DeSantis has ensured that businesses aren’t overburdened with COVID-19 vaccine or mask mandates and other pandemic restrictions, even though it leads the country in COVID deaths per 100,000 population (1.52) and average daily deaths (325.7) as of Sept. 16, according to Becker’s Hospital Review.
Go south all of you
Still, Florida has a special appeal for senior executives because it has no state income tax. Among the 12 highest-taxed states, Minnesota’s total tax burden ranks 9.99%, and Maryland’s 9.32% rate ranks 12th.
Toronto officials pay 12.16% on a portion of taxable income over $ 150,000 up to $ 220,000 to the province of Ontario. It rises to over 13% for people earning $ 220,000 or more, according to Legallline.ca.
The combined provincial and federal tax rate is 53% for income in the highest tax bracket.
Another RIA rollup, Boston Private, opened an office in Miami in 2020. See: As Boston Private and Banyan Partners merge, the Big Three roll-ups become the Big Four
Private equity giant Blackstone announced last fall that it would open an office in the city to employ 215 people, and Goldman Sachs Group Inc. is considering the region as a possible home for its asset management arm, according to the Wall Street Journal.
Capital of the capital
The real estate movement follows the listing of CI’s shares on December 2 on the New York Stock Exchange [NYSE: CIXX]. The shares first listed at $ 12.41. They closed in today’s trade at $ 21.12, up $ 0.26, or 1.25%, just after its 52-week high of $ 21.16, which it hit. in intraday trading. The stocks have a market capitalization of $ 4.25 billion.
Miami Republican Mayor Francis X. Suarez has publicly boasted of having “been incredibly successful” in persuading businesses to leave New York and open offices in his city.
Suarez was even quoted in the press release as saying that CI Financial is the largest financial institution to establish a head office in South Florida.
“The importance of this cannot be overstated and brings us closer to our goal of becoming the ‘capital of capital’,” he said.
Suarez didn’t hesitate to make his city a hotbed for financial companies seeking lower taxes than Manhattan, said Karl H. Heckenberg, vice president of Emigrant Bank, which works closely with CI Financial. See: What exactly makes Kurt-and-Karl click as CI’s financial and emigrant partners strike deals, deepen ties and evolve business models
“Suarez has pressured all technology companies, asset managers and financial services companies to move their headquarters to Miami and it is working,” Heckenberg said.
A deep talent pool
Another big reason for the decision CI notes in its release is that Miami offers an attractive hiring base. The financial services industry has long been dominated by white males. But Miami Dade has 1.9 million Hispanic residents, or about 71% of the county.
Full-time employees working in RIAs in Miami have jumped 55% to 1,326 in the past five years, pushing cumulative AUMs to $ 75 billion, according to a 2019 report released by the Downtown Development Authority .
“Miami is a vibrant and multicultural city that offers a talent pool, an attractive location for recruiting and a very conducive business environment,” the company said in its statement.
The question is how many Canadian employees will flee harsh winters for sunny temperatures. When asked how many employees would move or work out of the Miami office, Davis declined to provide “specific numbers.”
Heckenberg says it probably wouldn’t be difficult to convince employees to move to Miami.
“Canadians who want to go to Miami – sure bet. I’m sure they could try to attract some of their Canadian employees.”