The Caisse de dépôt et placement du Québec’s $18 billion real estate portfolio posted a return of 12.4 percent for 2012, up from its 11 percent return for 2011 but below its benchmark of 13.2 percent.
According to its 2012 annual report, the C$176.2 billion ($174.7 billion; €133.3 billion) pension system’s real estate return is due mainly to results in the shopping center sector, primarily in Canada, and its solid and stable current return. For the four-year period ended December 31, the portfolio generated a 5.4 percent return, which is almost identical to that of its benchmark index.
The Caisse also is in the process of making broader changes to its alternatives portfolio. Last year, following a review of its “strategic orientations,” the pension established a new investment strategy that included increasing its investments in private equity, infrastructure and real estate “in the years to come,” according to its annual report.
The Caisse’s real estate portfolio consists mainly of direct investments in shopping centers, office buildings and multifamily properties, mostly made through its real estate arm Ivanhoé Cambridge. Noteworthy acquisitions made in 2012 included additional stakes in shopping centers in Canada and Brazil, as well as office buildings in Paris and New York and residential buildings in California and London at a total cost of $2.2 billion. In addition, the Caisse’s new commitments to construction, expansion and redevelopment projects during the year totaled $2.2 billion.
As of December 31, investments in Canada represented 48.8 percent of the portfolio’s fair value and those in the US were 24.1 percent, versus 49.2 percent and 23.5 percent, respectively, at year-end 2011. Retail properties accounted for 39.9 percent of the portfolio and office buildings were 30.7 percent, versus 40.7 percent and 30.7 percent, respectively, at year-end 2011.
The Caisse’s actual allocation to real estate was 10.3 percent as of December 31, down from 11.5 percent the year prior. The system’s entire portfolio generated a 9.6 percent return in 2012.