The Canada Pension Plan Investment Board’s real estate portfolio returned 8.3 percent in the fiscal year ending March 31, compared with 12.3 percent in the previous fiscal year, the Toronto-based pension system said in its annual report last week.
Real estate comprised 12.6 percent of CPPIB’s overall C$316.7 billion ($234.5 billion; €208.6 billion) portfolio as of March 31, up from C$36.7 billion last year. The pension system began investing in real estate 16 years ago, with C$145 million invested as of March 31, 2002, according to its website.
Overall, CPPIB’s portfolio returned 12.2 percent last year, compared with 3.7 percent in the 2016 fiscal year.
CPPIB’s real estate equity portfolio comprised 121 investments, 86 percent of which are in developed markets and 14 percent in emerging markets. The pension system put C$4.6 billion in real estate equity last year, including the acquisition of a 50 percent interest in a seven-property Canada office portfolio for C$1.2 billion and a 50 percent stake in a New Zealand office and retail portfolio for C$233 million.
CPPIB allocated C$7.7 billion in real estate in the 2016 fiscal year.
“The slowdown in new investment activity and rise in asset sales is consistent with our view of the robust pricing environment for high quality real estate assets and the strong competition for widely marketed trophy commercial properties in global gateway cities,” the report said.
In August, the pension system created a real assets group to incorporate real estate, infrastructure and agriculture investments, which now comprises 23 percent of CPPIB’s overall portfolio.
Graeme Eadie, who was previously senior managing director and global head of real estate investments, now oversees the real assets department as global head of real assets. Peter Ballon, formerly managing director and head of real estate for the Americas, was elevated to head of investments, real estate.