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PSP beats real estate benchmark

Performance drivers included office portfolios in Paris, London and in Australia and senior retirement and healthcare portfolios in Canada and the UK.

The Public Sector Pension Investment Board’s real estate portfolio exceeded its benchmark return over the one-year period ending March 31, PERE's sister publication, Private Debt Investor, reported Wednesday.

The asset class showed a one-year return of 10.8 percent, compared with its 6.2 percent benchmark. The report cited office portfolios in Paris, London and in Australia and senior retirement and healthcare portfolios in Canada and the UK for causing the allocation’s strong performance.

Real estate grew slightly to $20.6 billion in net assets, up from $20.4 billion in the year ending March 31 2016, with nearly 43 percent of its portfolio in the US.

The Canadian pension plan was not immediately available to comment further.

Other asset classes in the pension plan’s portfolio also surpassed return benchmarks over this period.

Infrastructure earned a 14.4 percent one-year return, well over its return target of 5.2 percent. PSP attributed the strong performance to investments in transportation, communications and renewable energy sectors, especially in Europe, which accounts for 47.1 percent of the asset class investments. This asset class hit $11.1 billion in net assets by 31 March, up from $8.7 billion a year prior.

In contrast with real estate and infrastructure, the firm’s private equity portfolio’s performance “remains a challenge” and was “negatively impacted by certain legacy investments in technology and communications,” the annual report read.

Private equity showed a one-year loss of 3.4 percent and only a 7.8 percent five-year annualized return. Its one-year return target is 9.3 percent. Still, the firm was able to grow this asset class by $3.4 billion, to $15.5 billion, as of March 31.