NORTH AMERICA – The Healthcare of Ontario Pension Plan (HOOPP) has seen its real estate portfolio return nearly 19% in 2012, with the fund's chief executive hailing its overall 17% return as "exceptional".
According to the CAD47.4bn (€35.9bn) fund's annual report, its real estate portfolio saw its highest absolute return since 2007 and managed to outperform the IPD benchmark performance of 14.1%.
"The year 2012 was a difficult one in which to make new acquisitions due to the very competitive investment market in Canada," the report said.
"Much of the focus, therefore, was on the effective asset management of our existing portfolio and the expansion of our development activities."
HOOPP's real estate holdings nevertheless contributed CAD742m towards the fund's income, the best result of any asset class within its liability-driven portfolio.
The fund also estimated that active management of the portfolio helped add CAD215m in value, resulting in an overall return of 18.3%.
The portfolio's income was second only to the CAD2.3bn the fund gained through its long-term equity options, which sits within its return-seeking portfolio.
Jim Keohane, president and chief executive of HOOPP, praised the fund's "exceptional" return, well above its expected minimum return of 6.5% and the best in the past decade.
The healthcare scheme further emphasised the importance of sustainable property development, saying last year's focus remained on its holdings in energy use, carbon emissions and water consumption.
To this end, it said it was working to establish a portfolio-wide target for reducing energy and water use over a five-year scale.
It also said it was developing an annual greenhouse gas (GHG) emission report "with the aim of reducing GHG emission intensity over the longer term".
The comments come shortly after the chief executive of the Canada Pension Plan Investment Board said the absence of environmental considerations from an investor's property portfolio "would be the same as playing Russian roulette".
The majority of HOOPP's property is in Canada, with only CAD389m of its CAD5.8bn in real estate investments located outside the fund's domestic market.
However, it has steadily increased its non-Canadian investments in recent years.
In 2010, the fund held barely CAD100m in non-domestic property.
The fund said that, net of operating expenses, it earned CAD269m in rent from the portfolio.