REAL ESTATE – OMERS, the C$41.1bn (€30.0bn) Ontario Municipal Employees’ Retirement System, is to raise its real estate allocation to 12.5% from the current 8.1%.
It comes amid a plan to raise its allocation to real estate, private equity and infrastructure to 37.5% from 19.8% currently. Infrastructure will in future account for 15%, from 5.7% now.
“OMERS expects these asset classes will outperform traditional stocks and bonds over the long term and provide more stable returns,” the Toronto-based fund said in its 2005 returns announcement.
Its real estate portfolio returned 26% in 2005, compared to 11% in 2004 – due to “strong rental operating income plus favorable market value appreciation in the year”.
It said: “Part of the market value appreciation was realized in 2005 with the sale of several real estate properties as the business repositioned the portfolio for increased growth.
“This included the sale of a 50% interest in 11 properties to CPP Investment Board for an amount in excess of $1.0bn in June 2005.”
"The exceptional returns from our private market investments in real estate, infrastructure and private equity, combined with the continued strength of global equity markets contributed to another strong year," said OMERS president and chief executive Paul Haggis.
“Our asset mix strategy is working and we remain committed to increasing our asset allocation in private market investments.”
Overall, OMERS returned 16% in 2005, against a benchmark return of 13.2% - working out at a net investment income of $5.5bn.