CANADA - The Ontario Teachers Pension Plan, one of the largest real estate investors in North America, said its real estate portfolio registered a return of 16.9%, nearly double the 7.7% one-year benchmark.
Andrea Stephen, executive vice-president of investment at Cadillac Fairview, which manages real estate investments for Ontario Teachers, cited strong markets, a high-quality portfolio, strong valuations and good availability of capital as the chief reasons for the solid performance.
"We have had a very strong performance, both from an income perspective and a valuation perspective, as it is marked to market," she said.
Its total real estate investment stood at $16.9bn (€11.8bn) as of end of 2010, accounting for 16% of the total portfolio of $104.7bn. It is up by nearly 20% from $14.2bn in 2009.
Most of the real estate investments in Canada, which account for 77% of the total, are in high-end retail shopping centres and office towers, she said. It also has real estate investments in Brazil, the UK and the US.
In terms of breakdown, the company's investment in Canadian retail shopping centres accounted for 57%, followed by offices in Canada (25%), the US (7%) and 'international', which includes both the UK and Brazil at 11%.
"We have enough opportunities in the four markets we have invested in - we don't see the need go into other markets now," Stephen said.
While moves into Brazil and the UK are mostly opportunity driven, she stressed that, since US real estate trends were similar to Canada's, it allowed the company to "realise a lot of synergy".
The company entered the UK market in 2004 and Brazil in 2006.
Cadillac Fairview was previously a public company before it was privatised and became a wholly owned subsidiary of Ontario Teachers, managing its real estate investments.
On the whole, Ontario Teachers said it returned 14.3% in 2010, $4bn above its 9.8% benchmark.
Besides real estate, equities, fixed income and infrastructure also outperformed their respective benchmarks. Infrastructure returned 13%, nearly three times the benchmark.
The fund's total net assets $107.5bn as of December 31, 2010, up from $96.4bn in December 31, 2009.
Ontario Teachers invests and administers the pensions of 295,000 active and retired teachers in the state of Ontario.