CPPIB Posts 8% Annual Return as Assets Reach $462B Despite Real Estate Slump

The Canada Pension Plan Investment Board reported a net return of 8 percent for the fiscal year to the end of March as net assets rose nearly 11 percent to C$632.3 billion ($462.6 billion).

The annual results for fiscal 2024 were boosted by strong public equity market performance, gains in the private equity portfolio and investments in credit, infrastructure and energy, Canada’s largest public pension fund said Wednesday in a release.

The positive news was offset by the weaker showing of emerging-market investments and real estate assets, but president and CEO John Graham said the fund’s growth continued the trend of reaching heights several years ahead of initial actuarial projections.

“Solid performance by all of the investment departments and key corporate functions helps demonstrate how our strategy is on track,” Graham said.

Property Yield Lags

CPPIB’s C$62.3 billion increase in net assets consisted of C$46.4 billion in net income and C$15.9 billion in net transfers from the Canada Pension Plan.

For the five years to the end of March, real estate investments generated an annualised net return of 0.7 percent — handily outperformed by credit (3.8 percent), infrastructure (5.9 percent), public equities (8.4 percent) and private equity (13.9 percent).

The same period saw Asia Pacific investments post an annualised net return of 4.6 percent, as US investments led with 8.9 percent and Europe bets fared the worst at 4 percent.

The real estate portfolio had “mixed results” and was particularly impacted by rising interest rates in recent years, CPPIB said in its annual report. Rising rates also had a negative impact on the cost and availability of financing for real assets.

“Investments in the logistics sector were an exception as they experienced increased tenant and investor demand for most of the five-year period,” the report said. “This contrasted with retail and office investments, which were negatively affected by the transition towards e-commerce and the impact of evolving hybrid workplace trends.”

Key Divestments

In fiscal 2024, CPPIB agreed to the sale of a 21 percent partial interest in the Kendall Square Development Venture with ESR and APG in South Korea, with the fund manager netting $245 million in proceeds from the transaction.

CPPIB remains an investor with a 24 percent stake in the ESR Korea Logistics Core Fund, a perpetual open-ended vehicle housing the development venture’s stabilised assets.

In other property deals during the year, CPPIB sold its 45 percent stake in 1455 Market Street, an office building in San Francisco, chalking up net proceeds of $44 million on its exit from the 2015-era investment. It also signed an agreement to sell its 45 percent stake in 10 East 53rd Street, an office building in Manhattan, with net proceeds of $7 million expected after investing in the asset since 2012.