Real Estate Holdings Weigh Down Ontario Teachers' Performance
Real Estate Holdings Weigh Down Ontario Teachers’ Performance
Ontario Teachers’ Pension Plan says it achieved solid financial growth in 2024, but its real estate holdings played a role in one the country’s largest pension funds missing its benchmark return rate.
Ontario Teachers’ said its one-year total fund net return last year was 9.4% compared to 1.9% in 2023. It also said its net assets grew to $266.3 billion, up from $247.5 billion in 2023.
Despite the return, the results did not meet the benchmark, or target, return of 12.9% for 2024, Ontario Teachers’ said. The pension fund released its annual results on Thursday.
“The benchmark underperformance was primarily attributed to assets in private equity and real estate trailing their respective benchmarks,” the pension fund said.
Ontario Teachers’ did say that one of its 2024 property highlights was expanding its logistics real estate portfolio across Europe, where it acquired eight fully leased logistics assets in France and three warehouses in Germany.
The Toronto-based pension fund had assets of $266.3 billion as of Dec. 31 and 343,000 working members and pensioners. It owns 100% of Cadillac Fairview Corp., one of the country’s largest real estate companies.
“We had positive contributions from across the plan, with notable success in venture growth, credit, inflation-sensitive and public equity investments. The resilience of our portfolio, combined with our proactive approach to creating value, has positioned us strongly in an unpredictable economic climate,” said Jo Taylor, president and CEO of the pension fund, in a statement. “Our investment portfolio is well placed to deliver strong risk-adjusted returns for the plan in 2025 and meet our long-term obligations to the members we serve.”
Real estate had a negative 0.7% return, well below the 5% target rate for 2024. It was the second consecutive year of underperformance by the pension fund’s real estate holdings. In 2023, its real estate return was negative 5.9% versus a benchmark of a 2%.
Source CoStar. Click here for the full story.
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