Alberta Investment Management Corp. (AIMCo) posted an overall return of 6.9 per cent in 2023, despite challenges in its real estate portfolio. The asset manager, which invests on behalf of pension, endowment, insurance, and government clients in Alberta, ended the year with $160.6 billion in assets under management.
The return, though positive, fell below AIMCo’s benchmark return of 8.7 per cent.
The real estate portfolio was down 8.4 per cent at Dec. 31, 2023, offsetting significant gains posted by public equities and fixed income, which were up 15.8 per cent and 7.7 per cent respectively. The private equity portfolio also generated a positive return, at 6.7 per cent, while renewables were up 3.5 per cent. Mortgages and private debt and loan posted positive returns of 4.5 per cent and 9.6 per cent, respectively.
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AIMCo took the hit to its primarily North American-focused real estate portfolio alongside other funds invested in the office segment of commercial real estate as hybrid work persisted, said Marlene Puffer, who has been the asset manager’s chief investment officer since early last year.
“The valuations have suffered for more than one reason,” she said, adding that clarity around interest rates coming down — hopefully over the next quarter — could lead to more deals in the sector, in which there is often a large gap between the price a buyer is willing to pay and the amount a seller is willing to accept.
Positive on Poloz
“That is the dance that’s happening right now,” she said. “I think the market will settle itself out and we’ll see some significant properties change hands this year. But they’re not going to be changing hands at bottom-of-the-barrel valuations.”
AIMCo’s real estate holdings are primarily located in Canada and the United States, with some in Europe and the United Kingdom. At the end of fiscal 2022, the office segment accounted for 21.3 per cent of the portfolio, with updated figures expected to be published this June.
Puffer said she views it as a positive development that former Bank of Canada governor Stephen Poloz has been selected to lead a working group created to help the federal government identify domestic investment opportunities for pension funds in Canada.
“I have a lot of faith in Stephen Poloz to lead this activity. I think he’s a very balanced, thoughtful investment and markets expert and we’ll be very pleased to work with him on this,” she said of the working group, announced in last week’s federal budget, that will focus on investment opportunities for pensions in digital and physical infrastructure, airport facilities, artificial intelligence and housing.
Canada’s large, globe-trotting pension management organizations were blindsided by a section in last fall’s economic update that indicated Ottawa planned to find ways to keep more of their billions of investment dollars in Canada.
Assets in Canada
“There are certainly areas where discussion can, I think, be very productive,” said Puffer, who was chief executive of the division responsible for investment management of CN Pension Trust Funds and also served as vice-chair of the Board of the Healthcare of Ontario Pension Plan (HOOPP) before joining AIMCo.
“We have a lot of assets in Canada today and one of the questions is whether or not there can be additional, for example, infrastructure assets available in Canada that are attractive for us in terms of our global opportunities.”
The budget specifically mentioned airports, an infrastructure asset Canada’s largest pension managers have coveted for years. The Liberal government studied the potential of multi-billion-dollar privatizations in 2017, but the idea was ultimately shelved. Puffer said it’s too early to say whether a major Canadian airport will be put on the block.
“None of us know very much about what the government has in mind at this moment so it will be interesting to see how that all evolves,” she said.
AIMCo’s annualized 10-year return was 6.7 per cent at the end of the 2023. The asset manager also publishes returns for a “balanced fund” across all asset classes, which does not include clients that exclusively choose fixed income and money market investments. AIMCo’s annualized 10-year return for this balanced fund mix is 7.3 per cent.
Client mandates dictate to some degree how much and how quickly portfolios can be adjusted in response to market and macro-economic conditions, Puffer said, as do some asset classes such as infrastructure, which tend to be long-term holdings.
Private debt is an asset class where shifts are easier and AIMCo is keen to expand activity there, she said, describing “modest” deal flow from a year-long joint venture with another Canadian pension, the Public Sector Pension Investment Board. (PSP) That arrangement was forged in January 2023 when the Alberta-based asset manager snagged leveraged finance and capital markets veteran David Scudellari from PSP. Puffer said AIMCo has also been working with large global private credit players in the U.S. and Europe, where the relationships have led to a broadening of deal flow in other asset classes such as private equity — and to bigger allocations.
She singled out one recent transaction, which she identified only as “a popular one” among institutional investors, as one in which AIMCo might normally have seen its allocation cut back.
“And in this instance, we got the allocation that we asked for because of the strategic partnership activities,” she said.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
