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Ontario Teachers' delivers strong investment performance in 2021 – Ontario Teachers' Pension Plan

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2021 Highlights:

  • One-year total fund net return of 11.1%, driven by strong returns from private equity, inflation sensitive and innovation investments
  • Record annual value add to the fund of $5.5 billion
  • The plan is fully funded for a ninth straight year
  • Annualized total-fund net return over ten-years of 9.3% and since inception return of 9.7%
  • Diversified investments globally, acquiring nearly 50 private assets across five continents
  • Invested or committed over $5 billion into additional green or transition assets

TORONTO (March 14, 2022) — Ontario Teachers’ Pension Plan Board (Ontario Teachers’) today announced a one-year total-fund net return of 11.1% for the year ended December 31, 2021, exceeding its benchmark by 2.3%. This outperformance relative to its benchmark resulted in a record annual value add of $5.5 billion. Net assets grew to $241.6 billion.

These results contributed to the plan being fully funded as at January 1, 2022, with a $17.2 billion preliminary funding surplus. This marks the plan’s ninth consecutive fully funded year, underscoring the long-term financial health and sustainability of the plan.

“We delivered strong results for our members despite the challenges brought about by a second year of a global pandemic,” said Jo Taylor, President & Chief Executive Officer. “We had excellent investment performance, maintaining our fully funded status, and delivered a high level of service for our members – all while making meaningful progress on our new multi-year strategy.”

As at December 31, 2021, Ontario Teachers’ delivered an annualized total-fund net return of 9.7% since inception in 1990 and five- and 10-year annualized total-fund net returns of 8.4% and 9.3%, respectively.

Investment Performance

Time period (all as at December 31, 2021)

One-year

Five-year

10-year

Since inception

Total-fund net return

11.1%

8.4%

9.3%

9.7%

“Our diversified portfolio had an excellent performance in 2021 with strong returns across private assets, particularly in private equity, infrastructure, inflation sensitive assets and the Teachers’ Innovation Platform,” said Ziad Hindo, Chief Investment Officer. “Our efforts to balance and diversify our portfolio through increasing allocations to credit, real assets and inflation-sensitive assets proved timely, and positions us well to weather the potential impacts of various economic outcomes including the current inflationary environment.”

The performance relative to the benchmark was driven largely by outperformance by our private equity, infrastructure, credit and inflation sensitive asset classes, which all meaningfully exceeded their individual benchmarks.

Portfolio Performance by Asset Class (all figures as at December 31)

Fund returns by asset class are reported in the table below.

Fund returns (%)1

Actual

Benchmark

Actual

Benchmark

 

2021

2021

2020

2020

Equity

   

Public equity

9.0

13.1

15.2

11.2

Private equity

29.0

17.5

13.5

12.3

 

21.3

15.5

13.2

12.1

Fixed income

   

Bonds

(9.4)

(9.4)

24.6

24.5

Real-rate products

(1.4)

(1.4)

12.8

12.8

 

(6.3)

(6.3)

20.7

20.6

Inflation sensitive

Commodities

7.9

7.9

4.3

4.2

Natural resources

28.1

24.1

(11.2)

(8.5)

Inflation hedge

8.0

8.0

(4.4)

(4.4)

 

11.4

10.9

(2.4)

(1.6)

Real assets

   

Real estate

2.5

8.8

(13.7)

(4.7)

Infrastructure

7.9

1.2

2.6

7.5

 

5.4

5.3

(7.6)

(0.1)

Innovation2

39.0

39.0

16.3

16.3

Credit

3.5

1.2

2.6

1.5

Total-fund net return

11.1

8.8

8.6

10.7

1 The total-fund net return is calculated after deducting transaction costs, management fees and investment administrative costs. Asset-class returns are before deducting investment administrative costs.

2 Benchmarked to actual return during an incubation period, after which it will be measured against an active benchmark.

Detailed Asset Mix (all figures as at December 31)

Asset Class

$ billions

%

$ billions

%

 

2021

2021

2020

2020

Equity

   

Public equity

27.2

11%

42.4

19%

Private equity

55.1

23%

41.8

19%

 

82.3

34%

84.2

38%

Fixed income

   

Bonds

33.3

14%

17.2

8%

Real-rate products

11.9

5%

17.4

8%

 

45.2

19%

34.6

16%

Inflation sensitive

   

Commodities

26.5

11%

17.7

8%

Natural resources

9.4

4%

7.4

4%

Inflation hedge

12.1

5%

11.5

5%

 

 48.0

20%

36.6

17%

Real assets

   

Real estate

26.3

11%

25.2

12%

Infrastructure

26.1

11%

17.8

8%

Real-rate products

 –  

0%

1.9

1%

 

52.4

22%

44.9

21%

Innovation

7.1

3%

3.5

2%

Credit

24.3

10%

18.0

8%

Absolute Return Strategies

14.9

6%

13.6

6%

Overlay3

(0.5)

0%

0.8

0%

Funding for investments4

(34.7)

(14%)

(18.3)

(8%)

Net investments5

239.0

100%

217.9

100%

3 Includes strategies that manage the foreign exchange risk for the total fund.

4 Includes term debt, bond repurchase agreements, implied funding from derivatives, unsecured funding and liquidity reserves.

5 Comprises investments less investment-related liabilities. Total Net Assets of $241.6 billion at December 31, 2021 (2020 – $221.2 billion) include Net investments and other net assets and liabilities of $2.6 billion (2020 – $3.3 billion).

“Our global investment teams had an active year, making nearly 50 direct or add-on private investments across five continents and committing to ambitious interim emission reduction targets,” added Taylor. “Looking forward, we are well positioned for continued global growth and to meet our strategic goal of reaching $300 billion in net assets by 2030.”

Transactions Highlights

Ontario Teachers’ manages approximately 80% of its assets internally, with a focus on deploying capital into active strategies. During 2021, the fund diversified investments globally and acquired nearly 50 private assets across five continents. Highlights from the year include:  

Capital Markets:

  • Alongside partner Incus Capital, provided a corporate loan of €140 million to Capital Energy, an integrated renewable energy operator in the Iberian Peninsula;
  • Provided capital to several syndicates at Lloyd’s, the world’s leading insurance and reinsurance marketplace, through the London Bridge Risk (LBR) PCC.

Equities:

  • Acquired a 33.4% interest in Greenstone, a leading insurance distributor focused on developing life and general insurance products for Australians and New Zealanders;
  • Announced plans to acquire HomeQ, the parent company of HomeEquity Bank, Canada’s leading bank offering reverse mortgage solutions;
  • Made a significant strategic investment in Mitratech, a leading provider of legal and compliance software;
  • Became an anchor investor funding U.S. private equity firm TPG Rise Climate Fund, which works with businesses who are developing innovative climate solutions. 

Infrastructure:

  • Acquired a 40% holding in Caruna, Finland’s largest electricity distribution company;
  • Jointly acquired a 100% interest in the Canadian district energy operations owned by Enwave Energy Corporation for C$2.8 billion on an enterprise value basis;
  • Acquired a 50% interest in a portfolio of high-quality wind, solar and energy storage assets across the United States from NextEra Energy Resources, LLC;
  • Became a founding investment partner of the Brookfield Global Transition Fund, a global fund dedicated to accelerating the transition to a net-zero economy.

Natural Resources:

  • Became a significant shareholder in GreenCollar, a leading environmental markets project developer and investor across the carbon, water quality, biodiversity and plastics markets in Australia.

Real Estate:

  • Our real estate subsidiary Cadillac Fairview, alongside partner Lincoln Property Company’s residential division, grew their US multifamily fund from US$800 million to US$1.8 billion in equity. The fund will continue to focus on the development and acquisition of high-quality multifamily assets in top US markets.

Teachers’ Innovation Platform:

  • Led a C$375 million Series D fundraising round for ApplyBoard, an online platform that empowers students around the world to access top quality education;
  • Participated in the US$420 million B-1 funding round for FTX Trading Ltd., owner and operator of FTX.COM, a leading global cryptocurrency exchange;
  • Led the US$138 million Series C fundraising for Beamery, a leading talent operating system that helps companies attract, engage and retain top talent.

Climate ambition and investment

As part of its journey to achieve net zero on its investment activities by 2050, Ontario Teachers’ set industry-leading targets to reduce portfolio carbon emissions intensity by 45% by 2025 and 67% by 2030, compared to its 2019 baseline. Our portfolio carbon footprint and progress against these targets will be included in our upcoming annual report.  

“We have a multi-faceted climate strategy that is rooted in driving real-world emission reductions,” said Hindo. “Our strategy reflects our commitment to be accountable and to act immediately to reduce the environmental impact of our portfolio.”

Ontario Teachers’ has more than $30 billion in green investments in its portfolio and completed several transactions in 2021 that contribute to a net-zero carbon future. Since announcing its net-zero commitment in January 2021, it has invested or committed over $5 billion into additional green or transition assets.

Investment costs

Ontario Teachers’ is committed to cost effectiveness and both manages and links its costs to the investment value creation process. Total investment costs including administrative expenses, transaction costs and external management fees totaled $2,030 million (91 cents per $100 of average net assets) in 2021, compared to $1,452 million (70 cents per $100 of average net assets) in 2020.

The increase in investment costs  over the prior year was driven primarily by a significant increase in deal volume and transaction size in 2021, higher external management fees including performance fees due to strong investment performance, and higher annual and long-term incentives due to strong total-fund performance.

About Ontario Teachers’

Ontario Teachers’ Pension Plan Board (Ontario Teachers’) is the administrator of Canada’s largest single-profession pension plan, with C$241.6 billion in net assets (all figures at December 31, 2021 unless noted). It holds a diverse global portfolio of assets, approximately 80% of which is managed in-house, and has earned an annual total-fund net return of 9.7% since the plan’s founding in 1990. Ontario Teachers’ is an independent organization headquartered in Toronto. Its Asia-Pacific region offices are located in Hong Kong and Singapore, and its Europe, Middle East & Africa region office is in London. The defined-benefit plan, which is fully funded as at January 1, 2022, invests and administers the pensions of the province of Ontario’s 333,000 active and retired teachers. For more information, visit otpp.com and follow us on Twitter @OtppInfo.

Contact

Dan Madge
Ontario Teachers’ Pension Plan
Phone: +1 416-419-1437
Email: media@otpp.com

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'Low-risk' Vernon real estate investment turns into 8-year court battle | iNFOnews | Thompson-Okanagan's News Source – iNFOnews

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FILE PHOTO.
(BEN BULMER / iNFOnews.ca)

It was sold as a low-risk, low-stress, self-financing real-estate investment, and involved 14 non-descript condos on a Vernon street more associated with crime than as a place to invest money.

But in the 11 years since a variety of investors bought the rental units, eight of those years have been tied up in bitter litigation fueled by antagonism and deeply entrenched positions.

Following an 18-day trial at the Vernon courthouse, Justice Elaine Adair said that fortunately, the one area of consensus between all the parties involved was that they wanted the units sold.

“Sale of the units would at least bring an end to the prolonged fighting over matters relating to the Strata Corporation and its governance, and reduce the scope of the war to one over money and the division of profits,” Justice Adair said.

Details of the case are laid out in a 101-page, 36,000-word B.C. Supreme Court decision.

According to the decision, the case dates back to 2008 when Rene Gauthier, Odin Zavier, and Thane Lanz formed SWS Marketing to start a business in real estate investment.

Zavier had purchased a marketing licence, which allowed him to take on clients and advise them on marketing plans. Lanz took one of Zavier’s classes and they became friends.

They met Gauthier and the three decided to go into real estate investment. They launched SWS Marketing and although the three were supposed to own the company equally, Gauthier held more than 50 per cent of the shares and controlled the firm.

SWS Marketing got involved in three residential real estate development projects in the Lower Mainland before finding the 14 units in Vernon in 2010.

The following year Zavier bought the 14 units, spread over two buildings for $1.6 million. It worked out at $116,000 per unit, which they thought was a good deal as the units had been appraised at $145,000 each.

The transaction was structured so that, before completion, the company entered into separate contracts of purchase and sale for the individual units with investors.

Zavier, Lanz, and Gauthier were all involved in approaching potential buyers for the units. The investors were spread across the country and they sold it as a “hands-off” deal.

“The Vernon Project was presented as one having positive cash flow, and not requiring much cash up front,” the decision reads.

Investors needed to provide $2,500 and obtain a mortgage. SWS Marketing would manage the rental building and provide the remaining roughly $30,000 for the down payment.

As part of the transaction, each of the new owners also had to sign a Joint Venture Agreement.

These agreements laid out the profit share of 50 per cent between an owner and SWS Marketing.

It’s these Joint Venture Agreements that became to focus of much of the litigation.

READ MORE: Kamloops mother, baby sent to Kelowna after closure of pediatric ward at Royal Inland Hospital

The agreements appeared to have gone smoothly until 2013 when things broke down.

A dispute between Gauthier and Zavier “boiled over” and Lanz sided with Zavier.

“The Fall of 2013 also marked the beginning of the duelling strata councils,” the decision reads. “The ‘Gauthier Council,’ and the ‘Zavier Council.’

Due to their dispute, both Gauthier and Zavier created their own strata councils. Condo owners then chose sides and paid their strata fees to the strata council they preferred. The opposition strata council then sent demand letters asking for payment.

Justice Adair said this created “more confusion.”

Around this time the litigation started.

SWS Marketing, which is controlled by Gauthier, sued Zavier and Lanz, along with eight other owners, the strata council, and nine John and Jane Does.

Gauthier argued that Zavier and Lanz along with the other owners had breached the Joint Venture Agreement on how the profits were divided.

The parties were regularly in and out of court.

“By 2017, some of the defendant-owners had had enough and wanted out of their investments,” the decision says.

Zavier then steered the owners towards a company owned by his wife called the Home Buying Centre.

The company promised to help people who have properties that are difficult to manage.

SWS Marketing then accused Zavier and Lanz of intentionally creating the “chaos” so the owners would give up their units to Zavier’s wife’s company.

Zavier denied that.

READ MORE: Compulsory mental health treatment a ‘double-edged sword’ for rights of offenders

The lengthy court documents go through the long history of disagreements between the parties as they argue about what certain contracts meant.

Both parties accuse the other of being “evasive, obstructive and dishonest” throughout the trial.

There are accusations of forged signatures and very different accounts of who paid for what.

Justice Adair agreed that Zavier and Lanz were both “argumentative and evasive” and she also felt there were concerns about the credibility and reliability of some of Gauthier’s evidence.

“Through their answers, both Mr. Zavier and Mr. Lanz demonstrated considerable antagonism toward Mr. Gauthier,” the Justice said.

The Justice said Lanz was “openly sarcastic and derisive.

“My strong impression was that Mr. Lanz has held a long-standing grudge against Mr. Gauthier, and saw the trial as an opportunity to settle scores,” the Justice said.

Ultimately, following a lengthy analysis of multiple claims and counterclaims, the Justice dismissed the action against Lanz but ruled that Zavier, along with each of the condo owners had breached the Joint Venture Agreement.

However, the court proceedings are not yet over.

The Justice ruled that neither side had put forward an argument about how the court should go about assessing the damages.

“In those circumstances, I have concluded that I cannot make a final order, and it would not be just to make such an order, without receiving further submissions,” Justice Adair said.

The Justice then ordered both sides to come back to court with submissions about how to move forward with damages.

READ MORE: ‘TERRIFIED’: The interrupted life and final days of Katherine McParland


To contact a reporter for this story, email Ben Bulmer or call (250) 309-5230 or email the editor. You can also submit photos, videos or news tips to the newsroom and be entered to win a monthly prize draw.

We welcome your comments and opinions on our stories but play nice. We won’t censor or delete comments unless they contain off-topic statements or links, unnecessary vulgarity, false facts, spam or obviously fake profiles. If you have any concerns about what you see in comments, email the editor in the link above. 

News from © iNFOnews, 2022

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Dozens of MPP investment properties surge to more than $36 million as Ontario housing affordability worsens – CTV News Toronto

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Dozens of candidates running for re-election are sitting on investment properties that are surging millions in value as a housing crisis takes hold across Ontario, according to a review of disclosures by CTV News and a new home valuation tool.

And those eye-popping gains — to at least $36.5 million in investment properties alone according to Canadian app HouseSigma’s Home Valuation feature — is prompting tough questions from critics over whether those assets could be one reason leaders are not taking more action on the housing file.

“It’s no surprise to anyone living in Ontario that housing prices have literally gone through the roof,” said Bilal Akhtar of the pro-affordability group More Neighbours Toronto, who said large investments in the housing market could amount to a conflict of interest.

“Anyone who benefits from home price appreciation are not going to prioritize this. They are going to say, I can push this construction 10 years down the road,” he said.

MPPs in Ontario disclose that they own investment properties, but not exactly where. So CTV News Investigates had to dig into land title records and other sources to find more than 40 properties, owned by 25 MPPs in the most recent parliament.

Once we had identified the properties, HouseSigma’s machine learning and artificial intelligence came in with estimates about what the properties are worth today.

Of the properties we identified, 23 were owned by MPPs elected as PCs, 15 by NDP MPPs, and three by Liberals. The Green party confirmed that Mike Schreiner does not have an investment property.

For example, Willowdale PC Candidate Stan Cho has four investment properties. The two that we could value are worth an estimated $2.3 million today.

In Scarborough, NDP Candidate Dole Begum’s portfolio of four properties, which she shares with her extended family, rose $2.49 million since purchase to $4.41 million today.

Former Liberal Premier Kathleen Wynne declared two investment properties, which have more than doubled in value since purchase, to $1.5 million.

Former PC MPP Roman Baber — who was removed from caucus in 2021 over his opinion on COVID-19 lockdowns — appeared to have the largest portfolio, with three homes valued together at $5.21 million, a surge of about $2 million since he purchased them.

Many of these properties are over and above any properties they own as their residence, as a recreational property, or as a property they use to live in Toronto during legislative sessions.

Of the properties bought in the past 10 years, prices have jumped about 77 per cent — a windfall of about $4.7 million on paper.

That’s a figure that has some Ontarians wondering about the impact that amount of money has on our legislators making decisions.

“If you are someone who makes money off the housing market in a direct way, you have a very clear conflict of interest,” said Marguerita Kaliazina, speaking on Danforth Avenue in Toronto.

Reached at a press conference in Hamilton, PC Leader Doug Ford — running to keep his job as premier — said his government had acted to rein in prices.

“I don’t think we’re slow. To the contrary,” he said, pointing to housing starts figures he argued shows there was an increase in housing supply. “Our goal is to cut through the red tape and work collaboratively with municipalities because they’re the ones issuing the permits.”

Ontario’s Housing Affordability Task Force found that house prices have almost tripled in the past 10 years, growing much faster than incomes.

“Housing has become too expensive for rental units and it has become too expensive in rural communities and small towns. The system is not working as it should,” the authors wrote, making recommendations including building 1.5 million homes in 10 years to keep up.

Ford has embraced the 1.5 million homes figure, but has balked at other recommendations of the task force, including adding density in cities and ending exclusionary zoning, which Akhtar said had been left out of legislation introduced in March.

“What they all seem to be lacking is understanding the severity of this crisis and the urgency,” Akhtar said.

The Ontario Real Estate Association, which represents realtors in Ontario, called on all parties to make sure future generations have a chance to own a home, including measures to double the land transfer tax rebate for first time buyers, end exclusionary zoning, and getting dirty money out of Ontario real estate.

“You tended to think that if you played by the rules you could afford a home in the neighbourhood you grew up in,” said OREA CEO Tim Hudak in an interview. “That’s not the case any more.”

Ontario’s NDP have also embraced the goal of 1.5 million new homes, saying in their platform they would end exclusionary zoning and increase the supply of affordable housing in pedestrian and transit-friendly neighbourhoods.

The Ontario Liberals also point to the 1.5 million new homes in their platform, saying they will create an Ontario Home Building Corporation, and allow homes with up to three units and two stories to be built as-of-right across Ontario, including secondary and laneway suites.

While investment properties are one way of measuring wealth owned by MPPs, homes themselves store immense wealth: an an example, records show both Liberal and PC candidates running against Doly Begum in Scarborough Southwest appear to own homes worth in the neighbourhood of $2 million. 

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Al Gore's Investment Firm Unveils $1.7 Billion Sustainable Fund – BNN

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(Bloomberg) — Generation Investment Management, the $36 billion investment firm co-founded by Al Gore, launched a new fund targeting companies that contribute to lower emissions, increased financial inclusion and more accessible healthcare. The $1.7 billion Sustainable Solutions Fund IV will allow Generation to invest in growing companies that “are shifting industries toward sustainability and responsible innovation at scale,” the fund manager said in a statement Wednesday. The new fund is Generation’s response to the “sustainability revolution,” which will have “the magnitude of the industrial revolution and the speed of the digital revolution,” Lila Preston, the firm’s head of growth equity, said in an interview. The asset manager has researched “all pockets of the economy” to identify where the disruption will play out and which companies will perform best, she said.Generation’s latest sustainability fund is opening in the middle of an energy crisis that’s driven fossil-fuel prices higher and left many environmental, social and governance funds underperforming their benchmarks. In the US, ESG funds are down about 15% this year, compared with a roughly 35% increase in the MSCI world index for oil, gas and consumable fuels.Co-founded in 2004 by former U.S. Vice President Al Gore and and David Blood, a long-time Goldman Sachs Group Inc. executive, Generation has long shunned fossil fuels and warned that the finance industry is running out of time to shift capital away from greenhouse-gas emitters. Gore, whose 2006 documentary, “An Inconvenient Truth,” brought the issue of climate change to the awareness of the general public, has repeatedly warned of a “subprime carbon bubble’’ with investors caught on the wrong side of history facing significant losses.Preston said Generation’s new fund will target companies with revenues between $30 million and $300 million. All potential portfolio companies are assessed not only on the quality of their business and management, but also on their so-called system-positive contribution “to ensure they are clearly driving the transition to a more sustainable future,” Generation said.The new fund will target three key areas: planetary health, which focuses on a company’s ability to deliver net-zero carbon solutions in mobility, agriculture, energy and enterprise by cutting waste and emissions and supporting biodiversity;  “people health,” which targets companies that help deliver better, cheaper access to health care; and financial inclusion, which looks for companies that aid access to finance, help reduce inequality and support an equitable future of work.Generation said its analysis measures the “first and second-order effects of a business model on people and planet, including implications of its products, supply chain, organizational culture and broader role in society.”. In October, the firm announced that it’s teaming up with Goldman Sachs Asset Management, Microsoft Climate Innovation Fund and Harvard Management Co. to create a venture that will make investments pegged to limiting global warming to 1.5 degrees Celsius above pre-industrial levels.

©2022 Bloomberg L.P.

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