January 21, 2003
The CPP Investment Board announced today its second commitment in commercial real estate ownership as part of its strategy to diversify its overall asset portfolio beyond equities and bonds.
It has committed up to $100 million to the Canadian Income and Growth Fund, managed by LaSalle Investment Management (Canada) Inc., which will be invested over 30 months primarily in Canadian office, industrial, retail and multi-unit residential properties.
“Our commitment to the LaSalle fund is a further step in our real estate investment strategy designed to diversify our overall portfolio,” said Mark Weisdorf, CPP Investment Board Vice President, Private Market Investments. “This announcement is another example of how we are building a value-added real estate portfolio that will focus on the four major asset classes across Canada.”
Value will be added through restructuring and refinancing, re-merchandising of shopping malls, new lease arrangements, changes in property use, and capital improvements through redevelopment and renovation.
The LaSalle investment follows the announcement last week of a $200 million commitment to Osmington Inc. and the $300 million purchase of five shopping centres from Cadillac Fairview.
The CPP Investment Board is also developing a second strategy to build a real estate portfolio of high-quality core properties that will be held for the long term. The shorter-term value-added strategy, reflected by the LaSalle and Osmington transactions, is more opportunistic, pro-active and higher-risk-for-higher-returns than the long-term core property strategy. Both real estate investment strategies will diversify Canada Pension Plan assets beyond equities and bonds, while reducing volatility and enhancing the long-term risk-adjusted returns of the total portfolio.
The long-term plan is to invest up to five percent of Canada Pension Plan equity assets in real estate and infrastructure. With assets under management expected to reach $160 billion by 2012, as much as $8 billion could be invested in real estate and infrastructure in less than 10 years.
LaSalle Investment Management (Canada) is a subsidiary of LaSalle Investment Management Inc. headquartered in Chicago, which has more than $32 billion of assets under management. This investment with the CPP Investment Board is LaSalle’s first co-mingled fund in Canada.
Created in December 1997, the CPP Investment Board is a crown corporation that invests funds not needed by the Canada Pension Plan to pay current pensions. Cash flows are invested in equities to balance the bond portfolio owned by the Canada Pension Plan. By increasing the long-term value of funds, the CPP Investment Board will help the Plan to keep its pension promise to Canadians. Located in Toronto, the CPP Investment Board is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. For more information on the CPP Investment Board, visit www.cppib.ca.
For further information contact:
Mark Weisdorf
Vice President – Private Market Investments
416 868-1538
OR
Ian Dale
Vice President – Communications and Stakeholder Relations
416 868- 4086
idale@cppib.ca