Canada’s largest public pension plan Canada Pension Plan Investment Board (CPPIB) committed $375 million in Hong Kong-based PAG’s real estate investment vehicle Secured Capital Japan Real Estate Fund VI, hinting at its continued interest in Asia’s real estate segment.
Announcing its financial report for fiscal 2017’s third quarter ended December last year, the CPP Fund said that it has “committed $375 million in Secured Capital Japan Real Estate Fund VI (SCREP VI), PAG’s real estate investment vehicle focused on distressed debt and off-market acquisition opportunities in commercial real estate, primarily in Japan with additional opportunities in South Korea and China.”
It further added that CPPIB’s investment represents an approximate 25 per cent stake in the investment vehicle.
Further, the fund that has been actively lapping up real estate investments in Asia. It invested $375 million in Raffles City China Investment Partners III, CapitaLand’s third integrated development private investment vehicle in China where the fund’s investment represents a 25 per cent stake in the vehicle.
Among other real estate investments were a second joint venture with Longfor Properties Co. Ltd to invest in Chongqing West Paradise Walk shopping center in China where it committed approximately C$193 million for a 49 per cent interest in the property.
Another investment was of $162 million to acquire a 40 per cent interest in the Pavilion Dalian shopping mall from the Pavilion Group. Pavilion Dalian is a prime shopping center in Dalian, a major economic hub in northeast China.
The fund ended its third quarter of the fiscal with net assets of C$298.1 billion, compared with C$300.5 billion at the end of the previous quarter.
For the nine-month fiscal year-to-date period, the CPP Fund increased by C$19.2 billion from C$278.9 billion at March 31, 2016. This included $19.4 billion in net investment income after all CPPIB costs, less C$0.2 billion in net CPP cash outflows. The portfolio delivered a gross investment return of 7.1 per cent for this period, or 6.9 per cent net of all costs.
“The Fund’s modest return this quarter reflects the largest quarterly decline in North American fixed income markets since CPPIB’s inception coupled with the Canadian dollar strengthening against most major currencies except for the U.S. dollar, partially offsetting gains in our public equity portfolio,” said Mark Machin, President & Chief Executive Officer CPPIB.