Going in Partnership Where Markets Lead
“We invest with the intention of holding the real estate indefinitely,” says Canada Pension Plan Real Estate Expert
The real estate market has been particularly hot over the past couple of years, but it’s likely to quiet down now.
“Last year and the previous year were great years to be buying real estate,” says Peter Ballon, Vice-President, of Real Estate Investments in the Americas for the Canada Pension Plan Investment Board (CPPIB). “I anticipate that we will be less active in the next couple of years than the last two years, but we still expect to see some interesting opportunities.”
I’ve seen three major dips in my career. People who enter the field think that real estate only goes up, but it is a cyclical business,” Peter Ballon.
Ballon, who was among the team responsible for investing some eight billion dollars in equity last year, says that there was a shortage of equity capital that enabled his group to invest in several attractive properties at good prices. Their group is unusual, however, in that they only invests in real estate when it can get the best return-on-investment.
“CCP is somewhat unique compared to other funds in that we don’t have any specific allocations either to real estate or within real estate,” said Ballon. “We simply view real estate as providing returns against a certain benchmark, which is really a basket of risk profiles. If we think we can get a good risk-adjusted return on real estate, then we invest in that category, and if we don’t, then we don’t invest in that category. It’s all about assessing the risk and seeing if we’re being adequately paid for it.”
Note: This article appeared on page 14 of the Winter 2012 issue of Canada’s Leading Real Estate Forum Magazine.
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Tracey Arial helps Canadians grow with notable nonfiction and urban agriculture.