U.S. shopping centres substantial headwind for Caisse in first half of 2020

The Caisse de dépôt et placement du Québec had a challenging first half of 2020, posting a negative 2.3 per cent return.

However, the pension fund remains in a strong financial position, according to president and chief executive officer Charles Emond, holding assets of more than $333 billion and with an 8.7 per cent annualized return over the past 10 years.

“In the first half of 2020, the global economy was hit by a crisis that was unprecedented both in its speed and reach,” he said in a press release. “Exceptional central bank monetary policies coupled with historic government assistance programs have prevented the recession from becoming a depression, but there is a growing dichotomy between the real economy and financial markets.”

Read: Caisse real estate arm partnering to provide retail tenants with e-commerce solutions

Indeed, real estate has been a sore spot for the Caisse so far this year, posting a negative 11.7 per cent return. Much of this underperformance was due to the pressure on U.S. retail and office spaces, noted the release. The pandemic has accelerated the challenges that shopping centres in particular have faced in recent years and the sub-sector’s underperformance is pushing Ivanhoé Cambridge, the Caisse’s real estate investment arm, to intensify the implementation of its current action plan.

“The subsidiary therefore intends to actively pursue the orderly transformation of its shopping centre portfolio, which will require tailor-made solutions for each asset, as well as continue its repositioning in market segments such as industrials, or in mixed-use projects, which integrate the commercial, residential, office and logistics sectors to better meet the needs of local communities,” noted the release.

Read: PSP investing in Italian real estate, CPPIB in education group

Meanwhile, infrastructure proved resilient under the circumstances, returning negative one per cent for the first half of 2020. Exposures to transportation, impacted by the pandemic, put pressure on the portfolio, but positions in telecommunications and renewable energy boosted performance.

Public equities returned negative five per cent for the period. The Caisse noted its portfolio at the time had limited exposure to technology stocks, which have bolstered other stock portfolios with their record climbs during the pandemic so far. Without mentioning a specific return, the pension fund also said its private equity showed resilience partly due to holdings in the insurance, health-care and technology sectors.

Read: PSP, CPPIB invest in biotech, OMERS Ventures in U.S. residential real estate