By Allison Lampert
MONTREAL, Sept 21 (Reuters) - The top real estate executive
of Canada's second-largest pension fund said he won't have to
make riskier investments to achieve his target of a 7 percent to
8 percent average annual return for the next decade.
Daniel Fournier, chief executive of Ivanhoe Cambridge, the
real estate arm of Caisse de depot et placement du Quebec
CDPDA.UL , said on Monday he won't have to take bigger risks as
yields weaken, a strategy he saw many investors take before the
global financial crash.
"I don't think the answer is to go way up the risk curve,"
he told reporters in Montreal.
Ivanhoe Cambridge, which owns C$48 billion ($36.22 billion)
in assets, generated an average 13 percent return a year over
the last five years, a target that is no longer "sustainable" as
markets cool, Fournier said.
He said Ivanhoe Cambridge would continue to use the same
strategy of striking a balance between higher yielding,
opportunistic transactions and the purchase of quality
properties that deliver stable but comparatively lower returns.
"It's the balance between the two that gave us the 13
percent over the last five years and where we're trying to
produce the 7 or 8 percent that the Caisse is expecting from
us," he said.
In January 2015, Ivanhoe Cambridge generated headlines for
buying 3 Bryant Park in New York for $2.2 billion, a near-record
price for an individual U.S. office building.
While commercial real estate prices have soared in global
gateway cities like New York and London, Fournier said that
unlike 2007 and 2008, he doesn't see any froth, or trend of
overbuilding in U.S. markets that was prevalent in the run-up to
the global crash.
($1 = 1.3252 Canadian dollars)