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Investors gain view on Canadian property funds

Friday, August 5, 2016

Canadian property funds have been added to the IPD Global Property Fund Index following two quarters of consultative performance tracking. Recently released 2016 second quarter results show a 1.4 per cent total return for the seven open-ended funds participating in the now formally launched REALpac/IPD Canada Quarterly Property Fund Index.

Designed as a benchmark tool to inform small and medium-sized real estate investors, the new index provides data on real estate assets, cash and debt leverage. Collectively, the participating funds encompass 870 individual assets valued at approximately CAD $24.8 billion.

“We believe the REALpac/IPD Canada Quarterly Property Fund Index brings a new level of transparency to the real estate sector in Canada, which will make our market even more attractive to global investors,” says Michael Brooks, REALpac’s chief executive officer.

In the Canadian market, the property fund index augments the REALpac/IPD Quarterly Property Index, representing 46 portfolios and more than 2,440 directly held assets valued at more than CAD $138 billion, and the Green Property Index, which measures performance of assets with LEED and/or BOMA BEST certification against the broader index. As part of the IPD Global Property Fund, the Canadian funds will be benchmarked with 90 other funds from North America, the United Kingdom, continental Europe and Asia Pacific, valued at USD $353.6 billion as of March 2016.

At mid-year, the Canada property index recorded a 2.5 per cent total return for 2016 and a 7.7 per cent one-year return. The property index is heavily weighted to retail (41.8 per cent) and office (36.1 per cent) properties, whereas a breakdown of the property fund exposure, presented at the annual real estate investment forum in Toronto last winter, reveals more even distribution among sectors. Office properties account for about 40 per cent of capital value, with retail at 21 per cent, industrial at 18 per cent and multi-residential at 17 per cent.

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