AIMCO posts 6.9% annual return, but misses 8.7% benchmark

Alberta Investment Management Corp. (AIMCO) posted an overall return of 6.9 per cent in 2023, despite challenges in its real estate portfolio. The asset manager, which invests on behalf of pension, endowment, insurance and government clients in Alberta, ended the year with $160.6 billion in assets under management.

The return, though positive, fell below AIMCO’S benchmark return of 8.7 per cent.

The real estate portfolio was down 8.4 per cent at Dec. 31, offsetting significant gains posted by public equities and fixed income, which were up 15.8 per cent and 7.7 per cent respectively. The private equity portfolio also generated a positive return, at 6.7 per cent, while renewables were up 3.5 per cent. Mortgages and private debt and loan posted positive returns of 4.5 per cent and 9.6 per cent, respectively.

AIMCO took the hit to its primarily North American-focused real estate portfolio alongside other funds invested in the office segment of commercial real estate as hybrid work persisted, said Marlene Puffer, who has been the asset manager’s chief investment officer since early last year.

“The valuations have suffered for more than one reason,” she said, adding that clarity around interest rates coming down — hopefully over the next quarter — could lead to more deals in the sector, in which there is often a large gap between the price a buyer is willing to pay and the amount a seller is willing to accept.

“That is the dance that’s happening right now,” she said. “I think the market will settle itself out and we’ll see some significant properties change hands this year. But they’re not going to be changing hands at bottom-of-the-barrel valuations.”

AIMCO’S real estate holdings are primarily located in Canada and the United States, with some in Europe and the United Kingdom. At the end of fiscal 2022, the office segment accounted for 21.3 per cent of the portfolio, with updated figures expected to be published in June.