OMERS generated a net investment return of 3.1%, or a gain of $3.8 billion, during the six-month period from January 1 to June 30, 2023. Over the 12 months ended June 30, 2023, the Plan earned a net investment return of 7.8%, or a gain of $9.2 billion. At June 30, 2023, net assets totaled $127.4 billion, an increase of $7.9 billion over the last 12 months.
“We have had a good start to the year, generating almost $4 billion in returns on behalf of our members,” said Blake Hutcheson, OMERS President and CEO. “As a pension plan that pays benefits over generations, we are a long-term investor and over the last 10 years OMERS has earned an average net return of 7.8%, adding more than $68 billion to the Plan.”
“These results underscore the value of a well-diversified portfolio,” said Jonathan Simmons, OMERS Chief Financial and Strategy Officer. “Strong gains in our high-quality public equity holdings drove our performance. Real estate valuations decreased in the first half of 2023, but this impact was more than offset by solid earnings from infrastructure and credit investments.”
Mr. Hutcheson continued, “Rising interest rates are creating opportunities for OMERS in fixed income that we have not seen in many years. We are selectively targeting these opportunities while actively managing our existing portfolio and patiently waiting for the right time to deploy our ample liquidity into growth opportunities.
“On behalf of our Board, our Executive Leadership Team and OMERS employees around the world, we are proud to serve more than half a million OMERS members whose hard work and dedication keep our communities strong.”
OMERS is a jointly sponsored, defined benefit pension plan, with 1,000 participating employers ranging from large cities to local agencies, and over half a million active, deferred and retired members. Our members include union and non-union employees of municipalities, school boards, local boards, transit systems, electrical utilities, emergency services and children’s aid societies across Ontario. OMERS teams work in Toronto, London, New York, Amsterdam, Luxembourg, Singapore, Sydney and other major cities across North America and Europe – serving members and employers, and originating and managing a diversified portfolio of high-quality investments in public markets, private equity, infrastructure and real estate.
OMERS invests in high-quality assets that are well-diversified by geography and asset type.
As at June 30, 2023
As at June 30, 2023
Six months ended
Six months ended
Over the six months ended June 30, 2023:
Rising interest rates continued to support returns from bond and credit investments.
Public equities delivered strong returns from our core holdings in high-quality, large-cap stocks in the technology, communication, financials, and consumer discretionary sectors.
Private equity assets earned a positive return as operational improvements and tuck-under acquisitions increased portfolio company earnings.
Our globally diversified infrastructure assets continued to generate steady income and generated net valuation gains primarily from our fibre optic networks.
Our real estate assets recognized valuation declines as a result of pressure from higher interest rates and lower market demand for space in the office sector. These declines offset the stable income collected by our properties, profits from completed development projects and valuation gains in high-quality retail assets, residential properties and hotels which benefited from favourable leasing activities.
Foreign exchange detracted from our net investment results by approximately 1.0%, primarily due to weakening of the US dollar relative to the Canadian dollar.
We continue to maintain ample liquidity, with $23.6 billion in liquid assets to pay pension benefits, fund investment opportunities, satisfy potential collateral demands related to our use of derivatives, and to fund expenses. We also have the capacity to borrow an additional $2.3 billion while remaining within our 10% leverage limit.
This Investment Update presents certain non-GAAP measures. These measures are calculated on the same basis as those calculated and presented in our 2022 Annual Report. This Investment Update and the Opens new window (the “Interim Financial Statements”) are unaudited. OMERS Administration Corporation’s financial performance set out in this Investment Update is only for the period ended June 30, 2023, unless otherwise indicated. Past performance may not indicate future performance because a broad range of uncertainties (including without limitation those related to interest rates and inflation) could have an impact on the performance of various asset classes. The financial information included in this Investment Update should be read in conjunction with the Interim Financial Statements.
Investing for tomorrow
We remain disciplined and focused on ensuring that our portfolio is comprised of high-quality, diverse assets that meet our risk and return requirements. Below are some of our 2023 investment activities.
We approved a major conversion project, to redevelop Opens new window, into a state-of-the-art life sciences hub that will also be the new home of the BioIndustry Association, the trade association for UK life sciences.
We continued to progress our life sciences activity in the US, including the purchase and long-term lease back of a 120,000 square foot, state-of-the-art Opens new window, the final acquisition and completion of a 95,000 square foot Opens new window, and the sale of a newly constructed 140,000 square foot Opens new window.
We made a significant capital commitment to Opens new window, a 100% fiber infrastructure network servicing the enterprise, commercial, and residential sectors, primarily in Toronto, Vancouver and Montreal. This strategic investment will mark our entry into North American digital infrastructure and aims to support Beanfield’s mission of providing cost-effective, high-speed broadband connectivity to a wider range of homes and businesses.
We signed an agreement for the acquisition of Opens new window, a Dutch energy infrastructure solutions business that provides medium-voltage infrastructure – including transformers and switchgear – and meters to over 25,000 commercial and industrial business customers in the Netherlands and Belgium.
We led funding rounds for innovative companies across a range of industries, including:
We completed the sale of our majority stake in Trescal, a global leader in calibration services, and look forward to continued partnership with the business through our re-investment as minority owners.