–Jeanine Prezioso
Canadian pension funds who scooped up commercial real estate when the market was booming two years ago are now having trouble hedging their exposure. The funds want to sell swaps on the Canadian Property Index of the Institute of Canadian Real Estate Investment Managers to offset valuations risk, but are having trouble finding counterparties.
“We suspect [pension funds] have become overweight in real estate because the value of their other assets has dropped. They need to lower their exposure,” said Simon Cote, managing director of property derivatives at National Bank of Canada in Montreal.
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