CPP Fund Totals $298.1 Billion at Third Quarter Fiscal 2017

TORONTO, ONTARIO -- (Marketwired) -- 02/10/17 -- All figures in Canadian dollars unless otherwise noted.

The CPP Fund ended its third quarter of fiscal 2017 on December 31, 2016 with net assets of $298.1 billion, compared with $300.5 billion at the end of the previous quarter. The $2.4 billion decrease in assets for the quarter consisted of $1.7 billion in net investment income after all CPPIB costs, less $4.1 billion in Canada Pension Plan (CPP) cash outflows. The CPP Fund routinely receives more CPP contributions than required to pay benefits during the first part of the calendar year, partially offset by payments exceeding contributions in the final months. The Fund continues to benefit from net contributions on an annual basis after all outflows. The portfolio delivered a gross investment return of 0.64% for the quarter, or 0.56% net of all costs.

For the nine-month fiscal year-to-date period, the CPP Fund increased by $19.2 billion from $278.9 billion at March 31, 2016. This included $19.4 billion in net investment income after all CPPIB costs, less $0.2 billion in net CPP cash outflows. The portfolio delivered a gross investment return of 7.1% for this period, or 6.9% net of all costs.

"The Fund's modest return this quarter reflects the largest quarterly decline in North American fixed income markets since CPPIB's inception coupled with the Canadian dollar strengthening against most major currencies except for the U.S. dollar, partially offsetting gains in our public equity portfolio," said Mark Machin, President & Chief Executive Officer, Canada Pension Plan Investment Board (CPPIB). "Income was generated across investment programs and our teams continue to invest in assets in line with our long-term objectives to deliver solid results."

Long-Term Sustainability

The CPP's multi-generational funding and liabilities give rise to an exceptionally long investment horizon. To meet long-term investment objectives, CPPIB continues to build a portfolio and to invest in assets designed to generate and maximize long-term, risk-adjusted returns. Accordingly, long-term investment returns are a more appropriate measure of CPPIB's performance than returns in any given quarter or single fiscal year.

In the most recent triennial review released in September 2016, the Chief Actuary of Canada reaffirmed that, as at December 31, 2015, the CPP remains sustainable at the current contribution rate of 9.9% throughout the forward-looking 75-year period covered by his report. The Chief Actuary's projections are based on the assumption that the Fund's prospective real rate of return, which takes into account the impact of inflation, will average 3.9% over 75 years. CPPIB's 10-year annualized net nominal rate of return of 6.5%, or 4.8% on a net real rate of return basis, was comfortably above the Chief Actuary's assumption over this same 10-year period. These figures are reported net of all CPPIB costs to be consistent with the Chief Actuary's approach.

The Chief Actuary's report also indicates that CPP contributions are expected to exceed annual benefit payments until 2021, after which a small portion of the investment income from CPPIB will be needed to help pay pensions.

Asset Mix

----------------------------------------------------------------------------
For the quarter ending December 31, 2016
($ billions)
----------------------------------------------------------------------------
                                                               $           %
Equities
  Public                                                   103.6        34.8
  Private                                                   63.3        21.2
                                                    ------------------------
                                                           166.9        56.0

Fixed Income                                                66.0        22.1
(includes bonds, money market
securities, other debt and debt financing
liabilities)

Real Assets
  Real Estate                                               37.7        12.6
  Infrastructure                                            27.6         9.3
                                                    ------------------------
                                                            65.3        21.9
----------------------------------------------------------------------------
Total(1)                                                   298.2         100
----------------------------------------------------------------------------

(1 ) Excludes non-investment assets (such as premises and equipment) and non-investment liabilities, totalling $(0.1) billion for Q3 F2017. As a result, total assets will differ from the net assets figure of $298.1 billion.

Q3 Investment Highlights:

Private Investments

--  Invested US$152.8 million in the first lien term loan of Pretium
    Packaging LLC. Based in Missouri, Pretium designs and manufactures
    custom rigid plastic containers for food and beverage, household and
    industrial, pharmaceutical and personal care customers.

--  Committed an additional US$107.5 million in the first lien term loan for
    Caliber Home Loans, Inc., a U.S.-based residential mortgage originator
    and servicer owned by Lone Star, for a total commitment of US$482.5
    million.

Real Assets

--  CPPIB Liberty Living Inc., a wholly owned subsidiary of CPPIB, invested
    additional equity into Liberty Living to support its acquisition of the
    Union State Portfolio of student accommodation for a total consideration
    of approximately GBP 460 million. The portfolio comprises 13 student
    residences across the U.K., Germany and Spain. Liberty Living was
    acquired by CPPIB in 2015.

--  Committed US$375 million in Secured Capital Japan Real Estate Fund VI
    (SCREP VI), PAG's real estate investment vehicle focused on distressed
    debt and off-market acquisition opportunities in commercial real estate,
    primarily in Japan with additional opportunities in South Korea and
    China. CPPIB's investment represents an approximate 25% stake in the
    investment vehicle.

--  Signed an agreement to acquire a 50% interest in a diversified portfolio
    of prime office and retail properties in New Zealand from the Public
    Sector Pension Investment Board, for a value of C$545 million. CPPIB's
    equity investment is approximately C$215 million. Located primarily in
    Auckland and Wellington, the portfolio comprises 13 office and retail
    properties totalling approximately 2.9 million square feet. The
    transaction is subject to customary regulatory approvals and closing
    conditions.

--  CPPIB Credit Investments Inc., a wholly owned subsidiary of CPPIB,
    signed an agreement to provide a GBP 240 million corporate mezzanine
    development facility to Quintain, a Lone Star-owned investment company.
    The financing will support the delivery of a new masterplan for Wembley
    Park in London, U.K.

--  Invested US$162 million to acquire a 40% interest in the Pavilion Dalian
    shopping mall from the Pavilion Group. Pavilion Dalian is a prime
    shopping centre in Dalian, a major economic hub in northeast China.

--  Invested US$375 million in Raffles City China Investment Partners III,
    CapitaLand's third integrated development private investment vehicle in
    China. CPPIB's investment represents a 25% stake in the investment
    vehicle.

--  Entered into a second joint venture with Longfor Properties Co. Ltd to
    invest in Chongqing West Paradise Walk shopping centre in China. CPPIB
    committed approximately C$193 million for a 49% interest in the
    property. West Paradise Walk is a six-level shopping mall built in 2008,
    located in the heart of one of Chongqing's most established commercial
    areas.

--  Acquired an additional 5.1% stake in Transportadora de Gas del Peru
    (TgP) for approximately US$110 million. TgP is the largest transporter
    of natural gas and natural gas liquids in Peru. With this acquisition,
    CPPIB's ownership stake increased from 44.8% to 49.9%.

--  Formed a joint venture with Hudson Pacific Properties (Hudson Pacific)
    to acquire a 285,680-square-foot, Class-A office tower in Seattle for
    approximately US$180 million (after closing adjustments). CPPIB owns a
    45% interest in the joint venture and Hudson Pacific owns 55%. Known as
    Hill7, the newly constructed, 11-storey office building offers large
    floorplates, city and water views, modern on-site amenities and
    convenient access to the regional transportation system.

Investment highlights following the quarter end include:

--  Invested US$80 million for a 23% equity stake in Accordia Golf, the
    leading golf course operator in Japan. The investment was made alongside
    MBK Partners, as part of their acquisition of Accordia Golf.

--  Signed an agreement to acquire an approximate 48% stake in GlobalLogic
    Inc., a global leader in digital product development services, from
    funds advised by Apax Partners LLP. Based in San Jose, California,
    GlobalLogic helps clients build innovative digital products to enhance
    customer engagement, user experience and service capabilities. The
    transaction is subject to customary regulatory approvals and closing
    conditions.

Asset Dispositions:

--  Sold CPPIB's 45% ownership interest in 1221 Avenue of the Americas, a
    Midtown Manhattan office property. Net proceeds to CPPIB from the sale
    were approximately US$950 million. CPPIB acquired the ownership interest
    in 2010.

--  An affiliate of CPPIB Credit Investments Inc. sold a 16% equity stake in
    Antares Holdings (Antares) to a private investment fund managed by
    Northleaf Capital Partners (Northleaf). Northleaf and Antares are
    forming a broader strategic relationship, which will include developing
    separately managed accounts and other investment solutions designed
    specifically for Canadian asset managers, institutional investors and
    private clients.

Corporate Highlights:

--  Benita Warmbold, Senior Managing Director & Chief Financial Officer,
    announced her intention to retire in June 2017. CPPIB plans to name a
    successor ahead of CPPIB's current fiscal year reporting activities, to
    allow for a seamless transition.

Five and 10-Year Returns (1, 2)

(for the quarter ending December 31, 2016)

----------------------------------------------------------------------------
                   Investment Rate of  Investment Rate of     Investment
                    Return (Nominal)      Return (Real)        Income(3)
----------------------------------------------------------------------------
5-Year
Annualized                11.7%               10.2%         $122.1 billion
----------------------------------------------------------------------------
10-Year
Annualized                6.5%                4.8%          $134.7 billion
----------------------------------------------------------------------------

(1) After all CPPIB costs.

(2) Rates of return are calculated on a time-weighted basis.

( 3) Dollar figures are cumulative.

About Canada Pension Plan Investment Board

Canada Pension Plan Investment Board (CPPIB) is a professional investment management organization that invests the funds not needed by the Canada Pension Plan (CPP) to pay current benefits on behalf of 19 million contributors and beneficiaries. In order to build a diversified portfolio of CPP assets, CPPIB invests in public equities, private equities, real estate, infrastructure and fixed income instruments. Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg, Mumbai, New York City and Sao Paulo, CPPIB is governed and managed independently of the Canada Pension Plan and at arm's length from governments. At December 31, 2016, the CPP Fund totalled $298.1 billion. For more information about CPPIB, please visit www.cppib.com or follow us on LinkedIn or Twitter.

Contacts:
Dan Madge
Senior Manager, Media Relations
+1 416 868 8629
[email protected]

Mei Mavin
Director, Corporate Communications
+1 646 564 4920
[email protected]

Source: CPP Investment Board

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