There are several reasons for increasing the Plan’s allocation to real estate:

• There is generally a lower correlation between the performance of real estate and that of the public stock and bond markets, where most of the Plan's assets are invested. Real estate investments are therefore expected to respond differently to economic cycles than stocks or bonds. As a result, real estate offers the prospect of more stable returns in periods when stock and/or bond markets perform poorly.
• Real estate also tends to be highly correlated with inflation over time, providing an excellent match with the cost of retirees’ pensions, which increase annually to keep pace with inflation.
• Real estate can also be expected to generate a steady stream of income that can be used to make ongoing pension payments.

Real estate strategy
OPTrust’s real estate strategy includes holding a variety of investments that provide diversity by property type, geographical location, manager and investment style. Investments are identified, screened, purchased and monitored on an ongoing basis by portfolio managers in our internal Real Estate Group, with the assistance of external investment managers.

Our Canadian portfolio consists of office, retail, industrial and multi-residential properties that are owned directly by the Plan. OPTrust has also invested in a number of Canadian and international pooled real estate funds.