Canadian pension fund JV reports pretax loss for NZ property

12th March 2025 By Bridget O'Connell | bridget@propertyticker.co.nz | @propertyticker

A New Zealand investment vehicle owned by a pair of Canadian pension funds fell to a pretax loss as valuation write-downs more than offset rising rental income.

PSPIB/CPPIB Waiheke Inc is a joint venture between Canadian pension fund giants Public Sector Pension Investment Board and the Canada Pension Plan Investment Board, formed in 2016 when the latter bought 50% of a $1.1bn New Zealand retail, office and development portfolio from PSPIB.

The Auckland and Wellington portfolio comprised of 13 properties, including Botany Town Centre shopping centre, Manukau Supa Centre in Auckland, and the 13-floor St Paul’s Square office building in Wellington.

In its latest financial statements released on Monday for the year ending 31 December 2024, the company posted a pretax loss of just over $2m, which compared with a profit of $9.5m the previous year.

With the benefit of income tax, its net profit came back into the black at $905,000, but its performance gap with the year prior widened when it made a net profit of $19.4m.

At the top line, rental income for the JV increased, rising from $72m to more than $74m, and with a rise in other revenue, it booked total revenue of $92.8m, up 3.92%.

However its 2024 income was not boosted by any net unrealised gain on investment properties, whereas in 2023 it booked a 27.3m uplift.

As a result, total income slid from $119m to $95.3m in 2024.

And even though its expenses came in $7.7m less than the year prior – thanks largely to the fact it did not post any net realised net loss on properties held for sale – its operating profit tumbled compared with the period prior.

Profit from operating activities came in at $41.6m, down from $57.6m a year earlier, and even though net financial expenses were trimmed, it dipped into the red at the pretax profit level.

Operating cash flow increased by about $6.64m, from $23.53m in 2023 to $30.17m in 2024, indicating stronger operational performance.

However, the company experienced a decrease in cash holdings, from $38.97m to $19.19m, due to substantial investments in properties.

In 2023, the JV was involved in the year’s single largest commercial real estate deal, via the sale of an Auckland office tower to property tycoon and ex-politician Sir Bob Jones’ $2bn-plus company.

The office building at 51-53 Shortland St was valued at $70m.