CPP Investments Taps Sophie van Oosterom to Head Up Global Real Estate

Kevin He of Mingtiadi reports CPPIB taps Schroders’ Sophie van Oosterom as Global Head of Real Estate:

The Canada Pension Plan Investment Board (CPPIB) has tapped Sophie Van Oosterom to lead its global real estate business, according to market sources who spoke to Mingtiandi.

The executive will be departing her parallel role at British investment manager Schroders Capital to replace Peter Ballon, who resigned from the Toronto-based pension giant in July.

Schroders separately announced on Wednesday the promotion of Nick Montgomery, a 12-year veteran of the British firm who currently leads its UK real estate investment business, to global head of real estate as part of a broader real estate leadership shuffle.

“I extend my deep gratitude to Sophie for her commitment to the business,” Georg Wunderlin, global head of private assets at Schroders Capital said in a release. “It has been a pleasure to work with her and I wish her every success as she embarks on a new role on the client-side.”

Three Decade Veteran

Van Oosterom has led Schroders’ global real estate investment business since January 2021, where she chaired the fund manager’s global real estate management committee and global investment committee. Her recruitment by CPPIB was reported earlier by Green Street News in the UK.

Prior to Schroders, Van Oosterom served as CEO and chief investment officer for Europe, Middle East and Africa at CBRE Global Investors (now CBRE Investment Management), where she also served as a member of the organisation’s global executive committee and global investment committee.

Before that, Van Oosterom was a managing director and head of asset and portfolio management for Europe and Asia at Lehman Brothers Real Estate Partners (now Silverpeak Real Estate Partners). The University of Amsterdam graduate’s nearly three decade career also includes stints at JP Morgan and Barings.

Van Oosterom is taking the helm at CPPIB’s real estate business as the Canadian pension giant takes on a series of data centre investments.

On Tuesday, CPPIB unveiled a $15 joint venture with Singapore sovereign giant GIC and US data centre operator Equinix to develop and operate hyperscale facilities in the US. The US deal comes after CPPIB and US private equity titan Blackstone last month announced the $16 billion acquisition of Australia’s AirTrunk, with CPPIB having agreed to take a 12 percent stake in the firm.

Richard Lowe of IPE Real Assets also reports Sophie van Oosterom to head global real estate at CPP Investments:

Sophie van Oosterom is to leave Schroders to head global real estate investments at Canada Pension Plan Investment Board (CPP Investments).

Van Oosterom, who has been global head of real estate at Schroders since 2021, will be replaced by head of UK real estate Nick Montgomery.

CPP Investments, a C$646bn (€428bn) Canadian pension fund with C$45.5bn in real estate assets, has been searching for a replacement for a new global head of real estate after the departure of Peter Ballon earlier this year.

According to a source close to the matter, Schroders is working on a transition plan ahead of van Oosterom’s move.

Georg Wunderlin, global head of private assets at Schroders Capital, said: “I extend my deep gratitude to Sophie for her commitment to the business. It has been a pleasure to work with her and I wish her every success as she embarks on a new role on the client side.” 

Schroders Capital said US$27.9bn (€25bn) of its US$97.3bn in assets under management were in real estate and that the asset class was “a strategically important growth area”.

Montgomery has been at Schroders for 12 years and has overseen the growth of the UK business, including the launch of Schroders Capital’s Real Estate Impact Fund.

Roger Hennig, who has been leading the real estate in Switzerland, will become head of continental Europe, based in Zurich.

Kieran Farrelly will also become global CIO for Real Estate in addition to his existing solutions responsibilities, and James Macnamara will assume global responsibility for value-add and alternatives investments, building on his current focus as head of strategy, hotels and operating assets.

Montgomery said: “I am privileged to take on this role and excited at the prospect of leading Schroders Capital Real Estate, a business with a 50-year history.

“Alongside the senior promotions announced today, we have a fantastic global team who are fully dedicated to delivering investment excellence and outperformance for clients.

“These changes also coincide with a cyclical recovery in many real estate markets, which provides a supportive backdrop for growing this strategically important part of Schroders Capital. I look forward to working with Sophie to ensure an orderly transition.”

Bloomberg's Layan Odey and Paula Sambo also discuss the hiring of Sophie van Oosterom to head up CPP Investments' real estate portfolio here.

This is the latest executive shakeup at CPP Investments which had a few over the summer. To recap:

• Priti Singh was named the new CRO and Heather Tobin will be replacing her as Global Head of Capital Markets and Factor Investing (see my comment here).
• Caitlin Gubbels was promoted to Head of Private Equity replacing Suyi Kim (see my comment here)

And now with this latest nomination, Sophie van Oosterom will be replacing Peter Ballon as Global Head of Real Estate.

I can't say I'm surprised given that real estate remains a problem asset class at CPP Investments and other large Canadian pension funds.

To be more specific, Retail and Office investments remain a drag on returns and there doesn't seem to be much light at the end of the tunnel. 

Recall, CPP Investments reduced its real estate exposure for the third time in six years as it posted a 5 percent annual loss for the asset class for its fiscal year 2024.

From the FY 2024 Annual Report:

Real estate investments generated a five-year net return of 0.7%. The portfolio had mixed results and was particularly impacted by rising interest rates in recent years. Rising rates also negatively impacted the cost and availability of financing for these assets. Investments in the logistics sector were an exception as they experienced increased tenant and investor demand for most of the five-year period. This contrasted with retail and office investments, which were negatively affected by the transition towards e-commerce and the impact of evolving hybrid workplace trends.

Real estate investments delivered a negative net return of 5.0% in fiscal 2024, following losses also in the previous fiscal year. The overall rise in interest rates across many markets continued to adversely impact this asset class. Most of the losses were in the office sector, given the additional impact of changes in workplace trends.

As shown above, Retail and Office make up 12% of the Real Assets portfolio and that is the area that Ms. van Oosterom will be focusing a lot of her attention on.

There were also some news articles that raised eyebrows like:

• CPPIB's $1 office tower deal uncovers anxiety among longtime buyers
• Canada Pension Plan real estate investments deliver another loss due to empty office towers

Again, these aren't CPP Investments' specific issues, everyone is facing major headwinds in real estate and there were major executive shakeups at OMERS, OTPP and CDPQ as well, so none of this comes as a shocker to me.

I've also recently discussed the refinancing wall that is going to hit CDPQ's Ivanhoé Cambridge and other large pension funds that paid a premium for some assets over the last decade.

I know a lot more about problems in real estate at Canada's large pension funds but they will manage to get through them even if that means taking their lumps in some spots.

Now back to Sophie van Oosterom, this lady has extensive experience in real estate and John Graham couldn't have selected a better person to help manage their global real estate portfolio.

She's not only going to fix problem areas but also seize opportunities.

Back in March, she told Reuters Schroders was looking to buy up US commercial property in the billions of dollars over time and has begun hiring a team locally, with a focus on multi-family rental accommodation.

Build-to-rent, remember that folks, G7 nations are all headed in the same direction, nations of renters. 

Alright, let me wrap this up by wishing Sophie van Oosterom a lot of success in her new role.

It's not going to be easy but she has what it takes to lead this group and bolster that portfolio over the next five years.

Below, Sophie van Oosterom, Schroders Capital's former Global Head of Real Estate, joins Ferguson Partners' Europe Chair Serena Althaus to share perspectives on critical leadership qualities today, insights for women in leadership roles, keys to building a successful career and advice for future leaders (2023).

Take the time to really listen this interview, her thoughts on leadership shows her experience and she engages all members of her team, including junior members. 

Like I said, John Graham made the right selection here, I'm sure she will add value to the organization.

Update; To be clear, Sophie van Oosterom will be reporting to Maximilian Biagosch, Global Head of Real Assets and Head of Europe. This is why there wasn’t any major announcement on CPP Investments’ website.