Spokesperson defends the sale as fund eyes pricey CIBC Square move
CPP Investments has absorbed a $74.5m loss on the sale of its downtown Toronto headquarters while preparing to move into one of the city's costliest office towers.
The Toronto Star reported the investment arm of the Canada Pension Plan sold the 1 Queen St. E. complex, which includes the adjacent Confederation Life Building at 20 Richmond St. E., to fellow Crown agency Infrastructure Ontario.
The outlet cited a transaction summary from Altus Group that put the closing at $145.5m on May 14.
Real Estate News Exchange (RENX), citing transaction data it reviewed, pegged the price at $145m.
CPP Investments had paid $220m for the buildings in June 2013, the Star reported, a decline of roughly 34 percent over 13 years.
The money for the new office sits within the fund's operating expenses, which are deducted from net income.
Citing its own 2024 reporting, the paper put the estimated cost of the decade-long lease at CIBC Square at $300m to $430m.
Spokesperson Michel Leduc disputed that range in an emailed statement to the Star, calling it overstated and saying the actual cost falls below it, though he did not give a figure.
He also rejected the "upscale" label, telling the paper the tower at 141 Bay St. is "comparable to those occupied by Canada's leading financial institutions."
Leduc defended the deal to the Star as "the right decision for the CPP Fund," describing it as "deliberate, well executed" and a result that exceeded independent valuation, avoided millions in further capital investment and shifted leasing, operating and vacancy risk to the buyer.
He called it "a clear win" on a risk-adjusted basis.
The sale has no bearing on investment returns, he added, because the headquarters was a corporate asset rather than a fund investment.
According to Leduc, the move will shrink CPP Investments' footprint by about 12 percent, eliminate private offices including those for senior executives, and cut related carbon emissions by at least 45 percent.
"We secured the new space at an opportune time to lease in Toronto," he told the Star. "Another win."
The loss reflects a wider slump in Toronto office values.
Demand still trails pre-pandemic levels, Peter Norman of Norman Economic Strategies told the Star, largely because companies have shrunk their floor plates to use space more efficiently.
Norman, who had no role in the deal, said the low-value period could explain the loss, noting that "if your rent growth outlook now is softer than it was back (in 2013), then that's obviously going affect the value of the building."
Leduc framed the broader trend as "the most consequential repricing of office property in a generation," telling the Star that older Toronto office assets have fallen sharply since 2020 on higher vacancy and changing workplace patterns.
The class-A complex was 91.9 percent occupied, with CPP Investments itself taking up 78.6 percent, RENX reported, citing CBRE.
The manager is expected to vacate after its lease expires in December, according to the outlet.
Infrastructure Ontario spokesperson Ian McConachie confirmed to the Star that the agency bought the property "as a strategic investment" but did not say what it plans to do with the space.
The sale caps a broad retreat from Canadian offices.
Since late 2024, CPP Investments has sold many of its class-A and class-AAA assets across the country, RENX reported.
CPP and Alberta's AIMCo sold their stakes in nearby 2 Queen St. E. to Brookfield for $161m in Q4 2024, the outlet said, and in June 2025 CPP sold 50 percent stakes in seven western Canadian assets to Oxford Properties, the real estate arm of OMERS, for $730m.
Oxford and CPP then sold their last jointly owned Vancouver office, Oceanic Plaza, to BGO for $246m in January.
