Valuations for Canada's privately held office property markets have practically frozen in place following a wave of markdowns in 2023, making valuation assessments next to impossible. Last year was difficult for owners of Canadian private real estate, with many pension fund managers losing money due to high interest rates, increased operating costs, and high vacancy rates. The Caisse de dépôt et placement du Québec saw its real estate portfolio decline 6.2% in 2023, the Ontario Teachers’ Pension Plan experienced a 5.9% loss, and the Ontario Municipal Employees Retirement System (OMERS) saw its real estate portfolio drop by 7.2%. However, there are pockets of strength in multi-family residential, open-air retail centers, and industrial properties. The BMO Global Asset Management's commercial property outlook notes that the industrial and multi-family segments remain strong due to high investor demand and tight supply. The office property market is of the greatest near-term concern and focus, with a timeline for a return to 'normal' estimated to be at least five years. Private real estate investors need to evaluate opportunities on a city-by-city basis, as every city is different. Property owners may struggle to refinance expensive debt in a higher-for-longer rate environment, potentially leading to firesales for lower-quality buildings. The U.S. and other advanced real estate markets are ahead of Canada in terms of valuation adjustments. Canada's commercial office real estate market is catching up but has not corrected to the same extent. Private fund assets in Canada are valued based on activity, and the auditors are making assumptions when there is no activity in the marketplace. Some investors are preparing to evaluate new investments in the Canadian real estate space later in 2024. There is an opportunity to redeem open-ended private real estate investment trusts (REITs) in Canada and reallocate the money to the U.S. market or invest in publicly listed REITs. The market is still waiting for evidence of a turnaround, as valuations have not yet adjusted. [4db55b82]