The Canada Pension Plan Investment Board (CPPIB) is investing around £100 million (€117 million; $165 million) into a UK retail park fund.
The Hercules Unit Trust is advised by UK REIT, British Land, and managed in London by Schroder Property.
CPPIB has invested in the vehicle through its subscription for £100 million of subordinated convertible notes which are due in 2020 and carry a fixed coupon of 10 percent, said Hercules in a statement.
The money will be used to make an early repayment of part of the trust's debt facility. A commitment to pay down £300 million of debt is part of a package of proposals currently being considered by bond holders that would reduce the refinancing risk at maturity, added the fund.
Graeme Eadie, senior vice-president of real estate investments, said CPPIB expected Hercules to be a “platform for growth” as the UK property market begins to recover.
CPPIB opened an office in London last year from which to scout deals in its top-performing asset classes: real estate, infrastructure, and private equity.
Alain Carrier joined the pension fund earlier last year from Goldman Sachs’ London office to help lead efforts. The fund has been investing in Europe for more than eight years, but felt that having a dedicated team in the region allowed it to better monitor current investments and evaluate new ones.
CPPIB said at the time of opening its London office that it had invested some C$15 billion in European private equity, real estate and infrastructure, approximately C$8.4 billion of which is currently invested.
Global expansion and geographic diversification of its portfolio were key goals set forth in the plan’s 2007 annual report.