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CPPIB buys Canadian office stakes for $900m

The pension fund purchased a 50% interest in a portfolio of properties from Oxford Properties Group.

Canada Pension Plan Investment Board is investing close to home in its latest mega-deal.

The investment manager, which oversaw C$287.3 billion as of June 30, struck a deal with Oxford Properties Group to buy a 50 percent stake in a seven-office Canadian portfolio for C$1.2 billion ($900 million; €800 million), the groups said Thursday.

The portfolio totals 4.2 million square feet and comprises five buildings in Toronto’s financial district and two buildings in the north area of Calgary’s downtown, according to the announcement. Oxford will continue to manage the properties.

Michael Turner, Oxford’s Canadian vice president, said the sale of the portfolio stake will allow the firm to reinvest equity in new deals, according to the Thursday announcement.

“This is a rare opportunity to acquire a large-scale portfolio of modern office properties in two key Canadian office markets,” said Peter Ballon, CPPIB’s head of real estate investments. “With the addition of these assets, we are able to significantly expand our office portfolio in Canada alongside Oxford, a best-in-class manager and well-aligned partner.”

The two groups have worked together on previous joint ventures, including the December 2005 acquisition of Tour KPMG, a 34-story Montreal office building, which they sold to Bentall Kennedy in August 2015 for $136 million, according to real estate data provider Real Capital Analytics (RCA).

“The road to success in real estate is built on great relationships. We admire the team at CPPIB and are proud to once again deepen our long-standing relationship with them,” said Blake Hutcheson, Oxford’s chief executive, in the statement.

CPPIB had about 13 percent of its portfolio invested in real estate as of March 31, including stakes in 12 Canadian properties, according to its website. Prior to the portfolio buy, the firm’s latest publicly disclosed office acquisition was the June 2013 purchase of One Queen Street East, a two-building office property in Toronto, according to RCA. CPPIB bought the offices for C$212.2 million from the Ontario Pension Board.

Oxford, which manages over C$40 billion in real estate assets, is the real estate investment arm of the Ontario Municipal Employees Retirement System, a C$77 billion pension fund, according to Thursday’s statement.