CPPIB completes $783m US, German shopping spree

The Canada Pension Plan Investment Board continues investing large amounts of its equity into global real estate. This time it has picked up stakes in a portfolio of shopping centres in New England - its first ‘regional mall’ acquisition in the US - and a large shopping centre in Dusseldorf.

The Canada Pension Plan Investment Board (CPPIB) has purchased interests in 13 shopping centres in New England and a large shopping centre near Dusseldorf in deals that saw the giant pension fund invest $783 million of equity.

CPPIB, which had C$140.1 billion (€102 billion; $144.5 billion) of assets under management at the end of 2010, has spent $350 million on a 36.9 percent stake in the Mayflower partnership, a consortium that owns the portfolio of 13 shopping centres, from institutional investors advised by JPMorgan Asset Management. The 10.1 million-square-foot portfolio, which currently is valued at $2.03 billion, also is owned by US retail giant Simon Property Group and Teachers Insurance and Annuity Association – College Retirement Equities Fund (TIAA-CREF). They own 49.1 percent and 14 percent, respectively.

Peter Ballon, CPPIB vice president and head of real estate investments – Americas, said the investment represented the pension fund’s first major regional mall acquisition in the US. Describing the investment as an “attractive entry point into the sector,” he said: “Our overall objective is to build a platform that will deliver stable returns and retain its relative value across multiple business cycles. The Mayflower portfolio meets these criteria.”

Meanwhile, CPPIB also has purchased a 50 percent stake in the CentrO Oberhausen, a large shopping centre 40 kilometres from Dusseldorf, from Stadium Group for €270 million. Stadium, a private group of companies focused on retail property development, will retain the remaining 50 percent position. The shopping centre is 1.6 million square feet and includes further planned development of 180,000 square feet by the end of 2012.

Of that transaction, Graeme Eadie, CPPIB vice president for real estate investments, said: “Our joint venture with Stadium is fully aligned with our European real estate investment strategy and represents a rare opportunity to invest alongside a proven, reputable partner in a high-quality shopping centre that has a history of income growth and demonstrated resilience to economic downturns and inflation.”

CPPIB has been one of the more aggressive investors in global real estate since the financial crisis. Though investing solo on these two occasions, the pension fund recently has invested alongside other large institutional investors, including Netherlands-based pension fund investor Algemene Pensioen Groep and the China Investment Corporation. Previous transactions this year involving CPPIB included the $1.4 billion purchase of a 50 percent stake in the Westfield shopping centre in Stratford, East London, and the A$2.5 billion (€1.88 billion; $2.5 billion) purchase of the ING Industrial Fund, an Australian-listed vehicle that holds 60 industrial properties in Australia and Europe, from ING Real Estate Investment Management.