CPPIB embarks on US investing spree

The investment arm of the $153.8 billion Canada Pension Plan enters into multiple joint ventures to acquire stakes in five multifamily properties across the US and three office buildings in Washington and New York.

The Canada Pension Plan Investment Board (CPPIB) has completed eight new US real estate investments, according to an announcement from the investment arm of the $153.8 billion Canada Pension Plan. 

As part of the CPPIB's continued investment strategy to acquire real estate assets in key US markets with local partners, the pension fund has participated in five US multifamily asset  acquisitions, marking its first direct entry in the sector. In addition to the multifamily investments, CPPIB has also acquired three office properties in New York and Washington, DC.

Peter Ballon, CPPIB's vice president and head of real estate investments in the Americas, said in a statement: “We see US multifamily real estate investments as an attractive opportunity to build our portfolio in this sector over the coming years.”

In the first of the multifamily investments, CPPIB acquired a 40 percent interest in two multifamily properties for $108 million in a joint venture with German insurer Allianz and Denver-based apartment REIT Archstone. The JV includes Archstone North Point, a 426-unit property in Cambridge, Massachusetts and Archstone Woodland Park, a 392-unit property in Herndon, Virginia located in the Washington, DC metropolitan area. The deals spark the beginning of a three-year development programme between Archstone and CPPIB. Archstone will retain a 20 percent stake in both communities, with Allianz owning the remaining 40 percent.
CPPIB also acquired a 49 percent interest in Palazzo Westwood Village for an undisclosed amount in a joint venture with Beverly Hills-based privately held real estate company Casden Properties. Palazzo Westwood Village is a Class A, 350-unit property in Los Angeles. Terms of the deal were not disclosed. 
The pension fund purchased a 45 percent interest in the Cadence multifamily development project in San Jose, California for an equity investment of $92 million. CPPIB acquired the stake in a JV with Palo Alto, California-based REIT Essex Property Trust. Construction on the 569-unit Class A development is scheduled to begin in September.
CPPIB acquired a 44 percent interest in a 654-unit multifamily development in downtown Seattle for an equity investment of $84 million. This investment is through a JV with an entity affiliated with Multi-Employer Property Trust, an open-ended fund managed by Bentall Kennedy. The development, called Sixth and Lenora, is a Class A, 24-storey high rise that includes 654 units in the city's Belltown neighbourhood.
In Washington, CPPIB acquired a 45 percent interest in 1255 23rd Street, a 340,000 square-foot Class A office property in a JV with locally-based Carr Properties and MetLife Real Estate Investments. The total purchase price was $138 million resulting in a $30 million equity investment, net of debt, for CPPIB.
In New York, CPPIB acquired a 32 percent interest in a JV owning two properties: 655 Fifth Avenue and 100 Broadway. 655 Fifth Avenue is a 49,300 square foot retail-office property that is 100 percent leased to boutique clothing and accessories retailer Salvatore Ferragamo and houses their flagship New York City store. 100 Broadway Avenue is a 394,600 square-foot office building in Lower Manhattan. The JV was made alongside New York-based real estate firms Meadow Partners and Madison Capital. According to data provider Real Capital Analytics, 100 Broadway was purchased for $115 million. Financial terms of the 655 Fifth Ave. transaction were not disclosed.
Mr. Ballon said: “We will continue to pursue attractive real estate investment opportunities in key markets in order to expand our U.S. real estate portfolio”.