CPPIB forms US office JV

The Canadian pension teamed up with two private equity real estate investors to buy into a Houston portfolio valued at $1bn.

The Canada Pension Plan Investment Board, TH Real Estate and Silverpeak Real Estate Partners have purchased minority stakes in a Houston office portfolio in a deal totaling $512 million, according to an announcement Friday.

The groups formed a joint venture, along with the original owner, Houston-based real estate investment trust Parkway, to own the Greenway Portfolio. The Houston portfolio comprises 4.9 million square feet of office space in 11 buildings located within a 52-acre mixed-use development.

Toronto-based CPPIB acquired a 24.5 percent stake in the portfolio for $141 million, while London-based TH Real Estate and New York-based Silverpeak partnered for a 24.5 percent stake. Parkway will retain a 51 percent interest and manage the joint venture. The deal values the portfolio at $1 billion.

“The Greenway Portfolio provides CPPIB with immediate scale in the Houston office sector, which we expect to benefit from accelerating job creation and continuing population growth,” Hilary Spann, CPPIB’s head of US real estate investments, said in Friday’s statement.

The portfolio is anchored by the 34-story Phoenix Tower, built in 1984. Parkway bought the building in December 2012 for $123.8 million, according to data provider Real Capital Analytics. The other buildings in the portfolio range from five stories to 31 stories.

CPPIB ended its fiscal third quarter with net assets of C$298.1 billion ($227.68 billion; €214.11 billion), compared with $300.5 billion at the end of the previous fiscal quarter. As of December 31, the institution held C$37.7 billion, or 12.6 percent of its total portfolio, in real estate.

TH Real Estate manages $96.8 billion in assets, and Silverpeak has over $10 billion in assets.

The deal is expected to close in the second quarter.