CPPIB, Hermes JV makes first acquisition

A partnership between the Canadian pension and the UK asset manager, established in July, has purchased Aldgate House in London for £100 million.

The Canada Pension Plan Investment Board (CPPIB) and Hermes Real Estate Investment Management have acquired the first property for their 50:50 joint venture launched this summer, purchasing London’s Aldgate House for £100 million ($160 million; €119 million).
The $182 billion Canadian pension and the London-based asset manager established the joint venture in July, when Hermes, on behalf of the British Telecom Pension Scheme, sold CPPIB a 50 percent stake in an eight-property portfolio for £173.9 million. The properties, which span more than 550,000 square feet of offices, retail and ancillary accommodation, include 100 Regent Street, 100 New Oxford Street, 40 Eastbourne Terrace, 50 Eastbourne Terrace, 242 Marylebone Road, Cheapside House, 20/24 Broadwick Street and 69 Carter Lane. At the time of the deal, CPPIB noted that the partners planned to “double the size of the joint venture partnership by increasing its exposure to similar types of core-plus/value-added assets.”
The venture’s newest asset, purchased from clients of Orchard Street Investment Management, is located adjacent to the Aldgate Underground station and provides more than 214,000 square feet of office space.  The eight-story building, built in 1976, was renovated in 2008 and includes Thomson Reuters, LCH Clearnet and ISG as tenants.
“This acquisition complements our existing London office portfolio and highlights our desire to grow the partnership with Hermes as we continue to execute on our strategy of acquiring high-quality properties,” said Wenzel Hoberg, managing director and head of real estate investments Europe at CPPIB, in a statement. 
The partnership expects that this purchase will kick off further acquisitions in the UK capital soon. According to a statement from Hermes chief executive officer Chris Taylor, the team is “capitalizing upon the robust economic drivers that we observe across the Central London market.”
This transaction is the latest example of CPPIB using a joint venture structure to take advantage of prime real estate opportunities in London. The pension plan’s other notable holdings in the city include its 50 percent stake in Victoria Circle, a nearly one million-square-foot residential, office and retail  development opposite Victoria Station, and a 25 percent interest in the largest urban shopping center in Europe, East London’s Westfield Stratford City Shopping Centre, which totals nearly 2 million square feet.