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CPPIB invests $201m in China mixed-use development

The Canada Pension Plan Investment Board has entered into a joint venture partnership with Longfor Properties to develop a mixed-use project in Eastern China and potentially more projects in the future.

The Canada Pension Plan Investment Board has committed RMB1.2 billion (€170.57 million; $201.47 million) in a joint venture partnership with Beijing-based developer Longfor Properties for a mixed-use development project. The partnership marks the pension plan’s first direct joint venture in mixed-use development in China.

Under the partnership, the two will jointly develop the Times Paradise Walk located in Suzhou, a city in Eastern China. The project will comprise residential, office, retail and hotel space, and is expected to be spread over 7,911,474 square feet. 

“We look forward to building a long-term strategic partnership with Longfor that will allow CPPIB to continue to invest in large scale mixed-use and retail projects in China, a market in which we see a long-term growth potential,” said Jimmy Phua, managing director and head of real estate investments in Asia for CPPIB.

The completion of the project, which is located in Suzhou Gaoxin district’s central business zone, is scheduled to happen in multiple phases between 2016 and 2019.

“One of Longfor’s key operating strategies is to expand joint venture initiatives with aligned partners…We believe partnering with organizations like CPPIB in these types of joint ventures will provide significant advantages in that it allows us to be more flexible in our resource allocation, improve capital efficiency and strengthen financial stability,” said Zhao Yi, finance general manager for Longfor. 

Pinnacle Real Estate Capital Partners acted as the advisor for the investment. “The joint venture sets the stage for the beginning of a significant partnership between CPPIB and Longfor and they are ideal partners to capture the long term growth prospects for such large scale development projects in China, “ Kenny Tse, the firm’s managing director said in a statement. 

CPPIB, which has over $22 billion in real estate investments, has been actively investing also in China’s growing logistics sector. In November last year, it allocated an additional $400 million in equity to its industrial joint venture with the Sydney-based developer Goodman Group, bringing the total equity committed by the partners to $2 billion. That partnership has so far invested in 27 logistic properties across different markets in China, including Shanghai, Beijing, Tianjin and Chengdu.

In March, it also entered into a $250 million residential joint venture with China Vanke, the country’s largest residential developer. The first investment under that partnership was made in a residential development in Qingdao in the Shandong province – a three-phase project to be completed over a period of four years.