CPPIB makes first investment in DC

The pension fund has acquired a 45% stake in two Vornado office properties for $91m. The Canadian plan is increasingly targeting direct, core deals as it eyes major US cities.

The Canada Pension Plan Investment Board has acquired 45 percent stakes in two prime office properties owned by Vornado Realty Trust for $91 million.

The deal to buy minority interests in the Warner Building at 1299 Pennsylvania Avenue and 1101 17th Street NW marks the C$129.7 billion (€91 billion; $126 billion) pension’s first? foray into the Washington DC area.

Like many limited partners, CPPIB has increasingly turned to direct, core transactions as it looks to deploy its capital.

In May, the pension bought a 45 percent interest in Manhattan’s McGraw Hill building from SL Green for roughly $576 million. CPPIB also purchased a 45 percent stake in the office building at 600 Lexington Avenue for approximately $87 million, which the REIT bought in May for a 4.8 percent cap rate.

CPPIB said in a statement today it had assumed 45 percent of the debt secured against the Pennsylvania Avenue and 17th Street offices, which had an implied value of $526 million.  

Vornado retains a 55 percent ownership interest and will manage the assets. The REIT acquired 1299 Pennsylvania Avenue NW in December 2005 for $335.8 million, according to data provider Real Capital Analytics. CPPIB said in the statement the transaction now valued the 600,000-square-foot office at $445 million, while the deal valued the 200,000-square-foot 1101 17th Street NW at $81 million.