CPPIB pumps A$200m into second Goodman fund

The Canadian Pension Public Investment Board has invested up to A$200 million ((€141.4 million; $172 million) in a new joint venture with Australia logistics developer and fund manager Goodman Group.

The C$124 billion (€97.5 million; $119.5 million) pension said the fund, the Goodman Australia Development Fund, had been funded with a total of A$250 million of equity – A$200 million from CPPIB – and would target the acquisition of up to A$400 million of assets. The remaining equity has been provided by Goodman, with the vehicle created on an 80-20 basis.

The vehicle – the second fund CPPIB has set up with Goodman – has already been seeded with an A$66.3 million, 76,000-square-metre distribution centre being developed by Goodman for US retailer Kmart, in Melbourne.

[The fund] importantly secures a funding platform for our Australian development business over the next two years. Goodman chief executive officer Greg Goodman

CPPIB invested $150 million in a joint venture with Goodman last August to target the logistics industry in China. The JV was seeded with four Goodman assets, with a 12-month option to acquire Goodman's land bank plus a first right of refusal over all logistics opportunities sourced by Goodman in the country.

Goodman’s unlisted Australia Industrial Fund (GAIF) will have the first right of refusal to Goodman acquisitions and developments in Australia, while the CPPIB JV will have the second right of refusal, “which they will be able to exercise where GAIF does not take up its right”, Goodman said in a statement.

Goodman chief executive officer Greg Goodman said GADF “importantly secures a funding platform for our Australian development business over the next two years”.

Some of the world’s largest investors are increasingly turning to direct investments with fund managers, rather than investing through commingled vehicles. In April, the vice president of Ontario Municipal Employees Retirement System Philip Haggerty said there was a need for American institutions to make large real estate and infrastructure investments directly, and that Canada was “opening the door for partnership”.

Speaking at the Milken Institute Global Conference in Los Angeles he conceded OMERS began direct investing roughly 15 years ago, and therefore it would take just as long for American institutions to do the same. “It’s now possible for us to actively promote the direct investment model,” he said. “But it’s going to take a long time for a CalPERS or a CalSTRS or a Washington State to move in that direction.” However, stressing improved performance returns for Canadian pensions over their US rivals, Haggerty said: “Do investments directly.”