CPPIB to invest $1.8bn in mall JV

The joint venture with Westfield represents the $152.8 billion pension fund’s largest global real estate investment to date.

The Canada Pension Plan Investment Board (CPPIB) has agreed to form a joint venture with The Westfield Group, in which the pension fund will make a $1.8 billion equity investment for a 45 percent stake in a US mall portfolio currently owned and managed by the Sydney-based retail giant. The portfolio, which has a total gross value of $4.8 billion, consists of 10 regional malls totalling 13.5 million square feet in California, Maryland and Washington, as well as two redevelopment sites.

“This is an excellent opportunity to acquire a significant interest in a portfolio comprising high-quality regional shopping centres that are well positioned for long-term growth,” said Graeme Eadie, senior vice president of real estate investments at CPPIB, in a statement. “This acquisition represents our largest real estate investment to date globally and supports our retail real estate strategy of investing in dominant regional malls with best-in-class operators.”

The joint venture is the latest investment that CPPIB has made with Westfield, which will serve as the managing general partner for the joint venture and will remain the property manager, leasing agent and developer for the properties. In 2010, the shopping centre group sold a 50 percent interest in the retail component of Stratford City in London to a joint venture between CPPIB and APG for £871.5 million (€1 billion; $1.4 billion). CPPIB also is a major investor in the Westfield UK Core Shopping Centre Fund, which owns interests in four regional shopping malls throughout the UK.

Upon the completion of the deal, which is expected this quarter, CPPIB will become one of the largest institutional owners of US shopping malls, with interests in a total of 26 properties in major urban markets. CPPIB’s real estate investments totalled $14.4 billion as of 31 December, representing 9.5 percent of the pension plan’s total assets.