PGGM pumps $130m into US retail JV

The Dutch pension fund manager has teamed up with retail REIT Inland Real Estate to target grocery-anchored and community retail centres in the Midwest

Dutch pension fund manager PGGM has created a $270 million joint venture with US retail REIT Inland Real Estate Corporation to target retail investments in the US’ Midwest markets.

Inland said the €89 billion pension fund manager would commit up to $130 million of equity to the JV, as large institutional investors look increasingly to direct and joint venture investments, especially in the US.

PGGM has invested an initial $20 million, with a further $110 million of equity earmarked for new acquisitions and to match the value of properties contributed by Inland.

Inland has seeded the venture with three retail centres valued at roughly $45 million in total, including the 97,638-square-foot Shannon Square Shoppes in Arden, Minnesota; the 82,929-square-foot Mallard Crossing retail center in Elk Grove Village, Illinois; and the 170,122-square-foot Woodland Commons center in Buffalo Grove, Illinois. The REIT is expected to contribute more assets over the next two years, as well as acquire new retail centres, focusing on grocery-anchored and community retail properties in Midwest US markets.

PGGM will retain a 45 percent stake in the JV, with Inland taking the remaining 55 percent interest, as well as managing the assets.

PGGM’s investment is a part of a growing trend of large institutional players take more control of their investments.

Last month, Ontario Municipal Employees Retirement System invested $475 million in a $15 billion development of Manhattan’s Hudson Yards, taking over from Goldman Sachs’ Real Estate Investment Area as lead partner with Related Companies.

Related Companies said in a statement at the time that it and OMERS’ $18 billion real estate investment and development arm, Oxford Properties Group, would become general partners in the 26-acre mixed-use development, which will comprise 12 million-square-feet of residential and commercial space.

In April, PERE also revealed the Dutch pension fund manager had created a €4 billion property vehicle to pool around 70 global fund interests owned by its biggest client, Pensioenfonds Zorg en Welzijn (PFZW).

The idea is to next sell stakes in those interests to smaller pension fund clients of PGGM. According to market participants, PGGM is not the only large Dutch fund manager that has been working to pool the interests of a large client. APG is another firm planning to take advantage of the structure, with its APG Strategic Real Estate Pool.