Real Estate News
Canada Pension Board pours $400m into US industrial real estate market
10 Aug 2012
NORTH AMERICA - The Canada Pension Plan Investment Board (CPPIB) has agreed to invest $400m (€324m) of equity into a logistics and industrial partnership with the Goodman Group to invest in US assets.
The total equity in the venture is $890m.
Goodman will be putting in $490m for a 55% stake, with the balance to be owned by the pension fund.
This is the first time CPPIB has made a direct investment in industrial properties in the US.
Peter Ballon, vice-president for real estate investments for the Americas, said: "We have been looking to enter the US industrial market for some time and feel good about the partner we have chosen."
The initial investment focus will be to develop new properties.
Ballon said: "There is now more opportunities for us in the development of new properties versus investing in existing properties for either value-add or stabilised investments.
"The main reason for this is that there is a lack of debt for the construction of new projects, and we can take advantage of this."
The partnership will be investing in logistics and warehouse distribution properties.
The actual ownership of the properties in the venture will go along the same lines as the equity contributions.
The deal is not the first time CPPIB and Goodman have worked together.
With the most recent partnership, the two parties have now invested together more than $1bn of capital in industrial partnerships worldwide.
They first began their relationship with an investment in China in 2009, followed up the following year with an investment in Australia.
They also created a venture in 2011 for Australia and Hong Kong.
For many large investors such as CPPIB, the industrial market has proved a hard nut to crack - many industrial deals can have a value of as little as $10m.
"This property sector can be difficult to invest into because the average deal sizes are so small," Ballon said.
"That is why we needed to find a partner like Goodman that has the capability to do this."
CPPIB and Goodman are to focus their investments on the East and West Coasts, including the Inland Empire area of Los Angeles, San Francisco, Seattle, New York, New Jersey and Philadelphia.
Other key logistics hubs based around inland ports, intermodals and tier one ports will also be considered.
Author: Jon Peterson