LONDON-Locally based Grosvenor Fund Management (GFM) and the Toronto-based Canada Pension Plan Investment Board (CPPIB) are signing a joint venture agreement creating a $310-million partnership to invest specifically in London’s West End office market. The split will be a $295-million commitment from CPPIB and a $15.5-million contribution from GFM.

The joint venture is focusing only on value-add propositions, Grosvenor tells GlobeSt.com. “The joint venture is looking to upgrade and reposition assets through active asset management and enhancement,” notes a GFM representative. There is no single dogma for the final disposition. Once the asset is revamped into the class A strata, the partnership plans to leverage the new value to its best advantage, whether that be holding or selling for yield. CPPIB posits that the relationship is beneficial for them in that Grosvenor has a complementary platform to theirs within London, gaining them expertise in the local London market.

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Scott Rowland, commercial fund manager with Grosvesnor, tells GlobeSt.com, "The peak to trough fall in capital values from 2007 to 2009 was approximately 45%. Rents fell by 30% over the same period. Over the last few years the market has been recovering strongly but capital values and rental value are still approximately 20% below the peak."