TORONTO-The Canada Pension Plan Investment Board recently invested more than $330 million into portioned interests in eight apartment and office properties in the United States. The investment in three apartments and two apartment developments are the first entry by the board into the US multifamily market.
The CPP investments in the eight properties do not total more than 50% interest in any of the properties. The board announced it has invested $284 million in some of the apartments, and about $30 million in one of the offices, but did not disclose all of its financial investments in these properties.
The board has taken a 40% interest, representing about $108 million, in the 426-unit Archstone North Point in Cambridge, MA and the 392-unit Archstone Woodland Park in Herndon, VA, located near Washington, DC. The interest was taken with Allianz and Archstone, with which the latter firm has formed a three-year joint venture program with CPP for future development.
Also, the board has taken a 49% interest in the 350-unit Palazzo Westwood Village in Los Angeles. This move is a venture with Casden Property LLC.
To round out the multifamily investments, CPP took a 45% interest ($92 million) in the 569-unit Cadence apartment development in San Jose, CA, and a 44% interest ($84 million) in the 654-unit Sixth and Lenora apartment development in Seattle’s Belltown neighborhood. The Cadence deal is with Essex Property Trust and is scheduled to start construction in September, and the Seattle project is with Multi-Employer Property Trust, a fund managed by Bentall Kennedy.
The office investments were completed in the two core US markets. In Washington, DC, CPP acquired a 45% interest in 1255 23rd St., a 340,000-square-foot property. The board bought the building in a joint venture with Carr Properties and MetLife Real Estate Investments for $138 million, with CPP providing $30 million equity.
Finally, the board purchased a 32% interest in two Manhattan properties, the 49,300-square-foot 655 Fifth Ave. and 394,600-square-foot 100 Broadway Ave. The Fifth Avenue building is leased to Salvatore Ferragamo and includes its New York City store. Meadow Partners and Madison Capital were the venture partners in this deal, with financial terms not disclosed.
Peter Ballon, VP and head of real estate investments for CPP, said in a statement that the board sees US multifamily as an attractive opportunity. “We believe that the limited supply of high quality rental properties, and other broad demographic trends such as forecast population growth, declining home ownership and the echo-boom generation reaching peak rental propensity, all support continued growth in the US multifamily sector,” he said.
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