BT teams with CPPIB for central London joint venture
GLOBAL – The UK's BT Pension Scheme (BTPS) has sold £174m (€201m) worth of its London property portfolio to the Canada Pension Plan Investment Board (CPPIB), forming a joint venture to be managed by Hermes Real Estate Investment Management.
The schemes – the largest pension investors in their respective markets, with assets of £41.3bn and CAD183bn (€140bn) at the end of March – have as part of the joint venture split ownership of a portfolio of eight central London office assets initially owned by BTPS.
The buildings, primarily in the capital's West End, comprise offices and other mixed-use buildings.
The core and core-plus assets include retail space and accommodation.
CPPIB's head of real estate Graeme Eadie said the investment offered a "unique opportunity" to acquire a well-diversified portfolio of London properties in prime locations.
He indicated that the deal would be the first of many further acquisitions.
"We see an excellent opportunity to increase the seed portfolio's value and to grow the venture by acquiring more value-add product in Central London."
Meanwhile, Hermes REIM chief executive Chris Taylor said the joint venture allowed BT to partner with a "like-minded long-term global investor".
"Central London will continue to deliver attractive opportunities," he added.
According to a spokeswoman for Hermes REIM, the joint venture will target an unlevered internal rate of return of 9-10%.
Hermes REIM managed nearly £6bn in assets on behalf of its clients at the end of March, while CPPIB had a property portfolio valued at CAD20bn.