Canada Pension Plan Investment Board (CPPIB) is buying a US real estate investment trust (REIT) for US$1.2bn (€1.05bn).
The CAD317bn (€214bn) pension fund has agreed to acquire 100% of Parkway, a Houston-based REIT, at US$23.05 per share.
Parkway owns the largest office portfolio in Houston, totalling approximately 8.7m sqft across 19 properties, which are 87.6% leased, as of the end of the March.
“Parkway fits well with CPPIB’s long-term real estate strategy to hold stable, high quality assets in large US markets,” said Hilary Spann, managing director and head of US real estate investments at the Canadian investor.
“Through this investment, CPPIB gains additional scale in Houston.”
Earlier this year, CPPIB took part in a recapitalisation of a portfolio owned by Parkway. In conjunction with TH Real Estate and Silverpeak Real Estate Partners, it recapitalised a portfolio 11 buildings and took a 24.5% stake.
Parkway’s board of directors have all approved the agreement. TPG Capital and its affiliates, which collectively own approximately 9.8% of the outstanding common stock of Parkway, have agreed to vote in favour of the transaction.
James Heistand, president and chief executive of Parkway, admitted that the Houston office market – which is dependent on oil and energy industries – faced “some near-term headwinds”.
But, he said, “the implied asset valuation of this transaction shows CPPIB’s appreciation for the high quality portfolio we have assembled and the near-term stability it provides during the current downturn in the market”.
Parkway will pay its second-quarter dividend on 30 June 2017, but will suspend all future quarterly dividend payments.
