CANADA - The Canadian Pension Plan Investment Board (CPPIB) has bought two large shopping centres in Quebec: the Galeries de la Capitale in Quebec City and Carrefour de L'Estrie in Sherbrooke.
The value of the deal was confidential but Land Registry sources suggest a price of CAN$820m (€600m).
The CPPIB has taken an 80% interest in the shopping centres with minority partners Osmington and Westerkirk Capital taking a 20% stake. The properties will be managed by Redcliff Realty Management, a wholly-owned subsidiary of Osmington.
Graeme Eadie, real estate vice president for CPPIB said: "It’s a rare opportunity when shopping centres of this quality become available for purchase. Shopping centres of this type have historically been strong performers relative to other property types and this acquisition will help us balance our real estate portfolio across sectors."
David Denison, president and chief executive of CPPIB said: "The shopping centre acquisition is consistent with our goal to diversify the CPP reserve fund by investing in ‘real return’ assets such as high quality real estate. "This type of real estate is attractive because it provides a stable and inflation-sensitive source of income."
Galeries de la Capitale, in Quebec City is a two-level enclosed shopping centre with 1.5m square feet of lettable space. It features retail anchors in Sears, The Bay, Zellers, Famous Players and Simons.
Carrefour de L'Estrie, in Sherbrooke is also a two-level enclosed shopping centre with 1.2m square feet of gross lettable space. Tenants include Sears, The Bay, Zellers, Rona and Metro.
Earlier this year, CPPIB purchased a 50% interest in a portfolio of 11 office properties across Canada from Oxford Properties.
And last month CPPIB was the lead investor in a consortium that acquired O&Y Properties and O&Y REIT. This included the purchase of First Canadian Place, Toronto, Canada's tallest office building.
CPPIB’s real estate portfolio – which is predominantly domestic – is now worth over $4bn.
CPP looks after the current and future retirement needs of 16 million Canadians. It’s based on a compulsory, defined-benefit scheme set up in the mid 1990s which will pay pensioners one quarter of the average industrial wage (currently CAN$10,000 per annum).
The CPP reserve fund, which is made up of assets not needed to pay current CPP benefits, is valued at $91.7 billion.