GLOBAL - Canada Pension Plan Investment Board (CPPIB) has made its first ever investment in Manhattan through a joint venture with SL Green Realty Corporation, and established an Australian real estate development fund with Goodman Group.
The pension fund invested $585m (€472m) in partial ownership stakes in two office buildings. This included a 45% interest in 1221 Avenue of the Americas - otherwise known as The McGraw Hill building - for $500m. An additional $76m of working capital and debt was committed as part of the transaction.
CPPIB also acquired a 45% stake in 600 Lexington Avenue for $87m of equity.
Graeme Eadie, senior vice president for real estate investments at CPPIB, said: "We have been looking at the Manhattan office market for the past couple of years. We feel that the leasing market for office buildings in Manhattan has been improving and this will continue in the future."
CPPIB expects the deals to be the start of a long-term relationship with SL Green. "We are hoping that we can do more transactions with them in the future," Eadie said.
The pension fund has also extended its existing relationship with Australia-based real estate manager Goodman Group to set up the Goodman Australia Development Fund.
The fund, which will invest in Australian development assets, has been seeded with the acquisition of Goodman's Kmart development in Melbourne for a total consideration of A$66.3m (€44.2m).
An initial equity commitment of A$250m has been provided and the fund can grow to a target gross asset value of approximately A$400m. CPPIB will hold an 80% interest in the fund.
Eadie said: "This investment provides an excellent opportunity for CPPIB to enter the Australian logistics market and to establish a strong portfolio of high quality warehouses that we expect will deliver stable income returns over the long term. We are pleased to continue building our partnership and look forward to future investments alongside Goodman."
Goodman CEO Greg Goodman added: "This is our second fund with CPPIB following the successful China fund announced last August and we are delighted to be building on this important partnership."