GLOBAL - The Canada Pension Plan Investment Board (CPPIB) has invested $91m (€65m) in return for a 45% stake in two prime office buildings in Washington DC, its first investment in the US capital.
CPPIB paid the equity to Vornado Realty Trust, owner of Pennsylvania Avenue (the Warner Building) and 1101 17th Street NW and will assume 45% of the assets' existing mortgage debt, which implies a total value of $526m.
Peter Ballon, vice-president and head of real estate investments for the Americas at CPPIB, said: "This investment represents an opportunity for CPPIB to acquire assets in one of the top real estate markets in the US, alongside one of the largest US REITs with a strong track record of developing and managing office properties in Washington DC.
"With this transaction, we continue CPPIB's ongoing investment strategy to acquire top-quality real estate properties in key US markets."
The deal sees CPPIB enter into a joint venture with Vornado, which will retain its 55% ownership interest and continue to manage and lease the properties.
The Warner Building is a 13-storey, class-A office building containing more than 600,000 square feet of commercial space, located approximately three blocks east of the White House.
The building also includes the historic Warner Theatre, a 1,850-seat venue that has been restored to its original grandeur. The transaction values the property at $445m, or $737 per square foot.
1101 17th Street NW is another 13-storey office building, containing more than 200,000 square feet of space. The transaction values the property at $81m, or $382 per square foot.
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