GLOBAL - Canadian Pension Plan Investment Board (CPPIB) has formed a joint venture with Australia's largest commercial real estate developer, Lend Lease Corporation, and its investment fund, Australian Prime Property Fund Commercial (APPFC), to develop two office towers along the Sydney shoreline.

The Barangaroo South Project will be Canadian institution's first commercial real estate investment project in Australia and the largest single-project real estate investment the company has ever made.

CPPIB would invest CAD1m (€828m), or 50% of the equity for the project, with Lend Lease and APPFC investing 25% each.

The Barangaroo project is "iconic and high-quality commercial real estate" that is part of a "massive redevelopment project along the
City's shoreline", CPPIB said.

With liabilities that are "decades away", CPPIB said commercial real estate tended to provide stable, risk-adjusted returns over a long-term period.

If all goes well, the joint venture may not rule out developing a third such project, it added.

The latest deal would increase the pension fund's total investment in Australia to more than CAD2.7bn.

The office space has already been leased to blue-chip clients, according to CPPIB said.

When completed, the project would also have 6,840 square meters in retail space.

The project, which would have two towers with 31 and 48 floors, respectively, is expected to be completed by 2015.

The development of Barangaroo - located in the Western edge of Sydney's central business district - is part of a New South Wales government's 2003 drive to provide more commercial and recreational space in what was used for shipping and stevedoring.