UNITED STATES - CPP Investment Board has made its first acquisition in the Denver office market through a joint venture with Callahan Capital Partners.
The pension has paid $125m (€89m) for a 39% interest in the joint venture, according to Graeme Eadie, senior vice president of real estate investment for CPP, as top of the line office properties in Denver now have a current vacancy of around 3% and there is little new construction planned in this region for the immediate future - indicating stable returns potential.
"We like the current market demographics for office buildings in Denver. Both occupancies and rents are moving up and there is every indication this will continue to happen in the near future," said Eadie.
The joint venture owns five class A office buildings totaling over 260,000 square metres - a portfolio Callahan acquired in March for $770m.
There is a sixth asset in the joint venture in the form of a land development parcel which could support the construction of another 50,000 square metres of office space, albeit no timetable has been established for potential development.
This latest deal means CPP now has a real estate portfolio in the United States valued at $400m but the pension fund has a future investment target of $1bn in US real estate, so further deals are sought, according to Eadie.
"We have a preference of investing in either a joint venture arrangement or in a commingled fund with just a few investors," he said.
The pension fund is most likely to invest in the major property types of office, industrial, retail and apartments.
At the end of June, CPP had total assets of C$120bn (€86.54bn) while around $5.6bn has been invested in real estate.
Rather than set out a targeted allocation for each investment sector, CPP IM places capital in an asset class when it sees an attractive investment opportunity.