UNITED STATES - The Canada Pension Plan Investment Board (CPPIB) has completed its first ever joint venture with Donahue Schriber on a retail property in San Diego.
The pension fund has replaced the equity that had been invested in the Del Mar Highlands Town Center project by Pardee Homes, to give it a 50% interest in a 272,000 square foot property with a value approaching $100m (€68.9m).
According to CBBIP officials, the investor felt it was a good purchase as it was owned by a proven retail operator and is located in an area with strong demographics.
Donahue Schriber said the sales volume generated at the Highlands Town Center - a grocery-anchored shopping centre - was $600 per square foot in 2009 and its lead tenant is Ralph's Fresh Fare. The sales volume represents flat results for 2009. But the real estate company predicts for 2010 sales will increase by 1-3%.
Donahue Schriber, on the other hand, is structured as a private REIT. The company is 90% owned by the New York State Teachers' Retirement System and JP Morgan Strategic Property Fund.
Pardee had first wanted Donahue Schriber to sell the whole property last summer, but the remaining partner refused and instead approached its two main institutional investors to see if they would be interested in buying into the shopping centre, according to Patrick Donahue, president of Donahue Schriber.
"The time was not right for them to invest in the property. They were both not interested and so we looked at other capital sources. Before the deal was completed both of our shareholders met with CPPIB on the San Diego asset and for other general business items."
He continued: "We do expect that this will not be the only venture with CPPIB. I know that they have an interest in doing larger deals than the venture in San Diego. Future transactions could be on some of our existing portfolio or on new investments."
Donahue Schriber owns and operates an existing portfolio of 85 neighborhood and community shopping centres in California, Nevada, Arizona and Oregon.
CPPIB currently has a limited amount of US retail assets in its real estate portfolio but does own an eight-property retail portfolio totaling 800,000 square feet alongside Regency Centers.