CANADA/UK - The Canada Pension Plan Investment Board (CPPIB) has injected £100m (€118m) into the Hercules Unit Trust (HUT), a UK retail warehouse fund run by British Land and Schroders, which is in the process of restructuring its £800m debt facility.
The capital injection will help pay down £300m of debt and will see C$106bn (€65bn) Canadian institution receive in return convertible bonds due in 2020 and carrying a fixed coupon of 10%.
British Land and Schroders expect to raise a further £100m through the issue of notes on the same terms to existing investors in the trust.
"CPPIB is pleased to be making a substantial investment into the Hercules Unit Trust, a unique portfolio of high-quality UK retail warehouse assets," said Graeme Eadie, senior vice president for real estate investments at CPPIB.
"Hercules is well-managed by Schroders and British Land and we expect it to provide an excellent platform for growth as the UK property market begins to recover."
William Hill, head of property at Schroders, said: "CPPIB's investment is a significant demonstration of their confidence in the quality and management of the HUT portfolio and we are very pleased to have them on board as a new and wholly supportive investor.
"This transaction ensures that the trust will not breach its loan covenants at the end of June should agreed property sales fall through."
He added: "The introduction of the new capital provides the Trust with greater flexibility. It ensures that it is strongly placed to exploit market opportunities ahead and is able to maximise long-term investment returns for investors."