GLOBAL - The Healthcare of Ontario Pension Plan (HOOPP) has made its first direct real estate investment outside Canada by acquiring a 50% stake in the Crown Estate's St James's Gateway development in London.
Foreign investments account for only 1% of the pension fund's real estate portfolio, which was valued at $3.3bn (€2.47bn) at the end of 2009, and comprise stakes in a number of funds.
The £100m (€119m) stake in St James's Gateway development is therefore a break with tradition for HOOPP, which until now had gained exposure to Europe's real estate markets through two UK funds and two pan-European vehicles.
St James's is a core asset of the Crown Estate covering 3.8m square feet, home to the royal households of St James's Palace and Clarence House, and adjacent to Piccadilly Circus and St James's Park in the West End of London.
Michael Catford, vice-president of real estate at HOOPP, said: "St James's is one of London's most internationally renowned destinations, and we look forward to being a part of its future.
"This is HOOPP's first direct property investment outside of Canada, and in The Crown Estate, we have found a great co-venture partner."
The Crown Estate will oversee the development and directly manage the properties upon completion, which is expected in 2013.
The Crown Estate will retain the freehold for the blocks and grant the joint venture a new 150-year head lease.
The arrangement has parallels with the Crown Estate's earlier joint venture with the Norwegian Government Pension Fund Global, which saw the sovereign wealth fund acquire a 25% interest in a 150-year lease on the Crown Estate's Regent Street portfolio in London.
Paul Clark, director of investment and asset management at The Crown Estate, said: "This deal demonstrates our commitment to working with partners that share our values, to enable continued and significant investment in our core West End holdings, St James's and Regent Street."
The scheme involves a mixture of retained and new facades and will also deliver public realm improvements, together with a striking new Eric Parry-designed frontage along Piccadilly, significantly enhancing the famous views of the street from Piccadilly Circus.