NORTH AMERICA - Ivanhoe Cambridge, subsidiary of Caisse de depot et placement du Quebec, is to invest $300m (€236m) of equity into a Chicago office development, as it looks to circumvent expensive existing assets in the US.
The deal to fund the 900,000 sq ft, 45-storey River Point construction is likely to be the first in a number of US office developments targeted by Ivanhoe Cambridge.
The firm is looking to take on development risk to gain higher returns than it might achieve through acquiring existing office assets at 5-6% yields.
Pierre-Francois Chapleau, vice president for office development in North America at Ivanhoe Cambridge, said: "We would like to find other deals in markets like Manhattan, Boston, Washington DC, Seattle and San Francisco.
"All of these areas have some common themes. These would be that they have the best economies, are 24/7 cities and have strong transportation systems in place."
Real estate developer and manager Hines will develop the downtown Chicago office building in joint venture with Ivanhoe Cambridge.
Hines hopes to secure tenants for the building ahead of construction which is due to start before the end of the year.
Greg Van Schaack, senior managing director at Hines, said: "This is likely not to be a true spec project as we are already talking with some tenants.
"We think our project will attract the typical office building tenants like financial service firms, lawyers and accounting companies."
Van Schaack added: "We think there will be pent up demand for our project once it's completed in early 2016. Right now there is a lack of space for large users.
"If a company is looking for 200,000 square feet or more there are only two office buildings that can accommodate them in the sub-market. Our building will give these tenants more options."
Chapleau said: "Hines is a proven and respected office developer in the US and the world.
"Chicago is becoming more of a 24/7 city that has a good economy, and the vacancy in the West Loop sub-market for class-A office buildings was at 7% at the end of 2011 and dropping."