GLOBAL - The residential subsidiary of public pension fund manager Casse de dépôt et placement du Québec has acquired a four-asset prime London portfolio for CAD150m (€115m).

The acquisition, via a joint venture with private company Residential Land and property manager Apollo, comprises 207 units in central London locations.

It comes as part of a strategy set out by Ivanhoe Cambridge's residential arm last year to target difficult-to-penetrate residential markets - five in the US, three in Canada, and Paris and London.

What the cities have in common is high barriers to entry, high costs of ownership and resilient occupation.

Ivanhoe Cambridge residential president Sylvain Fortier told IP Real Estate: "We wanted to go places where renting makes sense, and lenders capital markets will go to these markets first.

"For us, it is absolutely key to get critical mass. We got a thousand units in Montréal, and another thousand in Silicon Valley. In London, assets were hard to find. You don't have a density or the number of storeys you have in New York, or the availability of land you have in California.

"We were lucky to buy this many units in one transaction - and we hope to be able to add to the inventory."

The subsidiary has not yet confirmed that it will sell the repositioned assets.

"Here it's somewhat between a core and a value-added play with the buildings already fully occupied," Fortier said.

"We could leave them as they are, but we're choosing to spend good money on some units to bring them up to the standard of their neighbours.

"In that sense, it's closer to a value-added play. There is the capacity to do less work, but instead we could convert them back to core and keep them."

He added: "The normal reaction is to renovate and then sell them on to individuals. We might instead seek a long-term stable return from the assets."

Ivanhoe Cambridge plans to enter the Paris residential market via a joint venture, but has yet to source a local partner following a search that began in May last year.

"If you don't have a local partner, it's hard to get the first call on assets," Fortier said. "You'll be depending on a formal listing and then you'll need to win the bid.

"We don't have a problem with doing that from time to time, but, in London, the local partnership gave us a way to enter the market.

"We want the same kind of assets in Paris as we have in London - solid apartments in quality locations."

He added: "We bought in Montréal in July, and we're just closing in London. We've also be looking at opportunities elsewhere. We haven't had a whole lot of time to worry about Paris."