GIC, CPPIB and Cortland Partners form US Multifamily Real Estate JV
Singapore sovereign wealth fund GIC has entered its second multifamily investment in the US in joint venture with Canada Pension Plan Investment Board (CPPIB) and Cortland Partners .
The investment will target initial equity investment of US$550m (€461m), to purchase and renovate up to 10,000 older multifamily units in a segment known as Class B properties.
It has already acquired three, value-add garden-communities in the growth cities of Denver in Colorado, Raleigh , North Carolina) and Austin in Texas. The gross value of the three acquisitions totalled US$216m.
CPPIB and GIC will each have a 45% interest in the joint venture and Atlanta-based Cortland Partners the remaining 10%.
Commenting on the new investment, Lee Kok Sun, GIC Real Estate’s chief investment officer, said the objective was to pursue a value-add strategy to capture the strong demand and resilient return profile of the US multifamily sector.
Cortland, headquartered in Atlanta, is one of the largest multifamily owner-operators in the US, where it owns and manages some 45,000 apartments.
GIC and CPPIB said in a statement that they would pursue additional opportunities in the US to acquire multifamily properties that are candidates for value-add strategies, primarily in major markets throughout the Southern and Southeastern parts of the country.
Hilary Spann, managing director, head of CPPIB’s America real estate investment, said the US multifamily real estate sector continued to offer compelling risk-adjusted returns.
Spann said demand was being driven by favourable population growth and employment trends.
She added that Cortland was one of the largest multifamily owner-operators in the US and GIC “a longstanding partner we know well”.
Last week, GIC and CCPIB acquired a further portfolio of student housing in the US for about US$1.1bn for their joint venture, Scion Student Communities.
The latest investment complements GIC’s entry into the US multifamily market, where it has invested in an upscale multifamily portfolio with Greystar Real Estate Partners, another US multifamily developer-owner-operator.
Last year, GIC became a foundation investor in a new Greystar fund, Greystar Growth & Income Fund, which was formed following the US$3bn acquisition by Greystar of a US REIT known as Monogram Residential Trust.
Other investors in the Greystar vehicle, a perpetual-life fund, include affiliates of APG Asset Management N.V., Ivanhoé Cambridge, the real estate arm of the Caisse de dépôt et placement du Québec and Dutch pension fund asset manager PGGM.
The Monogram portfolio is comprised of investments in more than 13,000 apartments, located in 48 multifamily communities in 10 statees.
GIC sees residential as a key thematic investment, with particular emphasis on multifamily and student housing in the US which is considered to be the deepest and most established market in these two sectors.