The Canada Pension Plan Investment Board is forming a joint venture with real estate developer Cortland Partners and global investment firm GIC Private Ltd. to invest US$550 million in the acquisition and renovation of nearly 10,000 multifamily units in the United States.
The CPPIB and GIC will each own a 45 per cent interest in the joint venture and Cortland Partners will own the remaining 10 per cent.
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“The U.S. multifamily real estate sector continues to offer compelling risk-adjusted returns for the CPP fund, driven by favourable population growth and employment trends,” said Hilary Spann, managing director, head of Americas, real estate investments at the CPPIB.
“By focusing on Class B asset opportunities, this joint venture enables us to add diversification to our U.S. multifamily portfolio, which is concentrated in prime urban locations. We are pleased to form this new joint venture with Cortland Partners, a vertically integrated operator and one of the largest multifamily owner-operators in the U.S., and GIC, a longstanding partner we know well.”
The joint venture has initially acquired three garden-style communities located in major U.S. metropolitan areas — Denver, Colo; Raleigh, N.C.; and Austin, Texas. The joint venture will pursue additional opportunities, primarily in major markets throughout the southern and southeastern U.S.
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“This venture will pursue a value-add strategy to capture the strong demand and resilient return profile of the U.S. multifamily sector,” said Lee Kok Sun, chief investment officer at GIC. “We look forward to growing this venture with Cortland, an experienced multifamily firm with a sizeable presence in the Sun Belt target markets, and CPPIB, a partner who shares our long-term investment philosophy.”