The Canada Pension Plan Investment Board is acquiring Houston-based real estate investment trust Parkway Inc. for $1.6 billion.

The CPPIB will own 100 per cent of the company at $30 per share.

“Parkway fits well with CPPIB’s long-term real estate strategy to hold stable, high-quality assets in large U.S. markets,” said Hilary Spann, managing director and head of U.S. real estate investments at the CPPIB. “Through this investment, CPPIB gains additional scale in Houston.”

Read: CPPIB to buy stake in Houston office portfolio

Parkway owns a large office portfolio with 19 properties across Houston. The offices serve tenants in the financial services, technology and commodities industries.

“CPPIB shares our view of the long-term resiliency of the Houston market, and we believe this transaction demonstrates our commitment to enhancing stockholder value,” said James Heistand, president and chief executive officer at Parkway. “We believe there are still some near-term headwinds in the office sector for Houston, but the implied asset valuation of this transaction shows CPPIB’s appreciation for the high-quality portfolio we have assembled and the near-term stability it provides during the current downturn in the market.”

Read: CPPIB sells stake in Manhattan office building

The deal is expected to close in the fourth quarter of 2017, and is subject to customary closing conditions, including approval by Parkway’s shareholders.

Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

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