The Canada Pension Plan Investment Board is investing in U.S. apartment buildings, a residential real estate sector that has managed to perform well as the broader housing market crumbles.
CPPIB invested about $300-million to buy stakes in eight U.S. buildings. Apartment buildings are seen as relatively safe cash-generating investments, because weakness in the housing market drives former home owners to rent.
“We believe that the limited supply of high quality rental properties and other broad demographic trends such as forecast population growth, declining home ownership and the echo-boom generation reaching peak rental propensity all support continued growth in the U.S. multifamily sector,” said Mr. Peter Ballon, vice-President and head of real estate investments.
The buildings include:
· A 40-per-cent interest in two properties for $108-million in a joint venture with Allianz and Archstone. The joint venture includes Archstone North Point, a 426-unit property in Cambridge, Mass. and Archstone Woodland Park, a 392-unit property in Herndon, Va., located in the Washington, D.C. metropolitan area.
· A 49-per-cent interest in Palazzo Westwood Village, a Class A, 350-unit property located in Los Angeles in a joint venture with Casden Property Co. LLC, a privately held real estate company.
· A 45-per-cent interest in the Cadence multifamily development project in San Jose, Calif. for $92-million in a joint venture with Essex Property Trust. Construction on the 569-unit Class A development is scheduled to begin in September.
· A 44-per-cent interest in a 654 unit multifamily development in downtown Seattle, Wash., for $84-million. This investment is through a joint venture with an entity affiliated with Multi-Employer Property Trust, an open-ended fund managed by Bentall Kennedy. Called Sixth and Lenora, the development is a Class A, 24-storey high rise that includes 654 units.
CPPIB has recently purchased stakes in office buildings in the U.S. as well, in Washington, D.C., and Manhattan.