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The skyline of downtown Los Angeles. (FRED PROUSER/REUTERS)
The skyline of downtown Los Angeles. (FRED PROUSER/REUTERS)

CPPIB moves into U.S. apartments Add to ...

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.

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“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.

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