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Sean Kilpatrick/CPPHOTO

The Canada Pension Plan Investment Board is making its single biggest real estate investment ever, putting more than $1-billion into the development of two office towers in Australia.

CPPIB has formed a joint venture with Lend Lease Corp. and the Australian Prime Property Fund Commercial (APPFC) to develop and own two waterfront towers at the Barangaroo South Project in Sydney's central business district.

The joint venture is committing $2.08-billion (Canadian) to the project, and half of that will come from CPPIB. Lend Lease and APPFC will each commit 25 per cent. It's a sizable undertaking for the Canadian pension plan, whose total real estate portfolio amounted to $17.1-billion at the end of March. About $1.7-billion of that was invested in Australia.

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This deal marks CPPIB's first direct office investment in Australia.

The towers, which will be 41 and 38 floors, will total 165,773 square metres and will include a retail component. They are expected to be done in 2015, and the joint venture is considering building a third tower down the line.

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