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Canadian Pension Plan Investment Board CEO David Denison poses in Toronto in this picture taken August 5, 2010.

The Canada Pension Plan Investment Board will soon be one of the largest institutional owners of regional shopping malls in the United States after striking its biggest real estate investment ever.

These investments are, in large part, a bet on the future health of American consumers. CPPIB now has an interest in 26 malls in major U.S. urban areas, placing it in the top ranks of investors in that area. It has also invested in malls in the U.K., Australia, Brazil and Germany.

Tuesday's deal will see it make an equity investment of $1.8-billion (U.S.) for a 45-per-cent interest in a new joint venture that it will be forming with Westfield Group.

The joint venture will consist of 10 regional malls and two redevelopment sites, the majority of which are in California.

At the moment, the properties are owned and managed by Westfield and have a total gross value of $4.8-billion. The Westfield Group operates one of the world's biggest shopping centre portfolios, one that is worth tens of billions of dollars and stretches from New Zealand to Brazil.

CPPIB made a conscious effort in the wake of the financial crisis to shift away from publicly traded securities, such as stocks and bonds, towards investments such as real estate and infrastructure. CPPIB chief executive officer David Denison has credited that strategy for insulating the fund from volatile stock markets.

In addition to shopping malls, CPPIB has been investing in offices and residential complexes in the United States. But shopping malls have been a particular focus because CPPIB is among those who believe that they can be had for a good price right now. After the subprime mortgage fiasco hit and the U.S. economy slumped, consumers shifted from spending to paying down debt, and regional malls faced the highest vacancy rates they had seen in a generation. Rents began to fall, and property values followed suit.

Now the U.S. economy is beginning to look up; it has added new jobs two months in a row and it has begun expanding at a faster pace. And construction of new U.S. malls has been slow while U.S. population growth is expected to be reasonably strong.

In an interview last week, Mr. Denison said that real estate is a sector the fund is paying a lot of attention to right now. CPPIB's total real estate investments stood at $14.4-billion at the end of 2011, making up 9.5 per cent of the fund.