The Canada Pension Plan Investment Board is making its largest real estate investment ever, with a $1 billion commitment to the building of two office towers in Australia.
CPPIB says it will develop and co-own the Barangaroo South Project in Sydney through a joint venture with Australian project developer Lend Lease Corporation and the Australian Prime Property Fund Commercial, which is managed by Lend Lease.
CPPIB is committing 50% of the equity for the project, or C$1.04 billion. The other two companies in the venture will each commit 25%.
The project, which marks CPPIB’s first direct office investment in Australia, will be an extension of the Sydney Central Business District. The towers will be 41 and 38 stories, and will include both office and retail components. Construction is expected to be completed in 2015.
The project marks CPPIB’s first direct office investment in Australia.
CPPIB says “under certain circumstances,” the joint venture may also develop a third tower at the same location in the future.
“This is an excellent opportunity to invest in a high quality, iconic commercial waterfront real estate development alongside Lend Lease, one of the region’s top developers and APPFC, an aligned, local institutional partner,” said Graeme Eadie, CPPIB’s senior vice-president for real estate investments. “This investment supports our real estate strategy to acquire premium, long-term assets in key global markets.”
As of the end of March, CPPIB’s real estate portfolio totalled $17.1 billion, of which approximately $1.7 billion was invested in Australia.