CPP Investment Board grows portfolio of shopping malls

TORONTO — The Canada Pension Plan Investment Board said Monday it has signed two deals worth a total of $335.5 million in cash and debt for eight shopping malls as part of its efforts to grow its portfolio of Canadian retail properties.

TORONTO — The Canada Pension Plan Investment Board said Monday it has signed two deals worth a total of $335.5 million in cash and debt for eight shopping malls as part of its efforts to grow its portfolio of Canadian retail properties.

The investment board will acquire full ownership of six shopping centres in British Columbia and Ontario, and a 90 per cent interest in two malls in Quebec, in two separate deals.

“We have a lot of interest in growing in the retail sector here in Canada and a lot of the market participants know that, so when an opportunity arises, we often are called,” Peter Ballon, CPPIB’s head of real estate investments for the Americas, he said in an interview Monday.

“We have a strong confidence in the Canadian consumer and wherever the opportunity arises, if we see a good quality asset, particularly here in Canada, we will try to buy it.”

Many Canadian retail properties are owned by stable long term investors including pension plans and real estate trusts and do not switch hands very often.

In the first deal worth $222 million with private real estate firm Osmington Inc., the CPPIB increased its stake in a portfolio of seven malls.

It will now hold a 100 per cent stake in five of them and a 90 per cent interest in two Quebec properties. A third party who did not want to sell will continue to own the remaining 10 per cent.

“We have a strong familiarity with the seven assets that we acquired partial interests in so we feel well see benefits right away,” Ballon said.

In the second deal, the board bought the Hillside Centre in Victoria in an agreement worth $113.5 million from the Ontario Pension Board, the pension plan for Ontario public employees.

“The investment that we made in Victoria, we really believe very strongly in the Victoria market, we think its a very strong retail node and we have a lot of confidence that the investment will do well right from the beginning,” Ballon said.

Combined, the two deals included a total equity investment of $230.5 million and $105 million in assumed debt.

CPPIB’s real estate investment group invests in commercial properties primarily through joint ventures with operating partners.

Last month, the board made a $350 million investment in shopping centres in Australia.

In April, it announced it had formed a joint venture with North America’s largest operator of neighbourhood and community shopping centres, Kimco Realty Corp., to grow its portfolio of U.S. retail spaces.

The CPP Investment Board invests the money not needed by the Canada Pension Plan, which has 17 million contributors and beneficiaries, to pay current benefits.