CPPIB investing in U.S. real-estate developments, European wind farms

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Windmills with the sky background and clouds. © Daniil Peshkov / 123rf stock photosThe Canada Pension Plan Investment Board is forming a joint venture with Greystar Real Estate Partners to pursue multi-family real estate development opportunities in target markets in the U.S.

The CPPIB has invested US$350 million in equity to the joint venture for a 90 per cent stake and Greystar has allocated US$39 million for the remaining 10 per cent. Greystar will manage and operate the portfolio on behalf of the joint venture.

“There is a significant undersupply of rental housing in the U.S. Despite the global pandemic and short-term economic uncertainty, there continues to be an opportunity for long-term investors to develop high-quality, multi-family properties in growth markets,” said Hilary Spann, managing director and head of real estate for the Americas at the CPPIB, in a press release. “With Greystar’s strong national presence and local expertise, our partnership will build a resilient portfolio of well-located assets.”

The joint venture will develop Class A, mid- and high-rise multi-family properties in urban and inner-ring suburban communities across major U.S. markets, including core coastal markets and other regions with strong population and job growth, said the release. Last fall, the CPPIB teamed up with Greystar and Cyrela Brazil Realty in a separate joint venture that will develop, own and operate purpose-built multi-family rental housing in São Paulo, Brazil.

“We are pleased to launch another joint venture alongside our trusted partner,” said Bill Maddux, executive managing director of development and construction for Greystar, in the release. “At Greystar, we remain confident in the resilience of the rental housing industry despite the challenges and uncertainty of the long-term effects of the global pandemic. Quality, purpose-built, professionally managed housing remains more essential than ever as housing supply dwindles and homeownership prices increase to record levels.”

The CPPIB has also committed up to €245 million to its U.K.-based platform, Renewable Power Capital Ltd., in support of its first investment in European renewables. Renewable Power Capital was launched by the CPPIB in December.

The renewable-power company has committed to acquiring a 100 per cent interest in a portfolio of three wind farms from OX2 Group AB. OX2 company will construct, and then be responsible for the technical and commercial management, of the wind farms. When all three wind farms are set to be operational in 2022, the portfolio is expected to produce the equivalent of the electricity consumption of approximately 118,000 households.

“Our new commitment to support RPC’s initial investment in Finland is fully aligned with our goal of deploying long-term, flexible capital in an attractive renewables market,” said Bruce Hogg, managing director and head of power and renewables at the CPPIB, in a press release.

RPC forms a core part of the CPPIB’s multi-billion-dollar power and renewables investment strategy and will invest in solar, onshore wind and battery storage, among other technologies, across Europe. The CPPIB has made approximately $9 billion of equity commitments to renewable energy globally as of September 30, 2020, with investments in development and operational assets across onshore wind, offshore wind, solar, hydro and associated storage and distribution.

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