TORONTO—Expanding a reach into US multifamily that began three years ago, the Canada Pension Plan Investment Board has made equity commitments totaling more than $330 million in half a dozen class A projects since 2014 began. The investments bring the Toronto-based pension fund’s commitments to US apartments over the $1-billion mark.
“These high-quality properties align well with our multifamily strategy to acquire or develop investments in core US markets typically with high barriers to entry,” says Peter Ballon, VP and head of real estate investments for the Americas at CPPIB. “We do this alongside top-tier, well-capitalized joint venture partners and developers and look forward to further growing our existing partnerships in this sector as we continue to expand our portfolio.”
Three of the projects are in the Bay Area, including a pair of deals with existing JV partner Essex Property Trust. CPPIB has taken a 45% interest in the 506-unit Pleasanton BART development for $77 million and has made a $39-million commitment to build develop the 200-unit Phase III of the Essex Epic development in San Jose. It is also taking a 44% interest in the Block 6 development in San Francisco for $90 million, alongside JV partners Multi-Employer Property Trust and Golub & Co.
The single largest investment is a $117-million commitment to expand CPPIB’s JV platform with AMLI Residential with 45% interests in two Atlanta projects: AMLI Arts Center in Midtown and AMLI CityPlace in Buckhead. When completed, the two developments will total about 1,000 units.
Finally, CPPIB has committed $11 million to develop and hold the Avalon North Point Lofts multifamily development with existing partners AvalonBay and Allianz. Located in Cambridge, MA, Avalon North Point Lofts is a 103-unit residential development.
“US multifamily investments remain an attractive sector for CPPIB,” Ballon says. “We believe that the limited supply of high-quality rental properties and other broad demographic trends such as forecast population growth, declining home ownership and the echo-boom generation reaching peak rental propensity all support continued growth in this sector.”
It’s a philosophy CPPIB has held since 2011, when it entered the US multifamily sector with a $300-million push that included the establishment of its Cambridge, MA JV with what was then Archstone and Allianz on the Archstone North Point project. At that time, CPPIB also took JV interests in developments under way in Seattle, San Jose, Los Angeles and the Washington, DC suburb of Herndon, VA.
CPPIB’s US multifamily portfolio now comprises direct joint venture interests in over 8,400 units across eight markets. To date, CPPIB’s equity commitments in this sector total $1.3 billion, representing a gross asset value of $4.5 billion at full ownership share. The Financial Post reported earlier this month that CCPIB, which currently has $219 million of assets under management—nearly one-third of which are in North America outside Canada—is projected to reach $1 trillion in AUM by 2045.