CPP Investment Board Advances U.S. Real Estate Strategy with Acquisition of Interest in 13 Regional Shopping Malls in New England

The CPP Investment Board added interests in two real estate properties to its portfolio Friday, including the pension fund's first major regional mall acquisition in the United States, with a combined investment of just over $700 million.

The CPP Investment Board (CPPIB) announced today that it has acquired a 36.9% interest in the Mayflower partnership from institutional investors advised by JP Morgan Asset Management, for a total equity investment of US$350 million. The Mayflower partnership owns a portfolio consisting of 13 regional malls located in the United States mostly throughout the New England area. In aggregate, the portfolio has a total value of approximately US$2.03 billion.

Through the acquisition, CPPIB will become partners with Simon Property Group, Inc. (NYSE:SPG), the largest U.S. retail REIT, and Teachers Insurance and Annuity Associated – College Retirement Equities Fund (TIAA-CREF), one of the largest institutional real estate owners in the U.S., who will both retain their existing interests of 49.1% and 14% respectively. Simon Property Group, Inc. will continue to manage the assets on behalf of the partnership.

The portfolio comprises a 10.1 million-square-foot strategic footprint of well-established assets that primarily service the greater Boston area, and includes top-tier properties such as Northshore Mall in Massachusetts and the Mall at Rockingham Park in New Hampshire.

Simon Property Group, Inc. will continue to manage the assets on behalf of the partnership.

The portfolio, which has a total footprint of 10.1 million square feet, includes top-tier properties such as Northshore Mall in Massachusetts and the Mall at Rockingham Park in New Hampshire, CPPIB said.

Peter Ballon, CPPIB's head of real estate investments in the Americas, said the investment is "an attractive entry point" into the regional shopping mall sector in the U.S., and provides an opportunity to form a partnership with "a leading management team and experienced institutional investor."

Mr. Ballon added, "Real estate is an attractive investment for the CPPIB. Our overall objective is to build a portfolio that will deliver stable returns and retain its relative value across multiple business cycles. The Mayflower portfolio meets these criteria."

In a separate deal on Friday, CPPIB made an equity investment of 270 million euros (C$372 million) to acquire a 50 per cent joint venture interest in CentrO Oberhausen, a super-regional shopping and leisure centre in Germany valued at 1.3 billion euros.

The partner, Stadium Group, will retain its 50 per cent interest in CentrO and will continue to manage the shopping centre.

Located 40 kilometres north of Dusseldorf, the 1.6-million-square-foot shopping centre draws from a population of about 11.7 million people in Germany and the Netherlands who live within a 60-minute drive of the complex.

Graeme Eadie, CPPIB's senior vice-president of real estate investments, said the joint venture with Stadium in Germany is "fully aligned" with the pension fund's European real estate investment strategy and represents "a rare opportunity to invest alongside a proven, reputable partner in a high-quality shopping centre that has a history of income growth and demonstrated resilience to economic downturns and inflation."