Cortland Partners, Canada Pension Plan Investment Board (CPPIB) and Singapore’s sovereign wealth fund GIC have established a joint venture (JV) with a targeted equity amount of $550 million to acquire and renovate 8,000 to 10,000 Class B multi-family units in the U.S.
CPPIB and GIC will each own a 45 per cent stake in the JV with Cortland Partners holding the remaining 10 per cent interest in the JV.
Class B properties refers to well-maintained older assets with opportunities for improvements to the buildings for the benefit of tenants, ongoing maintenance and long-term appreciation.
“The U.S. multi-family real estate sector continues to offer compelling risk-adjusted returns for the CPP Fund, driven by favourable population growth and employment trends,” said Hilary Spann, Managing Director, Head of Americas, Real Estate Investments, CPPIB.
“By focusing on Class B asset opportunities, this joint venture enables us to add diversification to our U.S. multi-family portfolio, which is concentrated in prime urban locations,” she adds.
The JV has initially acquired three value-adds, Class B garden-style communities located in high-growth markets of major U.S. metropolitan areas. These are Lakecrest at Gateway Park, a 440-unit rental complex located in Denver, Colorado; Aurum Falls River, a 284-unit rental complex in Raleigh, North Carolina; and Waterstone Apartments, a 308-unit rental complex in Austin, Texas.
GIC, which reportedly has between $359 billion and $398 billion in assets under management (AUM) as at June 2017, has a portfolio which is heavily weighted to the US; it accounts for 34 per cent of its portfolio, with real estate assets contributing 7 per cent of its overall value.
The JV will also pursue additional opportunities to acquire multifamily properties that are candidates for value-add strategies, primarily in major markets throughout the Southern and Southeastern US.
In a statement, Lee Kok Sun, Chief Investment Officer, GIC Real Estate, said, “This venture will pursue a value-add strategy to capture the strong demand and resilient return profile of the U.S. multifamily sector. We look forward to growing this venture with Cortland, an experienced multifamily firm with a sizeable presence in the Sun Belt target markets, and CPPIB, a partner who shares our long-term investment philosophy.”