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Wary of volatility, CPPIB pours billions into real estate


 

The Canadian Pension Plan Investment Board announced on Wednesday it has signed a $1.56-billion deal to develop a residential, office and retail complex in London’s iconic Victoria Circle. The announcement follows yet another announcement from the CPPIB on Tuesday that it was pouring $1.8-billion into U.S. shopping malls, its biggest-ever foray into real estate. The new investment south of the border is part of a 45 per cent stake the CPPIB is taking in a joint venture agreement with the Westfield Group, which owns billions of dollars worth of shopping centres worldwide. Both announcements reflect the CPPIB’s strategy to move away from volatile capital markets and focus on infrastructure and real estate, including shopping malls, an area in which it’s common for pension plans to make investments. The CPPIB itself, which manages $152 billion of assets on behalf of 17 million beneficiaries of Canada’s national pension plan, has previously investmented in malls in the U.K., Australia, Brazil and Germany. As Tara Perkins, of the Globe and Mail, points out, although American malls experienced high vacancy rates and declining property and rental prices due to the recession, investors such as the CPPIB may benefit from what seems to be a recovering U.S. economy.


 
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