CPP Investments is forming a new joint venture with U.S.-based LMC to invest $1.25 billion (all figures Cdn) in class-A multiresidential development in high-growth American metropolitan areas.

The joint venture, which was announced Tuesday morning, will see CPP Investments take a leadership role with a 96 per cent interest. LMC, a wholly owned subsidiary of Lennar Corp., will own the remaining four per cent.

The $1.25 billion represents the equity investments from the two firms. They will seed the venture with five assets, three in Denver, one each in Miami and Boston, totalling 1,371 apartment residences.

They also have a pipeline of about $1.6 billion in potential future investments.

JV to meet U.S. housing demand

“This investment is an excellent opportunity to meet the strong demand for high-quality multifamily housing,” said Peter Ballon, managing director, global head of real estate, CPP Investments, in the announcement.

“We are pleased to work alongside a best-in-class partner like LMC to continue to build our portfolio of multifamily investments, which we believe will deliver steady, long-term returns for the CPP fund.”

The joint venture will focus on urban and suburban communities across major U.S. markets exhibiting both strong population and job growth.

In addition to its equity position, LMC will also contribute its development and construction expertise to the venture, as well as its fully integrated management platforms.

“This joint venture specifically targets high-growth markets where the housing supply hasn’t kept pace with renter demand and we are proud to be part of the solution,” said Todd Farrell, president of LMC, in the announcement.

“Our partnership with CPP Investments enables us to deliver on our mission to create extraordinary communities where people can live remarkably.

“We look forward to delivering on that vision with these five initial assets, as well as all future endeavours with CPP Investments.”

Previous CPP Investments U.S. activity

This is the second major multiresidential investment partnership for CPP Investments in the U.S. during the past three months.

In December, it announced an expanded $1.06 billion JV with Greystar Real Estate Partners LLC for single-family rental communities.

CPP took a 95 per cent stake in that partnership, with Greystar owning the remaining five per cent and contributing its operational and management expertise.

Greystar is another major investor, developer and property manager in the rental housing sector both in the U.S. and globally.

That investment focuses on the development and acquisition of professionally managed rental communities of detached or semi-detached homes and townhomes with private garages and backyards.

Earlier in 2021, CPP Investments and Greystar had announced a $500-million initiative to develop multifamily properties in targeted U.S. markets. CPP holds a 90 per cent stake in that partnership.

They are also partners in the life sciences sector, committing over $1.5 billion to develop class-A office and lab buildings in U.S. markets. CPP Investments owns a 90 per cent stake in the project.

About LMC and CPP Investments

LMC is a multifamily real estate development and operating company with a diverse portfolio of institutional-quality multifamily rental communities across the U.S.

As of Nov. 30, LMC had a 42,000-home pipeline of communities ranging from operating to under pre-development valued at almost $21 billion of high-rise, mid-rise and garden apartments.

CPP Investments is a professional investment management organization that manages the fund for the more than 20 million contributors and beneficiaries of the Canada Pension Plan.

CPP Investments builds diversified portfolios of assets through investments around the world in public equities, private equities, real estate, infrastructure and fixed income.

Headquartered in Toronto, with offices in Hong Kong, London, Luxembourg, Mumbai, New York City, San Francisco, São Paulo and Sydney, CPP Investments is governed and managed independently of the CPP and at arm’s length from governments.

As of Dec. 31, 2021, the fund totalled $550.4 billion.