CPP makes major investments in U.K. and Germany

The Canada Pension Plan Investment Board has made a major investment in a British mall, again teaming with the Hammerson property group.
The two have purchased 33.3% of the Bullring shopping centre in Birmingham from Australia’s Future Fund for £307 million ($482 million ) – each with an equal share of £153.3, CPPIB explained in an email Monday to Property Biz Canada.
The latest deal increases Hammerson’s stake in the Bullring Shopping Centre to 50% and sees CPPIB take the remaining 16.6% stake.
CPPIB had an indirect stake in the Bullring through Henderson’s Shopping Centre Fund, where it already invested £150 million in 2007, the email stated.
“This transaction provides CPPIB with further scale and opportunity in Bullring and is in line with our U.K. retail strategy of investing in high-quality assets in major locations with strong growth potential,” said Graeme Eadie, senior vice-president and head of real estate investments, CPPIB.
“We are pleased to expand our relationship with Hammerson, one of Europe's leading retail property companies, whom we know well having worked together successfully on other investments.”
Third partnership for CPPIB and Hammerson
In fact, this is the third recent partnership for the two. Last year Hammerson and CPPIB invested £183m jointly in a central London office block. Previously, they joined to purchase Silverburn, a Scottish shopping centre near Glasgow for £297m.
On Tuesday, CPPIB made another unrelated acquisition. German builder Hochtief reported it has sold its airports division to CPPIB for 1.1 billion euros ($1.4 billion), seeking to cut debt and invest in its infrastructure business.
The unit has holdings in airports in Athens, Budapest, Duesseldorf, Hamburg, Sydney and Tirana, said Hochtief, which is controlled by Spain's ACS.
Meanwhile, CPPIB's war chest grew even larger in the last quarter with $5 billion in investment income, the board said recently.
Its most recent financials show the CPP Fund ended the third quarter of its 2013 fiscal year on December 31, 2012 with net assets of $172.6 billion, compared to $170.1 billion at the end of the previous quarter. The $2.5 billion increase in net assets after operating expenses resulted from $5 billion in investment income and $2.4 billion of seasonal cash outflows.
Despite its massive investment fund, only a small percentage of the fund is invested in direct real estate, CPPIB figures show.
The real estate investment section of CPPIB's portfolio was $19.2 billion as of Dec. 31.
The fund also has large infrastructure investments and has often favoured foreign markets, with more than $7 billion spent in Australia in less than three years largely on infrastructure, said a weekend report in the Globe and Mail.
Canadian pension funds active in Europe
In an unrelated acquisition this week, Hochtief reported it has sold its airports division in Germany to Canada's Public Sector Pension Investment Board (PSP Investments) for 1.1 billion euros.
Recent CPPIB announcements:
* May 3 – CPPIB formed a new 50/50 joint venture with Hammerson to acquire a 33.3% stake in Bullring Shopping Centre for £307 million from the Future Fund.
* March 5 – CPPIB completed US $606-million secondary private equity transaction to acquire a portfolio of food assets and become lead investor in New Kainos Capital Partners Fund
* January 17 – CPPIB joined KKR and Stone Point Capital as a joint venture partner in Capital Markets Platform with plans for up to $2 billion in annual investments.

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