CPPIB investing more than $1B in Germany real estate joint venture

TORONTO – The Canada Pension Plan Investment Board is growing its German real estate platform by investing 394 million euros (C$542 million) for a 46.1 per cent interest in German shopping centre operator mfi AG.

The CPPIB, the investment arm of the Canada Pension Plan, said that under its deal with joint venture partner Unibail-Rodamco, it will also invest an additional 366 million euros (C$503 million) in support of mfi’s financing strategies.

Unibail-Rodamco, the second-largest retail real estate investment trust in the world and the largest in Europe, is already a joint venture partner of the CPPIB through the CentrO Shopping Centre in Germany.

“This agreement allows CPPIB to build on our existing relationship with Unibail-Rodamco,” Andrea Orlandi, CPPIB managing director and head of Real Estate Investments Europe, said in a statement announcing the deal.

“As a long-term investor, this transaction provides us with the unique opportunity to achieve immediate scale in the retail sector in Europe’s largest economy.”

The transaction, subject to regulatory approval and other customary closing conditions, is expected to close in the third quarter.

The CPPIB is a professional investment management organization that invests the funds not needed by the Canada Pension Plan to pay current benefits on behalf of 18 million contributors and beneficiaries. At the end of 2014, the CPP Fund totalled $238.8 billion, of which $26.3 billion represented real estate investments.