CPPIB buys 49% of Chinese retail mall JV

The deal marks Canada Pension Plan Investment Board’s second property joint venture with Longfor Properties.

The Canada Pension Plan Investment Board (CPPIB) has bought into 49% of a joint venture with China’s Longfor Properties, paying C$193 million ($146.4 million) as it steps up active investment in the region.

The Toronto-headquartered firm said on Thursday its second joint venture with the Chinese property firm will invest in the Chongqing West Paradise Walk shopping centre in China.

The deal is the latest example in Asia of large asset owners looking to enhance investment yields in a low-interest rate environment by making more direct investments and co-investments. CPPIB, run by former Goldman Sachs investment bank Mark Machin, is leading the charge.

Representing CPPIB’s first retail mall investment in Chongqing — one of China’s largest cities with a population of over 30 million — West Paradise Walk is a six-level shopping mall built in 2008.

West Paradise Walk is located in one of Chongqing’s Yangjiaping commercial hub. The mall currently maintains high customer traffic and occupancy rate. Its tenants including major local and international retail chains.

“This joint venture fits well with our investment strategy and allows us to invest alongside a highly experienced partner in a high-quality real estate asset that will provide attractive risk-adjusted returns over the long term,” said Jimmy Phua, CPPIB's head of real estate investments in Asia said in a statement.

CPPIB and Longfor established their first joint venture in 2014 with a mixed-use real estate project in Suzhou.

As in the previous JV, Pinnacle Real Estate Capital Partners acted as the independent advisor for the investment and will have an ongoing role with CPPIB and Longfor.

CPPIB invests the funds not needed by the Canada Pension Plan (CPP) to pay current benefits on behalf of 19 million contributors and beneficiaries. The CPP fund totalled $287.3 billion as of June 30.

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