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Canadian Pension Plan Establishes New Relationship with Kemper Development

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By Jon Peterson

Toronto-based Canada Pension Plan Investment Board has made its first investment with Bellevue-based Kemper Development Company on providing a $526 million construction-to-permanent loan for the Lincoln Square Expansion in Bellevue. This debt was provided by CPPIB Credit Investments, a wholly-owned subsidiary of the CPPIB.

The CPPIB and Kemper Development declined to comment when contacted for this story.

The property being financed in Bellevue is called The Bellevue Collection. It’s known as one of the most successfully integrated mixed-use destinations in the United States and considered a top live, work and play destinations in the country. The 1.5 million square foot project represents an integrated extension of this site, which is the epicenter of Bellevue commerce and expansion.

The Bellevue market is continuing to attract more institutional capital. The investment by CPPIB is the latest example of this. Capital sources are attracted to the market by the fact that the Bellevue economy is driven by high tech companies in the area like Microsoft across diverse industries resulting in low unemployment rates in the area and a diverse population. The combination of a successful economy and low unemployment results in higher household incomes in the area.

The development of Lincoln Square Expansion has already started. Its mixed-use theme will include a 41-story apartment and W hotel tower, a class A office project totaling 31 stories and a three-level retail portion with a luxury theatre and chef-driven restaurants. The project currently has a parking facility for over 4,000 subterranean spaces.

The transaction funded by CPPIB was done through its private real estate debt group within the CPPIB Credit Investments. Since its formation in 2010, this group has invested or committed more than $5 billion in Canadian dollars into commercial real estate credit transactions.

The financing on the property was arranged by the New York office of Cushman & Wakefield for its equity, debt & structured finance team of Dave Karson, Alex Hernandez and Chris Moyer, all of whom represented Kemper Development. The debt includes a fixed interest rate priced up to three years forward and converts to four distinct long-term loans.

Rendering courtesy of Sclater Partners