By Jon Peterson
Toronto-based Canada Pension Plan Investment Board has bought an interest in an industrial portfolio with assets that are in the San Francisco Bay Area and Seattle region.
The pension fund invested $350 million for a 10.6 percent ownership into a portfolio owned by Singapore-based Global Logistic Properties. The total value of the portfolio is $8.1 billion for 115 million square feet of assets or $70 per square foot.
The assets in the San Francisco region total 5.25 million square feet and represent 4.6 percent of the total portfolio. The properties in Seattle are 2.2 million square feet and make up 1.9 percent of the portfolio.
There are several institutional owners in the portfolio. These include the CPPIB, the Government of Singapore Investment Corporation and two other un-named large institutional owners of real estate.
“We think that this transaction is good on several fronts. One is that the pricing is very attractive. The price on this deal was set as of August 2014. This means we got locked in at a price point even though the assets have increased their value over the past 14 months. We also like portfolio deals for industrial assets, as it’s very hard to accumulate any size with this property type, as many industrial assets are sold for around $10 million each,” says Peter Ballon, managing director and head of real estate investments Americas for CPPIB.
This transaction fits in with the pension fund’s overall investment strategy. “We like to invest with management partners that we consider to be best-in-class and we believe that this surely is the case with GLP,” said Ballon.
The portfolio that CPPIB invested in totals 722 high-quality logistic assets. The types of industrial assets in the portfolio include warehouses, business parks and light industrial assets. Through the second quarter of this year, the portfolio acquired assets that were 91.4 percent occupied and 92.3 percent leased. The two markets with the biggest concentration are Reno with 12.6 million square feet and Los Angeles with 8.8 million square feet.
GLP had some leasing activity on one of its assets in the San Francisco region earlier this month. The company was able to lease 270,000 square feet of space in Newark, California to CEVA Logistics US. This tenant will take the entire property at the Mowry Business Center #4 in Newark. The lease with this property was started in September of this year.