By Muskan Arora
As the
residential market begins to rise, Canada Pension Plan leaps to make two real
estate deals focused in Brazil and South Korea in January, excluding the others
announced by the pension plan earlier this year.
CPPIB
signed a 50-50 joint venture agreement with Cyrela Brazil Realty’s Cy.Capital,
Brazil’s largest residential real estate developer. In São Paulo, the two
will invest $287.4m to construct residential buildings, which expect to bring
in more than $6bn reais over the next several years.
“The residential market in São Paulo has strong
fundamentals, supported by favourable demographics, [a] low unemployment level
and resilient household income growth in the city,” said Ricardo Szlejf, CPP
Investments’ head of real assets for Latin America, in a statement.
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Further, the pension plan announced a joint venture between
$350m with MGRV, a South Korean rental house provider to develop rental housing
projects. CPPIB will own 95% of the operation, as this is the first direct
investment of the pension plan in the residential sector of South Korea. The
remaining 5% will be owned by MGRV.
As per the companies, they plan to develop properties in Seoul
and focus on areas closer to major business districts and universities. As of
part of this venture, the pension plan has allocated up to $91.14m to seed
projects in the capital city of South Korea.
“This joint venture offers an excellent opportunity to enter
the residential sector in Korea and meet the strong demand for high-quality
rental housing in the greater Seoul area, where half of Korea’s population
resides,” said Sophie van Oosterom, CPPIB’s head of real estate, in a
statement.
These deals come in addition to a joint venture CPPIB formed
with Bridge Industrial, a real estate firm in early January to sell 49% stake
in four real estate joint venture projects with Longfor Group, Chinese real
estate firm to an affiliate of Dajia Insurance Group. The net proceeds from the
sale were approx. $163.3m prior to closing adjustments.
Additionally, CPPIB also sold its 15.75% stake in U.S. power
producer Calpine to Constellation Energy for net proceed of approx. $700m cash.
