By Muskan Arora
A boost in the industrial sector within real
estate has pushed multiple allocators to make investments in the space this year.
One of the largest pension plans remains no less interested.
The $467.66bn Canadian Pension Plan
Investment Board formed a partnership of $789m with Bridge Industrial, a Chicago-based
real estate firm.
Together, they plan to make investments in industrial
properties in “several core markets across the US,” as per the statement
released on last Thursday.
Please Click Here for More Information
The coalition will target acquisition and
development of modern industrial facilities in supply-constricted markets
across the US, as retailers aim for faster shipping despite a constraint in
space for warehouse construction.
CPP first formed a partnership of $1.1bn with Bridge Industrial in 2021 to develop industrial properties for long-term ownership. In both ventures, CPP held a 95% stake, while the Chicago-based firm held the remaining 5%.
“The industrial sector’s favorable market
dynamics position this joint venture well to deliver strong returns for the CPP
Fund,” said Sophie van Oosterom, the CPPIB’s managing director and head of real
estate investments, in a statement.
Further, this growing interest in industrial properties is backed by
high returns within the logistics sector owing to increased tenant and investor
demand for the last five-year period. This is in sharp contrast to the retail and
office spaces that have negatively impacted allocators’ real estate portfolios due to the transition
towards e-commerce and evolving hybrid workplace trends.
Similar to other pension plans in Canada,
CPP reported a loss from its real estate holdings, with a negative 5% return in
fiscal year 2024 and 0.5% return over a five-year period.
Real estate returns were “largely
attributable to increases in energy and commodity prices as well as the
performance of industrial assets that provide logistics and other essential
services,” stated the annual report.
