The Canada Pension Plan Investment Board (CPPIB) and Australia’s Future Fund have banded together to buy out the majority of investors in a direct property fund.The big institutions bought $673 million in property assets from 10 of the 12 existing investors in an unlisted property fund run by Colonial First State Global Asset Management (CFS GAM), turning the fund into a retail property-focused investment vehicle called the CFS GAM Property Retail Partnership.
The buy-out of existing investors, described in an announcement as a “recapitalisation and restructure”, will see CFS GAM remain as the manager of the fund.
The partnership currently manages $1 billion of investments in regional and sub-regional shopping centres in Australia, and provides the opportunity for other major institutional investors to join in a ‘clubbing’ arrangement.
Darren Steinberg, head of property at CFS GAM, said the diversified portfolio would have less than 20 per cent gearing, and that parent company Colonial First State, a large Australian financial services provider, would not invest in the partnership but would be paid management fees.
At March 31, the Future Fund invested 4 per cent of its $61 billion (excluding Telstra shares) in property. Among its publicised deals is its 50 per cent stake in the $426 million Lakeside Joondalup Shopping City in Perth, acquired through a joint-venture with Australian manager Lend Lease.
The $122 billion CPPIB has an active interest in Australian property, being an 80 per cent shareholder in the $359 million unlisted Goodman Australian Development Fund. Last year, it and the Ontario Teachers Pension Plan unsuccessfully attempted to take over toll road operator Transurban. Each has a 14 per cent stake in the business.