CPPIB Expands into Brazil with Global Logistic Properties Partnership
- Nov 19, 2012
Canada Pension Plan Investment Board announced entering into a joint venture partnership with Global Logistic Properties Ltd.(GLP), the world’s second largest owner of industrial property. The agreement signed by the two entities entails acquiring two Brazilian logistics portfolios along with other partnering entities. Both portfolios are to be acquired from Prosperitas and are worth $1.45 billion.
“This investment will significantly expand our logistics portfolio in Brazil and represents a rare opportunity to invest in a sizeable portfolio of high quality development and stabilized logistics assets,” said Peter Ballon, head of Real Estate Investments, Americas, and CPPIB.
The first portfolio contains five development projects. All five projects are high quality development sites that will top 8 million square feet of gross leasable area upon completion. The projects, which are in various stages of development, are located in the vicinity of important industrial and logistic hubs with direct access to key transportation nodes. Ninety percent of assets are being developed in Brazil’s most economically potent region–the State of São Paulo. The projects are expected to finish between 2013 and 2014 and will require $455 million to complete development. The joint venture partnership acquiring this portfolio will also include the Government of Singapore Investment Corporation (GIC), which will own a 19.1 percent interest. CPPIB will have a 39.6 percent interest, while GLP will hold 41.3 percent.
The second acquisition will bring in a total of 35 logistics assets to the joint venture partnership formed by CPPIB, GLP, GIC and the China Investment Corporation (CIC). An 11.6 percent interest will be held by CPPIB, GLP and CIC will each own 34.2 percent with GIC claiming a 20 percent share. The portfolio represents 34 fully leased assets located in the economically empowered Southeast Brazil, as well as one strategically located development site in Rio de Janeiro. The portfolio tops 13.6 million square feet of gross leasable area and comes with a diverse and high-quality tenant profile. All assets are 100 percent leased and have a weighted average lease expiry of 8.5 years with inflation-linked lease contracts.
The acquisitions bring CPPIB’s Brazilian real estate portfolio interest held in 56 retail, office and logistics properties, both finished and under development. When in-development properties complete, CPPIB will hold interest in more than 25 million square feet of leasable area.
The transaction is expected to close in early December 2012 with GLP appointed as asset manager for the purchased properties. CPPIB will be committing $343 million towards the transaction, with $200 million being put forward upon closing. GLP’s initial equity commitment is of $334 million.
“We are very excited to be entering Brazil, an attractive market with strong fundamentals and compelling opportunities for growth. Our proven ability to provide best-in-class, modern and flexible logistics a solution makes GLP ideally-placed to flourish in this significant, underserved market,” said Ming Z Mei, CEO of GLP.
Toronto-headquartered CPPIB is a professional investment management organization that invests the funds not needed by the Canada Pension Plan (CPP) to pay current benefits on behalf of 18 million Canadian contributors and beneficiaries. CPPIB invests in public equities, private equities, real estate, infrastructure and fixed income instruments. The organization is governed and managed independently of the Canada Pension Plan and at arm’s length from governments.
Global Logistic Properties is one of the world’s largest providers of modern logistics facilities, with a market-leading presence in China, Japan and Brazil. It owns, manages and leases out 505 completed properties in 205 logistics parks spread across 60 cities in China, Japan and Brazil.