CPPIB, Goodman Target North American Industrial with $890M Partnership

Canada Pension Plan Investment Board and Goodman Group have partnered to invest a big chunk of change in logistics and industrial properties in key North American markets.

The U.S. industrial sector is turning heads, including those of the Goodman Group and the Canada Pension Plan Investment Board. The companies just formed a new venture, the Goodman North America Partnership, to invest $890 million in logistics and industrial properties in key North American markets.

The increasing interest in the U.S. industrial market is not just local; it’s coming from beyond U.S. borders as well. Sydney, Australia-based Goodman and Toronto, Ont.-headquartered CPPIB serve as a case in point.

“Foreign buyers have been flooding into the U.S.; this is sort of a trend we’ve been seeing the last couple of months,” Kevin Thorpe, chief economist with commercial real estate services firm Cassidy Turley, told CPE. “There’s been a noticeable pickup and part of that is you’re seeing a flight to safe assets and some of that is spilling into the U.S. in terms of real estate. It started right around March, April, when things started to get really rocky globally. That’s when we saw this shift.”

Goodman and CPPIB’s 55/45 partnership calls for a respective contribution of $490 million and $400 million to fund GNAP’s activities, which will initially focus on development-led endeavors. The timing of the venture, marking CPPIB’s first direct investment in the U.S. real estate market, appears to be just right.

“There are real growth engines in the industrial sector that make it feel pretty safe in upside,” Thorpe said. “You have the auto sector, which has been driving growth, energy, technology, and you’re actually seeing this trend of manufacturing jobs returning to the U.S.¬† So there are many positive developments.”

As noted in Cassidy Turley’s second quarter report, for the last six quarters, the U.S. industrial sector has averaged 20 million square feet of demand. “That’s very, very close to where we were in ’05, ’06, so it’s been quite a turnaround,” he added.

When the market demands, GNAP will incorporate the acquisition of value-add and stabilized assets into its investment strategy.