CPPIB Exits Goodman US Warehouse JV With $1B Sale to Norway’s Norges

The Canada Pension Plan Investment Board has sold its interest in a North American warehouse partnership with Australia’s Goodman Group, dealing the 45 percent stake to Norway’s sovereign wealth fund last week for $1.07 billion.

The transaction with Norges Bank Investment Management closed on 1 January and values the Goodman North American Partnership’s portfolio at $3.3 billion, Oslo-based NBIM said Friday in a release. The portfolio has a total leasable area of 1.3 million square metres (14 million square feet) and comprises 48 buildings and five land plots across Southern California, New Jersey and Pennsylvania.

Goodman will retain its 55 percent ownership share of the portfolio and serve as asset manager on behalf of GNAP, which carries $888 million in debt. In a separate statement, Toronto-based CPPIB said it expects to book $2.2 billion in net proceeds from its investment in the joint venture, which it set up with Goodman in 2012.

“The success of GNAP has provided us with an opportunity to lock in strong returns for the CPP Fund and is emblematic of our ongoing partnership with Goodman,” said Max Biagosch, CPPIB’s head of real assets. “The proceeds from this transaction also give us the ability to redeploy capital towards new investment opportunities as our portfolio continues to grow and evolve alongside the global market.”

Bet on Fundamentals

Despite US industrial leasing volume slipping 26 percent year-on-year in the third quarter of 2024, per JLL’s most recent report, NBIM was attracted to the portfolio’s high-quality buildings in locations where restrictions on new supply are expected to help boost returns.

“This investment aligns with our long-term strategy, and we think now is a good time to invest,” said Per Loken, global head of unlisted real estate at NBIM, which oversees Norway’s $1.7 trillion sovereign fund, the world’s largest.

CPPIB and Goodman have committed $3.1 billion in equity to GNAP since the partnership was launched 12 years ago with a mandate to invest in industrial properties in key North American markets. In addition to welcoming its new JV partner, Goodman has acquired a portfolio of primarily value-add and development properties from GNAP, the Sydney-based group said in its own announcement.

CPPIB, which manages Canada’s $467.3 billion public pension fund, has also backed Goodman development ventures targeting logistics projects in Hong Kong and mainland China.

“We are proud of the success we’ve had with CPP Investments in GNAP across our global partnerships,” said CEO Greg Goodman. “We look forward to maintaining our strong working relationship across asset classes and geographies.”

Shifting Focus

In its annual report for the 12 months to the end of last March, CPPIB indicated that it would be allocating a smaller portion of the pension fund to real assets and emerging markets.

With that in mind, the institution announced late Friday that it has agreed to sell its 49 percent stake in a quartet of shopping centres, along with connected office and rental housing properties, in Shanghai, Suzhou, Chengdu and Chongqing to an affiliate of China’s state-owned Dajia Insurance.

The Canadian fund had invested in the assets, held in a JV with mainland builder Longfor Properties, through a series of transactions from 2014 through 2018, according to Mingtiandi research. CPPIB expects to net C$235 million ($163 million) in proceeds from the sale of the properties.

The fund’s recent real asset investments have favoured alternative sectors such as digital infrastructure over commercial property or other more traditional strategies.

CPPIB joined with Blackstone in September to acquire Australia’s AirTrunk in a deal valuing the data centre operator at A$24 billion ($16.1 billion), marking one of the biggest corporate takeovers ever in that country.