CPPIB’s Jimmy Phua is expanding a partnership with China’s Longfor
The Canada Pension Plan Investment Board (CPPIB) is deepening its partnership with top Chinese developer Longfor Properties by investing RMB 4.2 billion ($662 million) in two new mixed-use projects in the cities of Chengdu and Shanghai, the pension fund manager said in a statement.
“These projects deliver on CPPIB’s strategy to grow our investments in the Chinese real estate sector, specifically in the fast-growing retail sector,” said Jimmy Phua, Head of Real Estate Investments Asia at CPPIB in the statement. Phua added that the investments will help the fund diversify its real estate interests in China, providing attractive risk-adjusted returns in the long run.
CPPIB Invests in Over 1 Million SQM of Mainland Real Estate
The commitment by the $320 billion Canadian pension fund will support a 740,000 square metre residential and commercial development project in western China’s Chengdu, the capital of Sichuan province. Located in the eastern part of the second-tier city, the project enjoys easy access to the city centre. The development will include a 140,000 square metre Paradise Walk shopping mall, Longfor’s flagship mall brand.
The asset in Shanghai is a 340,000 square metre project in southern Minhang district, a suburb half an hour’s drive from the city’s downtown Jing’an business district. The project will integrate retail and commercial spaces, including a Paradise Walk mall.
Zhao Yi, Executive Director of Longfor Properties
“We look forward to further extending our cooperation with CPPIB. These investments are another set of landmarks in our work together, following the Suzhou Times Paradise Walk and Chongqing West Paradise Walk projects,” said Zhao Yi, Executive Director of Longfor Properties in the statement.
Chongqing-based Longfor Properties ranked eighth among Chinese property developers by contracted sales last year. The builder has opened 15 Paradise Walk malls across Chongqing, Chengdu, Xi’an, Shanghai, Hangzhou and Suzhou. The flagship mall portfolio accounted for 87 percent of Longfor’s RMB 1.1 billion ($162 million) rental income in the first half of last year.
Canadian Fund Manager Likes Chinese Malls
CPPIB’s tie-up with Longfor dates back to 2014, when the pension fund invested $202 million in Longfor’s mixed-use real estate project in eastern China’s Suzhou, which included the Suzhou Times Paradise Walk. The Toronto-based fund manager teamed up with the mainland developer again in 2016 by putting up $147 million for a 49 percent stake in West Paradise Walk, a six-level shopping mall in the western Chinese metropolis of Chongqing.
Just two weeks later, Canada’s largest pension fund invested $162 million to acquire a 40 percent stake in the Pavilion Dalian shopping mall in northeast China from Malaysia-based Pavilion Group.
In December last year Longfor opened the 140,000 square metre Shanghai Baoshan Paradise Walk mall in the city’s Baoshan district. That five-level project is the developer’s second shopping center in Shanghai and brought Longfor’s portfolio of mainland malls to 26.
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