For the second time in one week, Singapore’s sovereign wealth fund GIC has teamed up with Canadian pension giant CPPIB to buy up residential properties in the US, via a $550 million deal for multifamily assets primarily in the country’s Sun Belt region.
The investment will see GIC and the Canada Pension Plan Investment Board (CPPIB) join with Atlanta, Georgia-based Cortland Partners to acquire and renovate 8,000 to 10,000 class B multifamily units in major metropolitan areas. The Asian and Canadian investors will each own a 45 percent interest in the joint venture, while their US partner – one of the country’s largest multifamily real estate investment firms – will hold 10 percent.
The partners have kicked off the deal by acquiring a trio of value-add, class B rental complexes with 1,032 units. The news follows GIC’s $1.1 billion agreement last week to buy a portfolio of student housing projects across the US in concert with CPPIB and Chicago-based Scion Group.
Institutional Investors Tap the Sun Belt Boom
“This venture will pursue a value-add strategy to capture the strong demand and resilient return profile of the US multifamily sector,” commented Lee Kok Sun, Chief Investment Officer of GIC Real Estate in a statement. “We look forward to growing this venture with Cortland, an experienced multifamily firm with a sizeable presence in the Sun Belt target markets, and CPPIB, a partner who shares our long-term investment philosophy.”
The Sun Belt, spanning 15 states from Arizona in the Southwest through Florida in the Southeast, has boomed in recent years, benefiting from strong employment and urbanisation as many Americans flock to the warmer region from the Midwest and Northeast. Net migration to the Sun Belt states totalled 470,000 people in the year through July 2017.
For their first acquisition, the trio of investors has picked up Lakecrest at Gateway Park in Denver, Colorado; Aurum Falls River in Raleigh, North Carolina; and Waterstone Apartments in Austin, Texas. The future investments were not identified.
Cortland is one of the largest multifamily operators in the US, owning and managing over 45,000 apartment communities in the country. The company also has a global materials sourcing office in Shanghai.
A CPPIB executive said in the statement that the US multifamily sector offers compelling risk-adjusted returns for the Canadian fund, which totalled $263.2 billion as of last September.
GIC Extends Residential Buying Spree
Through the deal, GIC is deepening its partnership with CPPIB. The investment behemoths announced last week they had joined with student housing specialist Scion to buy a portfolio of 22 projects including 13,666 student beds in the US for about $1.1 billion. The investment follows similar deals between the same players in January 2016 and March 2017, with commitments of $1.4 billion and $1.6 billion, respectively.
The Singaporean investor has also bet on US residential properties by investing an undisclosed amount in the Greystar Growth & Income Fund (GGIF), which completed its acquisition of luxury US apartment developer Monogram last September in a $4.4 billion deal.
GIC has also taken an interest in student housing projects in Europe, most recently investing in a £227 million ($283.5 million) joint deal for a university complex in Birmingham, England.