Boston Properties, Inc.(BXP), Canada Pension Plan Investment Board (CPP Investments) and Singapore’s sovereign wealth fund GIC have established a co-investment program for future acquisitions of office properties in the United States.
The partners plan to acquire and operate office properties in BXP’s core markets – Boston, Los Angeles, New York, San Francisco and Washington, DC, as well as Seattle.
The partners have targeted an aggregate US$1.0 billion of equity to the program, with BXP and CPP Investments each allocating US$250 million and GIC allocating US$500 million.
The partnership expects to employ leverage allowing for an initial investment capacity of approximately US$2.0 billion. With these capital commitments, BXP expects to be able to accelerate the pace at which it can pursue acquisition opportunities and extend its investment capacity.
“We are delighted to expand our relationship with CPP Investments and to begin a new relationship with GIC, two highly respected and experienced real estate investors,” said Owen Thomas, CEO of BXP. “This new co-investment program underscores the attractiveness of Class A office investment opportunities in our markets and BXP’s track record of creating long-term value at the property level.”
Under the agreement, over the next two years BXP will provide CPP Investments and GIC with exclusive first offers to form joint ventures with BXP to invest in acquisition opportunities that meet the target investment criteria of the program, subject to certain exclusions (including ground up development). BXP will act as general partner and provide customary property management, leasing and other services.
“Employers in top global cities continue to seek best-in-class office environments that will attract and retain talent,” said Peter Ballon, Managing Director, Global Head of Real Estate, CPP Investments. “By expanding our relationships with both Boston Properties and GIC in this new program, we will be strongly positioned to serve this ongoing market need, and in turn generate returns for our Fund contributors and beneficiaries.”
“We firmly believe that top companies need collaborative workspaces to build culture, innovate and win the war for talent. We are confident that Boston Properties will identify assets that serve this need and position our venture to capitalize on an uptick in demand stemming from a return to the office and the reopening of America’s great cities,” said Adam Gallistel, Managing Director of Americas Real Estate, GIC.
Lee Kok Sun, Chief Investment Officer of Real Estate, GIC, added, “As a leading global, long-term investor, we seek to invest in world-class properties with world-class operators. We are thrilled to partner with CPP Investments and BXP on this endeavor. GIC’s capital and investment discipline, coupled with BXP’s operating expertise, create a strong consortium that positions us well to identify and invest in quality office properties across the U.S.”