Where India stands in CPPIB’s

global real estate portfolio By Swet Sarika and Keshav Sunkara 12 December, 2017

If there was one global investor which stood out for making mega realty bets in 2017, it was

Canada Pension Plan Investment Board (CPPIB). The pension fund struck back-to-back

platform deals and took its exposure to the Indian real estate market to a substantial level.

The Toronto-headquartered firm has exposure to real estate assets across the globe and has

accumulated a gross leasing area of 301.46 million sq ft while its effective gross leasing area

is around 111 million sq ft as on 30 September 2017, according to data available on its

website.

The effective gross leasing area is calculated after factoring in its ownership interest in the

individual real estate properties or platforms.

In CPPIB’s global portfolio stack, India is at the sixth position with a total gross leasing area

of 12.4 million sq ft. Taking into account effective gross leasing area of 11.18 million sq ft,

the country jumps up to the fourth position in the overall ranking.

These are direct property holdings of CPPIB and do not include properties held through real

estate funds.

In India, CPPIB has taken a calculated move to have a presence across different segments of

the real estate market. In the last few quarters alone, it struck a platform deal for retail real

estate exposure with listed developer The Phoenix Mills and formed a joint venture with

industrial realty giant IndoSpace for warehousing and logistics.

In April this year, it committed an equity capital of Rs 724 crore for a 30% stake in a joint

venture with The Phoenix Mills. It agreed to pump in Rs 1,600 crore more across multiple

tranches to own up to 49% in the strategic tie-up. The platform aims to develop, own and

operate retail-led mixed-use developments in India.

Soon after, CPPIB announced its plan to invest as much as $1.2 billion (Rs 7,700 crore) in a

joint venture with Indian developer IndoSpace to acquire and develop logistics facilities in

the country.

Its third piece in India realty portfolio is a commercial asset – SP Infocity – that was acquired

under a platform between real estate developer Shapoorji Pallonji Group and CPPIB.

They bought 100% stake in SP Infocity IT Park, situated in Chennai, for an enterprise value of

$220 million (Rs 1,340 crore).

Shobhit Agarwal, managing director – capital markets, JLL India, said CPPIB is currently quite

aggressive when it comes to its exposure to real estate. “Their preference is to seed their

portfolio instead of doing one transaction after another. They have done industrial and

retail and going forward will do more rental yield assets from segments such as hospitality

and office, among others. So, they are quite annuity-driven and that’s what will define their

strategy in real estate here,” Agarwal said.

Amit Goenka, real estate veteran and managing director at NiFCO, said Canadian firms, in

general, have taken a very positive view of India. “This is clear from the way they are going

about deal-making. The other factor why they find India to be a sweet spot is that yields,

globally, have not matched up the expectations. And given the macroeconomic factors of

our country and the performance of the rent-yielding assets, investors like CPPIB are coming

in scores,” he said.

While CPPIB is spreading its presence across different segments at the same time, this is in

stark contrast to what one of the biggest investors in realty market – Blackstone – has done

over the years.

The PE giant first accumulated over 30 million sq ft of commercial assets in Indian and is

now formed a separate vertical for retail assets in the country. Its retail vertical – Nexus

Malls – now has a portfolio of six-seven assets.

CPPIB has made rapid strides in the real estate ecosystem on its own as it has an on-the-

ground team in India. In 2015, it set shop in Mumbai with an aim to clock ‘best risk-adjusted

returns in India’. Mark Wiseman, president and CEO at CPPIB, had then said the firm has five

professionals in India and would be looking at growing the team as investment

opportunities arise.

This is not the first time that the investment giant is trying to make inroads into Indian realty

market. Earlier, it had set up a platform with Piramal Group to fund residential projects but

the effort did not pay off. The platform could do only one transaction and then it went off

the table for both the parties involved.

The ramped up interest of CPPIB comes at a time when rent-yielding assets have found

many takers in the Indian real estate market. The buoyancy in leasing activity, falling

vacancy level and higher demand for Grade A assets have lured many to come and join the

deal-making space.

In a big bet on rent-yielding assets, Singapore’s sovereign wealth fund GIC recently acquired

around 33% stake of DLF promoters in the realty firm’s rental arm. The deal value was

around $1.3 billion.