CPPIB Invests $650 Million in Real Estate, Renewable Energy

The C$456.7 billion ($359.2 billion) Canada Pension Plan Investment Board (CPPIB) has committed up to a total of $650 million for multifamily real estate development deals in the United States and European renewable energy investments.

CPPIB has formed a joint venture with South Carolina-based real estate developer Greystar Real Estate Partners to pursue multifamily real estate development investments in certain US markets. The Canadian pension giant will pony up $350 million in equity toward the joint venture for a 90% stake, while Greystar has invested $39 million for the remaining 10%. Under the terms of the joint venture, Greystar will manage and operate the portfolio.

“There is a significant undersupply of rental housing in the US,” Hilary Spann, CPPIB’s head of real estate Americas, said in a statement. “Despite the global pandemic and short-term economic uncertainty, there continues to be an opportunity for long-term investors to develop high-quality multifamily properties in growth markets.”

The joint venture will develop class A, mid-, and high-rise multifamily properties in urban and inner-ring suburban communities in major American markets, including coastal markets and other regions that have a high population and strong job growth.

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CPPIB also committed up to €245 million ($300 million) to its UK-based platform Renewable Power Capital Limited (RPC), which it launched last month, to support its first investment in European renewable energy.

RPC will acquire a 100% interest in a portfolio of three wind farms in Finland from Swedish renewable power generation company OX2, which will build the wind farms under an engineering, procurement, and construction contract. OX2 will also be responsible for the technical and commercial management of the wind farms. The three wind farms are expected to be operational in 2022, at which point the portfolio is expected to produce nearly 590 GWh per year, which is equal to the amount of electricity consumed by approximately 118,000 households.

“Our new commitment to support RPC’s initial investment in Finland is fully aligned with our goal of deploying long-term, flexible capital in an attractive renewables market,” said Bruce Hogg, CPPIB’s head of power and renewables. “We continue to see a strong pipeline of other renewable opportunities in RPC’s high priority markets.”

RPC will invest in solar, onshore wind, and battery storage, among other technologies in Europe. CPPIB has made approximately C$9 billion of equity commitments to renewable energy globally as of Sept. 30, with investments in onshore wind, offshore wind, solar, hydro, and associated storage and distribution assets.

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Tags: Canada Pension Plan Investment Board, CPPIB, Greystar Real Estate Partners, Real Estate, Renewable Energy, Renewable Power Capital Limited, wind farm

The American Federation of Musicians and Employers’ Pension Fund (AFM-EPF) is hoping the second time is the charm and has reapplied to the US Treasury Department for a reduction in benefits under the Multiemployer Pension Reform Act (MPRA) to help stave off impending insolvency.

In August, the Treasury Department denied the fund’s application for a reduction in benefits, saying that the mortality rate and new entrant assumptions it used were “not reasonable under the standards in the regulations.” The department said the mortality assumption used in the recovery plan was based on a standard table that was used “without adequate justification or a demonstration of the manner in which the table properly reflects the mortality experience of the fund.”

In the fund’s new application, which was submitted on Dec. 30, the proposed reduction for all participants who earned contributions before Jan. 1, 2010, includes an across-the-board 30.9% reduction of the multipliers used to calculate benefits for contributions earned before Jan. 1, 2010. There is no change to the multipliers for contributions earned on or after Jan. 1, 2010—the $1.00 multiplier is not being reduced. The benefit multiplier is the dollar amount by which each $100 of contributions is multiplied to determine the amount of a participant’s monthly pension benefit.

Participants who began their pension benefit before age 65 but then earn contributions before reaching age 65 earn so-called “re-retirement benefits.” On reaching age 65, a re-retirement benefit is added to the regular pension benefit.

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Under the proposed reduction, re-retirement benefits will be recalculated using a revised formula consistent with the way regular retirement benefits are calculated. Each $100 of contributions earned since the initial pension effective date is multiplied by the age-65 benefit multipliers for the benefit period in which the contributions were earned.

The only changes to the structure of the proposed reduction from its previous application is that the flat across-the-board reduction of multipliers higher than $1 is 30.9% instead of 15.5%, and that benefits will not be reduced if a participant’s benefit comes out to less than $1 per month.

“The change that matters most, of course, is the increase in the flat across-the-board reduction, which is due mainly to the COVID-19 pandemic,” said the fund’s trustees in a communication that was sent to the plan’s participants. “This year, due to the large drop in work, contributions to the plan have been significantly lower. And they likely will continue to be depressed for the next few years. Less contributions means benefits have to be lower for the plan to survive.”

The pension fund supports more than 50,000 active workers, retirees, and beneficiaries, and receives contributions from more than 5,500 employers in the film, recording, symphonic, television, and theater industries. If approved, the proposed reductions would take effect Jan. 1, 2022.