Canada Pension Plan, Boston Properties Buy Santa Monica Office Park

The $270.5 billion Canada Pension Plan Investment Board (CPPIB) and Boston Properties have formed a partnership, acquiring some California real estate in the process.

The two organizations picked up the Santa Monica Business Park on Monday, for $627.5 million, according to a news release. The 47-acre tract, located in the Ocean Park neighborhood, has 21 office buildings with about 1.2 million rentable square feet.

Roughly 70% of the rental space is subject to an 80-year ground lease, which allows the Canada-Boston partnership the right to buy the land underlying the park in 2028.

The property is 94% leased.

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news. 

The Canada pension board will invest $147.4 million in the park for a 45% stake. Boston Properties will pump $180.1 million into the venture, and provide the customary operating, property management, and leasing services for the space. Another $300 million in financing helped complete the acquisition.

This marks the 11^th office property the CPPIB has picked up in the US.

“Santa Monica consistently sees strong demand, driven by technology and media firms in the area, and the supply constraints make this asset attractive for CPPIB to hold long term,” said Hilary Spann, the Canada board’s managing director, head of Americas, real estate investments. She mentioned that the investment gives the board an “immediate scale in the West LA office market.”

The park’s previous owner was Blackstone Group, according to Bloomberg.

Tags: Boston Properties, Canada Pension Plan Investment Board, Real Estate, Santa Monica Business Park

The Church of England Pensions Board reported a 9.4% total return for all pension assets in 2017, easily beating its target returns and raising the total asset value of its pension funds to £2.6 billion ($3.41 billion).

The return was significantly ahead of its target, which is inflation (as measured by the retail prices index) plus 3%. Over the past 15 years, net returns for the plans’ assets, after fees and costs, are 9% per year, which is the equivalent of inflation plus 6%.

Total income for 2017 was £28.8 million, up from £28.4 million in 2016, while income from charitable activities was £19.9 million, compared to £19.6 million the previous year. Meanwhile, the pension deficit liability was £1.5 million at the end of 2017, down from £1.9 million at year-end 2016.

The Church of England Pensions Board is the trustee of four pension funds: the Church of England Funded Pension Scheme, the Clergy (Widows and Dependants) Pension Fund, the Church Workers Pension Fund, and the Church Administrators Pension Fund.

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news. 

The board provides retirement services for approximately 40,000 people who have served or worked for the Church of England, including more than 10,000 retired clergy.

According to an independent audit, the church has “a significant level of long-term debt liabilities on the balance sheet (£99.6m), which require servicing and which if called in would require the group to sell a large proportion of their property portfolio.”

The board holds a large number of properties on the balance sheet value at £224.6 million, which it uses to meet its charitable objective of providing housing to retired clergy. The properties are held as security against the funds’ liabilities.

The board also manages the Secretariat to the Ethical Investment Advisory Group (EIAG) on behalf of the Church of England’s national investing bodies, which include the Church Commissioners, the Church of England Pensions Board, and the CBF Church of England funds managed by CCLA Investment Management Ltd.

The role of the EIAG is to advise the national investing bodies on ethical investment policies. It currently does not invest in companies that have significant involvement in gambling, the production and sale of alcohol, tobacco, defense, or high-interest-rate lending.

In late 2017, the board announced a new policy on investing in extractive industries.

“Ethical investment considerations are very important to us when investing the pension funds,” Jonathan Spencer, chair of the pensions board, said in a release. “The new policy acknowledges the positive contribution that mining can make to development. However, it also highlights that extractive companies are particularly vulnerable to poor governance and ethical controversy.”

Tags: Church of England, Church of England Pensions Board, Fiscal 2017, Returns