CPPIB to Invest in French Real Estate Credit

The Canada Pension Plan Investment Board (CPPIB) is investing US$222.5 million in middle-market real estate credit opportunities in France by partnering with Acofi Gestion, a Paris-based asset manager.

Acofi Gestion will advise on the venture and offer debt financing solutions to borrowers in one of Europe’s largest commercial real estate markets, CPPIB said Tuesday. It’s targeting medium-sized whole loans and mezzanine loans for assets.

The Canadian pension fund is venturing further into commercial real estate, just as more offices, hotels, retail, and other properties are increasingly under pressure because of the pandemic.

Paris is a natural draw for the allocator. The French metropolis boasts one of Europe’s largest commercial real estate markets, and it has been among the world’s top draws for global investors seeking opportunities in Europe’s gateway cities, according to real estate services firm Jones Lang LaSalle (JLL).

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“The venture will provide borrowers in France a new source of flexible capital to cater for their needs at a time when funding has become complex to source,” Christophe Murciani, head of commercial real estate debt funds at Acofi Gestion, said in a statement.

As it is, the commitment is part of the Canadian fund’s broader growth strategy in Europe, according to Alain Carrier, dual head of Europe and international at CPPIB.

It’s the second investment into the European middle market lending space from the pension fund’s Real Assets Credit group. The retirement system has set up prior partnerships in Spain and Portugal to invest in middle market opportunities across the continent.

“We have identified a clear shortage of local, flexible, and structured sources of debt finance, particularly for more complex transactions,” Carrier said in a statement.

The Real Assets Credit group, which has offices in Toronto, London, and New York, targets $81 million to $405.9 million for global investments in real estate, energy, and infrastructure.

Credit investments account for about $50 billion in assets, or nearly 13% of the $386.2 billion portfolio, as of the end of last year.

CPPIB has returned 10.8% annually over the past decade. Over the past five years, it has returned 9.7%.