CPP in bid for Australian real estate fund

The Canada Pension Plan Investment Board is leading a consortium that has offered to buy 100 per cent of the assets of ING Industrial Fund.

Along with its partners, All Pensions Group, Goodman Group and China Investment Corp., the fund will offer 0.546 Australian dollars per unit for the fund's assets. The equity portion of the fund's assets are valued at $1.4 billion Australian, but the deal also includes $1.2 billion in debt — bringing the total value to $2.6 billion.

ING Management Ltd., which is responsible for managing the fund, has unanimously recommended that shareholders approve the sale.

The price represents a 15 per cent premium to the price on Oct. 27, when the group's first proposal was made public, and 22 per cent higher than the average price of the fund during the six months prior to that.

"This transaction is an opportunity for CPPIB to invest in a portfolio of high-quality industrial properties," CPPIB's senior VP of real estate Graeme Eadie said of the deal.

"As a long-term and disciplined investor, we believe that these assets would be a good fit with our existing portfolio and is well-aligned with our real estate investment strategy."

Unitholders are expected to vote on the offer in mid-March 2011. If approved, the transaction is expected to be complete by the end of March. CPPIB would own 42.5 per cent of the newly formed Goodman Trust Australia, a special purpose investment vehicle that has yet to be created to hold the assets.

The Canada Pension Plan Investment Board invests and manages the funds of 17 million Canadian contributors and beneficiaries of CPP. The fund had $138.6 billion in assets at the end of September.

The Canadian pension fund manager has been buying infrastructure and real estate assets around the world. The purchase represents the CPPIB's  largest real estate investment in Australia thus far.