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CPPIB gains half ownership of Hong Kong property

Hong Kong skyline.


The Canadian Pension Plan Investment Board has acquired 50 per cent of the shares in Hong Kong Interlink, an industrial facility under development, for $285-million.

The CPPIB, which invests surplus funds from the federal government's Canada Pension Plan, will pay about $205-million in cash and assume $80-million of debt for its half ownership of Hong Kong Interlink.

The Goodman Hong Kong Logistics Fund will own the other 50 per cent of the Interlink project, which is scheduled for completion in January 2012.

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The fund is part of Goodman Group, an Australian-based real estate company.

It's CPPIB's first direct investment in Hong Kong real estate and part of the pension fund manager's strategy of acquiring assets that can deliver stable returns over the long term.

"Interlink is well positioned to attract leading, global tenants seeking a large-scale, modern facility in the Hong Kong area, where the supply of industrial space is severely constrained and rental demand is consistently strong," said Graeme Eadie, CPPIB's senior vice-president for real-estate investment.

In a separate release Goodman said the deal expands the company's partnership with the Canadian pension fund and frees up capital for other investments in China's fast-growing economy.

"Significantly, the transaction will help to drive the group's growth strategy in the region, providing capital for reinvestment in new opportunities across Greater China, specifically in our targeted cities of Shanghai, Beijing, Chengdu and Chongqing," Goodman Group CEO Greg Goodman said in a release from Sydney, Australia.

Philip Pearce, Goodman's managing director for Greater China, said growth potential in China is great because of the booming economy linked to international trade.

"Customer demand for prime logistics space in Greater China continues to exceed supply and our people are very focused on procuring land and securing development opportunities in response to the strong demand," Mr. Pearce said.

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Under Thursday's announced transaction, Goodman will provide asset management, development and property services.

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