Canadian investors bullish on Manhattan

By Michael Stoler | May 19, 2010 06:00PM

It looks like 2010 is going to turn out to be another year when Canadian pension funds come to Manhattan in their quest to own quality real estate.

After investing lots of money in Canada, the $123.9 billion CPP Investment Board, is interested in acquiring a piece of commercial real estate in Manhattan. The board has spent $7.1 billion, or 5.8 percent of the pension plans’ assets, in commercial real estate, although predominately in Canada. The portfolio does include some properties in the United States.

On May 10, CPP announced its first foray into Manhattan with the acquisition of a 45 percent non-managing interest in the 50-story, 2.5-million-square foot McGraw-Hill building at 1221 Sixth Avenue, for $576 million, and a 45 percent stake in 600 Lexington Avenue for $87 million.

CPP is following the investment philosophy of Canada’s largest institutional investor, the Caisse de Dépôt et Placement du Québec — which invested approximately $23.3 billion in Big Apple real estate. Through its subsidiary Caisse SITQ, Caisse has ownership interests in a number of office buildings in New York City, four in joint venture with SL Green. Those buildings include 1515 Broadway and 1745 Broadway.

Over the past decade, Caisse, along with SL Green and other real estate investors, have owned a number of trophy assets in Manhattan like 340 Madison Avenue.

Montreal-based real estate advisor and portfolio manager, Cadim, a division of Caisse, became a major shareholder of the Praedium Group, a private equity firm. Praedium is $34 billion investor of multi-family apartments in New York City and New Jersey, co-owns rent-regulated multi family apartments with the Pinnacle Group.

Michael Stoler is a columnist for
The Real Deal and host of real estate programs “The Stoler Report” and “Building New York” on CUNY TV and on WEGTV in East Hampton. His radio show, “The Michael Stoler Real Estate Report,” airs on 1010 WINS on Saturdays and Sundays. Stoler is a director at Madison Realty Capital as well as an adjunct professor at NYU Real Estate Institute, and a former contributing editor and columnist for the New York Sun.