CPPIB partners with developer Tricon for two Toronto apartment buildings

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Canada’s largest pension fund is backing the development of two new apartment buildings in the heart of downtown Toronto, the latest housing project in the works in the country’s most populated city.

The buildings, which will have 870 rental units, will be the first developments from a newly formed partnership between Canada Pension Plan Investment Board (CPPIB) and developer Tricon Residential Inc.

To start the joint venture, the parties have earmarked $500-milllion in capital to develop up to 3,000 apartment units in the Toronto region. CPPIB is contributing $350-million and Tricon the remainder. Tricon, an apartment developer in Canada and the United States, will serve as the developer, asset manager and property manager for their properties.

The joint venture will develop apartments close to major public transportation and employment centres – a common goal for the many real estate companies.

Tricon and CCPIB declined to provide the exact location of the site, saying the purchase had not yet closed. However, they said the 25- and 32-storey buildings would be on a 1.8-acre site close to a future subway station.

Unlike new condo developments where the majority of the units are one-bedroom and smaller, Tricon president Gary Berman said there would be more room in the individual apartments. The average unit size is expected to be 680 square feet, which is larger than that of new condos. The developer says there is a demand for larger units.

The new apartment buildings are expected to have a gym, rooftop garden, outdoor pool and a public park. The project is expected to cost $600-million to build, with nearly $200-million in capital from the partnership. The remainder will be financed by borrowing.

Over all, the joint venture expects to spend $1.4-billion on development, of which the bulk is debt.

Construction is expected to start next year and take about three years to complete.

This is CPPIB’s second partnership with a housing developer in Toronto and comes as it tries to increase its portfolio of multiresidential properties and reduce exposure to office and retail properties – two types of real estate that lost value during the pandemic.

The fund has $43.1-billion in office, retail, industrial and residential real estate globally. It is unknown how CPPIB’s real estate has performed during the pandemic as it does not provide details until after its fiscal year ends in March.

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