GIC to allocate US$500M to office property tie-up with Boston Properties, CPP Investments

Singapore’s sovereign wealth fund GIC has allocated US$500 million to a US$1 billion co-investment program with Boston Properties (BXP) and Canada Pension Plan Investment Board (CPP Investments) to acquire office properties in the U.S.

Boston Properties and CPP Investments will each allocate US$250 million for an aggregate US$1 billion of equity, with leverage expected to boost the initial investment capacity to US$2 billion, the three partners said in press release Wednesday.

The program will target office properties in Boston Properties’ core markets of Boston, Los Angeles, New York, San Francisco and Washington, D.C., as well as Seattle.

“This new co-investment program underscores the attractiveness of Class A office investment opportunities in our markets and BXP’s track record of creating long-term value at the property level,” Owen Thomas, CEO of Boston Properties, said in the statement.

The office segment of commercial property has faced unprecedented levels of uncertainty as the pandemic made work-from-home required, at least temporarily, and led many workers to try to make the arrangements permanent.

But Adam Gallistel, managing director of Americas real estate for GIC, said: “We firmly believe that top companies need collaborative workspaces to build culture, innovate and win the war for talent. We are confident that Boston Properties will identify assets that serve this need and position our venture to capitalize on an uptick in demand stemming from a return to the office and the reopening of America’s great cities.”

Under the deal, over the next two years, Boston Properties will provide CPP Investments and GIC with exclusive first offers to form joint ventures on acquisition opportunities, with the U.S. property company acting as general partner and providing property management services, the press release said.