Tricon and CPP Investments announce a Toronto multi-family development joint venture
Tricon Residential Inc. and Canada Pension Plan Investment Board announced that they have entered into a joint venture to invest in build-to-core multi-family rental projects in the Greater Toronto Area.
The Joint Venture will provide up to $500 million of equity capital, including up to $350 million from CPP Investments (70 per cent) and up to C$150 million from Tricon (30 per cent), allowing for the expected development of 2,000-3,000 units at a gross development cost of approximately $1.4 billion, including leverage.
The Joint Venture will focus on developing high-quality rental apartments, located close to major transit and employment nodes, intended for a long-term hold by the JV. Tricon will serve as the developer, asset manager and property manager of the JV projects.
“We are excited to partner with CPP Investments, one of the world’s largest and most respected institutional investors, to grow our Toronto multi-family development platform. The Joint Venture will increase the stock of private rental housing, a stated goal of the City of Toronto and Provincial Government, and will play an important role in enhancing the City’s vibrancy and livability,” said Gary Berman, President and CEO of Tricon Residential. “Toronto’s compelling long-term rental fundamentals are firmly in place, including high population growth, a diverse economy, and increasingly stretched home prices. The current dislocation we are seeing in the land market presents an opportunity to source attractive development sites and provide high-quality rental apartments that respond to the needs of today’s renters, with relatively large livable suites, extensive amenities, and lifestyle programming (including virtual offerings) that contribute to a sense of resident community.”
The Joint Venture’s first project has been placed under contract and is located in Toronto’s Downtown East neighbourhood. The development is expected to consist of two towers totalling 870 units on a 1.8 acre site, and will feature a mix of 1, 2, and 3-bedroom units. The location is a short walk to a future Ontario Line subway station.
“The Greater Toronto Area continues to experience significant undersupply of purposebuilt rental properties, and even less stock of modern, institutionally owned and operated rental properties,” said Hilary Spann, Managing Director, Head of Real Estate Americas, CPP Investments. “We see a long-term opportunity to build and invest in properties alongside Tricon, a well-respected owner, developer and operator in the region, to meet this need with newer multi-family properties in transit-oriented locations.”
The Joint Venture is expected to allow Tricon to scale its Toronto-based multi-family portfolio to above 7,000 units in partnership with a likeminded long-term investor and maintain an active development pipeline as nearly 1,300 units are constructed and stabilized over the next two years.