CPP Investments, LMC Form $980M Joint Venture

Rendering of joint venture’s first development. Image courtesy of LMC

Canada Pension Plan Investment Board and LMC, a wholly-owned subsidiary of Lennar Corp., will develop nearly $1 billion in Class A multifamily communities across high-growth metropolitan areas across the United States in a new joint venture.

CPP Investments and LMC have allocated $979 million in equity to the joint venture. CPP Investments will own a 96 percent stake and LMC will own the remaining 4 percent.

The joint venture, which will focus on urban and suburban communities in major U.S. markets with strong population and job growth, will be seeded with five assets totaling 1,371 units. The properties will consist of one each in Boston and Miami and three in Denver. They are all new developments that will begin construction immediately with deliveries ranging from 12 to 36 months. Future cities targeted by the joint venture include Seattle, Dallas and Austin, Texas.

Todd Farrell, LMC president, said in a prepared statement the joint venture will be targeting high-growth markets where the housing supply hasn’t kept up with the demand. The joint venture will also leverage LMC’s extensive development and construction expertise to build multifamily communities at an attractive cost basis. It will also benefit from LMC’s fully integrated development management, construction management, property management and investment management platforms. LMC, which launched in 2011, is one of the nation’s most active developers, builders and managers and is currently the eighth largest U.S. developer, according to the National Multi-Housing Council’s annual Top 50 list.

Peter Ballon, managing director, global head of real estate for CPP Investments, said in prepared remarks the joint venture provides an excellent opportunity to meet the strong demand for high-quality multifamily housing. He said CPP Investments was pleased to work with a best-in-class partner like LMC as it continues to build its multifamily investment portfolio.

CPP Investments JVs

This is the latest major foray into the residential sector for CPP Investments. In December, the firm formed a joint venture with Greystar Real Estate Partners to develop and acquire purpose-built single-family rental communities in the U.S. The partners allocated approximately $840 million in equity for the joint venture that will develop and acquire professionally managed rental communities of detached or semi-detached homes and townhomes with private garages and backyards. CPP Investments will be the majority partner with a 95 percent stake. Greystar will own 5 percent and also manage the properties in the portfolio.

In March 2021, the company formed a joint venture with Tricon Residential to develop between 2,000 and 3,000 units of multifamily housing in Toronto valued at approximately $1.1 billion. CPP Investments was contributing about $278 million of the $400 million in equity capital to the joint venture.

LMC Developments

As of Nov. 30, LMC had a 42,000-home pipeline of communities ranging from operating to pre-development with a total value of more than $16.4 billion, including high-rise, mid-rise and garden apartments. Late last month, LMC opened Emblem Grayson, a 344-unit, garden-style community in the Atlanta submarket of Loganville, Ga.

In June, LMC’s Ovation, a 548-unit, mixed-use, luxury community in downtown Seattle was topped off. The property, which has two 32-story towers, is expected to start leasing early this year. QuadReal was LMC’s equity partner on the project. Also in June, LMC began pre-leasing at the Triangle Square Apartments, a 298-unit community in Chicago’s Bucktown neighborhood.