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Cortland Forms Big MF Partnership

Singapore's GIC and Canada Pension Pledge $550M
January 10, 2018
Pictured: Lakecrest at Gateway Park in Denver, one of three communities acquired by the Cortland/ GIC/CPPIB venture this past fall.

Atlanta apartment shop Cortland Partners has struck a partnership with two large international investors.

Cortland announced this week it has formed a joint venture with Singapore sovereign wealth fund GIC and Canada Pension Plan Investment Board (CPPIB). The partnership is looking to acquire between 8,000 and 10,000 Class B apartments in the U.S., and spend about $550 million of equity. With leverage, the cash will give the new partnership buying power of about $900 million.

The three investors teamed up this past fall to acquire three multifamily complexes totaling 1,032 units in Denver, Raleigh and Austin. The three investments, which closed between September and November, were collectively purchased for around $200 million.

The partnership will be hunting for older Class B rental properties in the Southern and Southeastern U.S., with a traditional value-added strategy in mind. They will acquire the properties, make interior and common area improvements, and hope to raise rents and boost net operating income. That will allow them to close the gap between rents at the older properties and the higher prices paid at newer, luxury projects nearby.

CPPIB and GIC will each own 45% of any new acquisitions, with Cortland, the managing partner, taking up the remaining 10% stake.

The commitment strengthens evidence that Class B properties will likely be the hot-ticket item for apartment investors this year. CPPIB has focused most of its U.S. apartment acquisitions on downtown, core assets in recent years. But that niche is overbuilt in most markets with rent growth flattening or declining for the properties. Older properties, with upgrade potential are seen as the rental assets most likely to see significant rent growth in the next few years.

John Doherty, Multifamily Reporter  CoStar Group   
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