Canada Pension Plan Investment Board said on Friday it would buy Houston-based real estate investment trust Parkway Inc for US$1.2 billion, its second significant U.S. investment this week.
Canada’s biggest public pension fund, which is one of the world’s biggest real estate investors, will pay Parkway stockholders US$19.05 per share and a US$4 special dividend, the companies said on Friday.
Shares of Parkway were up 12.3 percent at US$22.87 in morning trading. That was slightly below the US$23.05-per-share deal value, which represented a 14 percent premium to the stock’s average price in the past month.
“Parkway fits well with CPPIB’s long-term real estate strategy to hold stable, high-quality assets in large U.S. markets,” said Hilary Spann, who heads the pension fund’s U.S. real estate investment arm.
Parkway, in which U.S. private equity firm TPG Capital has a 9.8 percent stake, said it owned 19 Houston office properties totaling about 8.7 million square feet.
CPPIB Chief Executive Officer Mark Machin had said in November that he saw U.S. opportunities arising from President Donald Trump‘s election victory, citing the expectation of increased fiscal stimulus, less regulation and more economic activity.
CPPIB, which manages Canada’s national pension fund and invests on behalf of 20 million Canadians, has been diversifying from its domestic market by acquiring assets, such as real estate and infrastructure, around the world in addition to buying publicly traded stocks and bonds.
The pension fund is most heavily invested in the United States, which accounts for about 39 percent of its $317 billion (US$245 billion) of assets, according to its 2017 annual report. Asia is a distant second at 18 percent.
On Wednesday, CPPIB agreed to invest up to US$1 billion to buy oil and gas assets in the United States in a partnership with Encino Energy Ltd.
HFF Securities LP was Parkway’s financial adviser, and Hogan Lovells US LLP was its legal adviser.
By Matt Scuffham
(Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D’Silva and Lisa Von Ahn)
Photo of Houston skyline courtesy of Rauluminate/iStock/Getty Images