Canada Pension Plan Investment Board is in advanced talks to buy a 50% stake in the first phase of the £1bn Paradise Birmingham scheme, one of the largest development projects in the UK.
The C$264.6bn (£135.9bn) Canadian pension fund will take an equal share in the £150m first phase of the scheme alongside Hermes, which jointly owns the 1.8m sq ft project with Birmingham city council.
A source said the joint venture was the first deal in what could lead to a wider partnership on the scheme in due course.
Argent is the scheme’s developer.
The first phase of the project, which started earlier this year, includes demolition of the existing buildings on the site, major infrastructure improvements and public realm around Chamberlain Square, as well as two new office buildings.
The new offices are the 172,000 sq ft One Chamberlain Square, designed by Eric Parry Architects, and the 182,000 sq ft Two Chamberlain Square, designed by Glenn Howells Architects. The first is expected to complete in 2018, with the second due in early 2019.
The overall scheme will include offices, shops, cafés, restaurants and a hotel across 10 buildings.
The CPPIB deal is the second major regional joint venture agreed between the pension fund and Hermes in the past six months, following their £185m deal to develop Wellington Place in Leeds.
They also launched a £350m London joint venture in 2013.
CPPIB has been one of the most active of the giant Canadian pension funds investing in real estate in Europe. Around 11.5% of its total assets under management are in real estate, with significant assets in the UK including stakes in Nova, SW1; Silverburn in Glasgow; 55 Bishopsgate, EC2; and student housing company Liberty Living.
Paradise Birmingham, formerly known as Paradise Circus, will provide a new commercial heart to the UK’s second city, two minutes’ walk from the redeveloped £600m New Street Station, which is due to open in September and will feature the biggest John Lewis outside of central London.
CBRE and GVA are leasing agents on the scheme; CBRE advised Hermes on the joint venture.
