CPP Investment Board

CPP Investment Board
Vornado Realty Trust

Vornado Realty Trust

October 20, 2010 09:04 ET

Canada Pension Plan Investment Board and Vornado Realty Trust Announce a Joint Venture in Two Prime Vornado Washington D.C. Properties

Assets Valued at US$526 Million

TORONTO, ONTARIO and NEW YORK, NEW YORK--(Marketwire - Oct. 20, 2010) - The Canada Pension Plan Investment Board (CPPIB) and Vornado Realty Trust (NYSE:VNO) announced today a joint venture transaction in which CPPIB has acquired a 45% common ownership interest in 1299 Pennsylvania Avenue (the Warner Building) and 1101 17th Street NW, two prime office properties in Washington D.C. owned by Vornado. The transaction represents CPPIB's first real estate investment in the Central Business District of Washington, D.C.

CPPIB has made an equity investment of US$91 million and assumed 45% of the existing mortgage indebtedness secured by the properties in exchange for its 45% common ownership interest in the assets, which have a total implied value of US$526 million.

Vornado realized a net gain of approximately US$54 million on the sale of the Warner Building to be recognized in the fourth quarter. The gain on 1101 17th Street will be recognized when Vornado monetizes its investment. Vornado will retain its 55% ownership interest and continue to manage and lease these properties.

Peter Ballon, CPPIB's Vice-President and head of Real Estate Investments - Americas, said, "This investment represents an opportunity for CPPIB to acquire assets in one of the top real estate markets in the U.S., alongside one of the largest U.S. REITs with a strong track record of developing and managing office properties in Washington D.C. With this transaction, we continue CPPIB's ongoing investment strategy to acquire top quality real estate properties in key U.S. markets. We look forward to building this partnership as we continue to explore new opportunities in Washington and other cities." 

Vornado Realty Trust said, "We are pleased to have CPPIB, one of the world's most prominent institutional real estate investors, as a new partner in these two buildings. Like us, they primarily focus on top quality properties in major U.S. cities."

1299 Pennsylvania Avenue NW, known as the Warner Building, is a 13-storey, class A office building containing over 600,000 sq. ft., located approximately three blocks east of the White House. The building, considered a one-of-a-kind asset, also includes the historic Warner Theatre, a 1,850-seat theatre that has been restored to its original grandeur. The transaction values this property at US$445 million or US$737 per square foot.

1101 17th Street NW is a 13-storey office building containing over 200,000 sq. ft. that is well leased and well situated on the North East corner of L Street and 17th Street NW in Washington's commercial/business district. The transaction values this property at US$81 million or US$382 per square foot.

About The CPP Investment Board

The Canada Pension Plan Investment Board (CPPIB) is a professional investment management organization that invests the funds not needed by the Canada Pension Plan to pay current benefits on behalf of 17 million Canadian contributors and beneficiaries. In order to build a diversified portfolio of CPP assets, the CPP Investment Board invests in public equities, private equities, real estate, inflation-linked bonds, infrastructure and fixed income instruments. Headquartered in Toronto, with offices in London and Hong Kong, the CPP Investment Board is governed and managed independently of the Canada Pension Plan and at arm's length from governments. At June 30, 2010, the CPP Fund totaled $129.7 billion of which $7.9 billion represented real estate investments. For more information about the CPPIB, please visit www.cppib.ca.

About Vornado Realty Trust

Vornado Realty Trust is a fully-integrated real estate investment trust (REIT). Vornado is one of the largest owners and managers of commercial real estate in the United States with a portfolio totaling over 100 million square feet primarily located in the New York and Washington, DC metropolitan areas. For more information about Vornado, please visit our website at www.vno.com.

Contact Information

  • Canada Pension Plan Investment Board
    Linda Sims
    Director, Media Relations
    (416) 868-8695
    Vornado Realty Trust
    Joseph Macnow
    Executive Vice - President - Chief Financial Officer
    (201) 587-1000