Boston Properties Said in Talks With CPPIB Over Office Park

(Bloomberg) -- Canada’s biggest pension fund is in talks with Boston Properties Inc. about taking a stake in a California office park that the real estate investment trust recently agreed to acquire from Blackstone Group LP for more than $600 million.

The Canada Pension Plan Investment Board would buy a portion of the 1.2 million-square-foot Santa Monica Business Park, according to people familiar with the matter who asked not to be identified discussing a private negotiation. The size of the equity stake being discussed couldn’t immediately be determined, and the talks could still fall apart.

Boston Properties said in a presentation earlier this month that it was considering a “capital partner” for the office park and was getting a lot of interest from investors. Such joint ventures allow the REIT to spread its money among more projects.

A CPPIB representative declined to comment. Boston Properties didn’t immediately respond to phone and email messages.

In Demand

Offices in West Los Angeles have enticed landlords and real estate investors because they’re in demand by media, advertising and entertainment companies. Buildings in the area are outperforming those in midtown Manhattan by revenue per square foot, according to a recent study by real estate research firm Green Street Advisors.

The Santa Monica office park -- which spans 47 acres and includes 15 office and six retail buildings -- presents an opportunity for growth because of its below-market rents, Boston Properties said in the presentation. The facility is 94 percent leased and will add to the REIT’s other holdings in the area. The company owns about half of the nearby Colorado Center.

Blackstone acquired the office park as part of its $39 billion purchase of Equity Office Properties Trust in 2007. It has since sold off many of the assets. Boston Properties said its deal with Blackstone is expected to be completed before the end of the third quarter.

CPPIB is one of the largest investors in real estate around the globe, with about C$46.1 billion ($34.6 billion) invested in equity in the sector and C$4.7 billion more in debt, according to its annual report. Last year, it agreed to buy three student housing portfolios with its partners for $1.6 billion. It also agreed last June to acquire Houston-based real estate investment trust Parkway Inc. for $1.2 billion.

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