PSP Investments and Nuveen Real Estate Launch a $790 Million U.S. Shopping Center Venture, With 19 Centers Already Acquired

Canada's PSP Investments and Nuveen Real Estate announced on 21 October a joint venture that has already put $790 million into 19 open-air shopping centers across the United States. The centers total about 3 million square feet and sit in eight states: Arizona, California, Colorado, Florida, Minnesota, Texas, Virginia and Washington. The $790 million is the value of investments already acquired, not a new pot yet to be spent, and the acquisitions had closed by the time of the announcement.

The venture focuses on centers anchored by grocery retailers, essential services and everyday-needs retailers, in metro areas with population growth, rising household incomes and limited new retail supply. PSP provides long-term capital and Nuveen provides sourcing and operating capability. Two examples were named: the Shoppes of Lorton Valley in Lorton, Virginia, at about 110,000 square feet, and Las Tiendas Village in Chandler, Arizona, at about 188,000 square feet. The other assets were grouped into a six-center portfolio of about 801,000 square feet and an 11-property portfolio of about 1.9 million square feet.

Reading the numbers

On our arithmetic the venture has averaged about $41.6 million per center and roughly $263 per square foot. Treat both as rough: the sources do not give a purchase price for every property, so they are averages of the headline figure, not property-level prices.

What it signals

The structure is the story. A large pension investor supplies the capital and a specialist manager supplies origination and operations, with the assets bought before the announcement. That is a different route from committing to a blind-pool fund and waiting for the manager to invest. It is also not unique to PSP. We recently covered how CPP Investments bought 27% of Prestige Hospitality Ventures for C$441 million, another case of a Canadian pension taking direct stakes alongside an operator. Together they suggest that large institutions may prefer partnerships where they control more of the pace and the asset selection, though two examples do not make a trend and the sources do not say so.

What a GP can take from it

This is our advice. If you raise real estate funds, expect a large limited partner to ask whether it could take the same strategy through a separate vehicle. Prepare the answer before the question arrives: the minimum ticket, governance and reporting you could offer, how you would split fees and sourcing, and what you would need in return. A pension that is below its real estate target, like the one in our playbook on pitching an LP with room to fill, will weigh any partnership against its existing exposure. We cannot tell from the announcement whether PSP considered funds before choosing this route.

What to watch

Look for further acquisitions by the venture and any similar structures announced by other large pensions. FundLinx members can see which pension funds are active in your strategy.

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