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The Canada Pension Plan Investment Board and Redwood Trust have committed US$750 million to a new strategic capital partnership.,

CPPIB, Redwood Commit US$750M to JV

The Canada Pension Plan Investment Board and Redwood Trust have committed US$750 million to a new strategic capital partnership designed to invest in the U.S. residential real estate sector.

The partnership comprises a US$500-million asset joint venture and a $250-million corporate secured financing facility, Toronto-based CPPIB and Mill Valley, Calif.-based Redwood announced in a news release.

The JV will initially invest across Redwood’s broad suite of Redwood’s residential investor bridge and term loans, targeting US$4 billion in total acquisitions. CPPIB and Redwood will provide US$500 million in equity with the Canadian pension fund manager furnishing 80% and the U.S. company supplying 20%.

Redwood will manage the JV and received administration fees and performance bonuses if return targets are met.

The $250-million secured corporate financing will carry a two-year term with a one-year extension option. CPPIB will also receive about US$15 million in stock warrants and have the option to purchase an additional US$36 million in shares if certain performance targes are met.

“This transaction expresses our positive thesis on U.S. housing and other asset-backed credit opportunities,” said David Colla, CPPIB’s head of capital solutions.

CPPIB ranks among the world’s largest institutional investors. Redwood is a publicly traded finance company that specializes in housing credit.


Inside The Story

David CollaRedwood Trust

About Monte Stewart

Monte Stewart serves as Content Director - Canada for Connect Commercial Real Estate. Based in Vancouver, British Columbia, Monte provides daily news coverage of major Canadian commercial real estate markets, including Vancouver, Toronto, Montreal and Calgary. He has written about the real estate sector for various media outlets and Avison Young since the early 2000s. In addition, he has covered sports, general news and business for several leading wire services and publications, including The Canadian Press, The Associated Press, The Calgary Herald, The Globe and Mail, Research Money, The Daily Oil Bulletin, Natural Gas World and The Toronto Star. Monte is active in his community as a youth basketball coach and raises funds for such charitable causes as Movember.

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