Canada Pension Plan Investment Board is making one of its largest recent bets on domestic real estate with a $3 billion joint venture targeting last-mile industrial assets, a move that comes during a period of heightened scrutiny over how Canada’s biggest retirement fund allocates capital.
CPP Investments said it will partner with Dream Industrial Real Estate Investment Trust and Dream Asset Management Corp. to acquire warehouses located near urban centers, enabling faster final-stage delivery to customers. The venture is armed with $1.1 billion in equity, with $1 billion contributed by CPP Investments and $100 million from Dream Industrial. The equity will be leveraged to allow for an acquisition capacity of approximately $3 billion, the partnership said.
As part of the agreement, CPP Investments and Dream plan to acquire an initial portfolio of 12 Canadian industrial properties from Dream Industrial for $805 million. The portfolio contains 3.6 million square feet located near major population hubs and transportation corridors across Ontario, Quebec and Alberta.
A representative of Dream Industrial declined to disclose the properties contributed to the new partnership when contacted by email, but the statement issued by CPP Investments said approximately 37% of the gross leasable area is concentrated in the Greater Toronto Area, 36% in Montreal, 24% in Calgary and the remainder in London, Ontario.
“By partnering with Dream, a leading institutional asset manager and operating platform, we can efficiently scale our exposure in the Canadian market to capture this growth and drive long-term value for the benefit of CPP contributors and beneficiaries,” said Sophie van Oosterom, managing director and head of real estate at CPP Investments.
In logistics and industrial real estate, “last mile” refers to the final stage of delivery, moving goods from a distribution hub to the end customer. Last-mile facilities are typically smaller warehouses located near urban centers and major transportation routes, enabling fast and efficient delivery.
These properties play an important role in e-commerce fulfillment, same-day delivery and supply chain resilience. As a result, demand for last-mile logistics properties is growing as online shopping continues to grow and consumers expect rapid delivery.
Pressure to invest in Canada
Canada Pension Plan Investment Board, or CPPIB, has faced some pressure to invest more in Canada in recent times, as some argue that domestic investment is critical for economic sovereignty and growth. CPP Investments holds about 12% of its $777.5 billion real estate portfolio in Canada, while the U.S. represents nearly 47%. Real estate makes up roughly 8% of the overall pension fund.
The CPPIB has not slowed its foreign investment, however. Earlier this month, CPP announced plans to acquire half of Goodman’s European data centre fund, which includes four seed properties.
In July, it committed £100 million to a UK single-family rental housing platform with Kennedy Wilson, and in January, CPP launched a $1.14 billion joint venture with Bridge Industrial to acquire and develop warehouses across major U.S. markets.
CPP's recent Canadian investments include a $225 million stake in a $450 million upgrade of a Cambridge, Ontario, data centre to support AI computing.
As for the initial portfolio the new venture plans to acquire, the average in-place rents across the buildings are about $11 per square foot, with a weighted average lease term of three years, CPP Investments and Dream said. The closing is expected to occur in two tranches over the first half of 2026.
Dream will act as asset manager for the joint venture, while Dream Industrial will provide property management and leasing services.
Canada Pension Plan Investment Board was founded in 1997 and has its headquarters in Toronto. As of year-end of its fiscal 2025, CPP Investments had net assets of $714.4 billion, making it one of the world’s largest institutional investors. Its current President and CEO is John Graham.
Dream Industrial REIT was founded in 2012 and is based in Toronto. It is a publicly traded trust and owns approximately 73 million square feet of industrial properties valued at about $7.1 billion, spanning Canada, the U.S., and Europe. It's led by CEO Alexander Sannikov.