The Investment Management Corporation of Ontario (IMCO) and Tishman Speyer today announced the creation of a joint venture established to build a valuable portfolio of new developments and repositioned office and multi-residential properties in major U.S. gateway cities.

The planned investment program bolsters IMCO’s commitment to generating strong results for its clients through high-quality assets and developing long-term and mutually beneficial strategic partnerships. For Tishman Speyer, the venture will facilitate the expansion of its presence in major U.S. markets specifically by taking advantage of value-add opportunities.

With IMCO’s initial commitment of $500 million (USD), and additional co-investment opportunities of $250 million (USD), IMCO and Tishman Speyer will jointly acquire and develop property in major supply-constrained U.S. markets. This includes New York, Washington, Boston, Los Angeles, San Francisco, Chicago and Seattle. Investments will target new development opportunities and well-located office and multi-residential assets in need of renovation – converting them into modern, class A properties.

“IMCO has partnered with Tishman Speyer to leverage its worldwide presence, as well as deep local market knowledge,” said Jean Michel, Chief Investment Officer, IMCO. “This partnership allows us to access larger transactions where few bidders can compete. Tishman Speyer has a consistent track record in project delivery, which makes it an ideal partner for us.”

Tishman Speyer President and CEO Rob Speyer commented, “Demand is very strong for high quality office space and multifamily housing in U.S. gateway cities, and we believe that will be the case for the foreseeable future. This alliance will help to fuel our ability to help meet that demand, working with a partner that is financially well positioned and experienced in successful investment.”

IMCO prefers to develop partnerships with full-service real estate organizations that offer competitive advantages including market knowledge, deal accessibility, best-of-breed in-house expertise and strong reputations.

Targeted cities are characterized by supply constraints, which support higher rent growth as new developments lag demand. Market fundamentals across the U.S. remain strong and continue to outperform expectations. Development and value-add opportunities are economically attractive in the target markets, with stabilized return on cost at significant spreads over existing cap rates on core assets.