Canada Pension Plan backs Lendlease in $630m Milan venture

The move bolsters the developer’s international hopes as it chases growth in Europe and the US.

Lendlease and CPP have established a joint venture for Milan's MIND precinct.

Just a week after issuing a profit warning prompted by the impact of the coronavirus, property developer Lendlease has won the backing of the Canada Pension Plan Investment Board for a €400m ($631m) dedicated Italian real estate fund that will invest in Milan.

Lendlease was hit by delays in projects in London due to the pandemic, but has now confirmed the Canadian group as its partner on the huge precinct it is undertaking in the Italian city.

The vehicle will pursue the development of the first phase of the West Gate area of the Milano Innovation District, building on the pair’s ties at both Barangaroo in Sydney and Elephant Park in London.

CPP Investments and Lendlease have agreed to jointly invest about €400m of equity as a 50-50 joint venture in the fund for the development and long-term ownership of about 150,000sq m of a larger area where Lendlease has development rights.

The fund will develop part of the West Gate area of MIND, and the mixed-use area will become a recognisable destination for researchers, workers, residents and other visitors to the district’s west entrance.

Housed on the former 2015 World Expo site, MIND is set to become a top innovation district anchored by life sciences and technology. The development will comprise more than one million square metres when including the public institutions.

Overall, Lendlease’s development rights cover about half the district’s area, which is 480,000sq m, with an estimated development end value of about €2.5bn.

Public and private institutions form the foundation of MIND, which will deliver the new university campus of the Statale University for more than 18,000 students and the IRCSS Galeazzi hospital with more than 500 beds.

The district will also be home to the Human Technopole, Italy’s new research institute for life science and other research centres; as well as the Federated Innovation, an innovation ecosystem where more than 100 companies will be focused on co-creating discoveries in technology and life sciences.

The fund will be managed by Lendlease Italy SGR and Lendlease Services will undertake the role of development and project manager.

Lendlease head of continental Europe Andrea Ruckstuhl said the partnership honoured the legacy of the former Milan World Expo site and would help realise the vision of a world-class innovation district.

“Innovation districts are becoming more and more a new asset class; there is a new sensibility on the importance of human centre innovation, in line with the objectives of the European Recovery Plan,” he said.

Lendlease has a £27bn ($50bn) pipeline of work in ­Europe alongside new and existing capital partners.