TORONTO -- The Canada Pension Plan Investment Board now owns a significant piece of five major shopping centres in the United States.

Kimco Realty Corp. said Wednesday it has signed a $370-million joint venture with CPPIB that will see the pension giant acquire a 45% interest in the shopping malls. The move came after Kimco’s major co-investor stepped away from the deal.

Kimco, based in New Hyde Park, N.Y., will retain 55% of the investment and will continue to act as the operating manager. Three of the malls in the deal are in California, one in Florida and one in Vermont.

Until now, CPPIB has been unable to secure any major interests in shopping malls in the U.S. according to Graeme Eadie, senior vice-president of real estate investments for CPPIB. The pension giant is hoping this deal will lead to opportunities in the space. “It’s the first step in a much larger play,” says Mr. Eadie.

Retail shopping centres are coveted by long-term investors because they offer more stable income streams and are less volatile. By contrast, office space tends to be more cyclical, according to Mr. Eadie.

Mr. Eadie said the deal with Kimco differs from the retail mall opportunity that Toronto-based Brookfield Asset Management is trying to make with Growth Properties Inc. Whereas Brookfield has targeted regional shopping centres with a fashion focus, Kimco has focused on large open-air centres that have grocery stores such as Costco and Wal-Mart at their core, according to Mr. Eadie.

Kimco owns and operates the largest portfolio of neighbourhood and community shopping centres with 1,478 properties in North and South America.

“We are very excited about forming a long term partnership with one of the largest and most well regarded pension funds in Canada,” says David Henry, president and chief executive of Kimco.

kmazurkewich@nationalpost.com