One of Canada's largest pension funds formed a joint venture with Britain's Segro for a portfolio of European warehouses, the latest global investor attracted by the high returns of industrial real estate. Such industrial property typically offers higher yields than offices or shops due to the risks associated with lettings to single tenants in outlying locations that can be difficult to fill should they leave. The sector is also expected to benefit from the growth of online shopping which is increasingly dependent on warehouses for distribution. Canada's Public Sector Pension (PSP) Investment Board, which manages C$64.5 billion ($61.5 billion) of police and army pension money, will contribute 303 million euros ($394 million)of equity for its half stake in the venture, the two said. The JV will own 34 properties valued at 974 million euros in countries including France and Belgium and the rental yield is 7.9 percent, three or four percentage points higher than the best offices or shops in central London or Paris. Norway's sovereign wealth fund formed a 2.4 billion euro joint venture for European warehouses with U.S.-based Prologis last year. "It (industrial property) is a perfect asset class in this world of falling bond yields because you have higher yields and letting momentum is actually picking up," said J.P. Morgan analyst Harm Meijer. PSP Investments and Segro said they planned to grow the portfolio to at least 2 billion euros through developments and acquisitions over the coming years. About 11 percent of PSP Investments' assets, or $7.1 billion, is invested in real estate, with just 3 percent of that in industrial property. Shares in Segro were trading 2 percent higher at 280 pence by 1440 GMT. Segro said the deal, which is due to complete by September, would reduce its full year EPRA pretax profit by 10.8 million pounds and lower its debt levels. (Reuters)