AustralianSuper is closer to realising its strategy of setting up an overseas office with the completion of two property deals worth $1.5 billion – 1.7 per cent of the fund.
In its biggest ever direct property transaction it paid $1.1 billion for a 25 per cent stake in the Ala Moana Center, Honolulu – the world’s largest open-air shopping centre with 290 retailers and 80 restaurants.
The deal, which is helping to fund an expansion of the centre, was put together in partnership with QIC, which has a brief from AustralianSuper to seek out investment opportunities in prime US retail.
Over the weekend it also announced the purchase of a reported $400 million for a 25 per cent stake in the King’s Cross regeneration project, its first direct London investment. The 67-acre King’s Cross site, includes offices, homes, hotels, leisure, shops and restaurants, a university, galleries, schools, community facilities and music venues. AustralianSuper was advised by TIAA Henderson Real Estate on the deal.
The fund has been following a direct or co-investment property ownership policy since 2013 and will increase its allocations here from 8 per cent to 10 per cent over the next three to four years.
For Mark Delaney, deputy chief executive and chief investment officer, AustralianSuper, flying members of his team to carry out due diligence on such assets is reaching breaking point.
“Once we have these co-investments we will have to manage them as a co-owner, not as an investor,” he said. “At some point we cannot keep flying people over there for months at a time it just won’t work.”
“If you are looking at a UK property asset and someone has got to go for three months and they have a young family and they have to go back again for another two months that is not really a sustainable outcome. You have to live there for two years and do the job and then come back.”
Delaney believes that while property and infrastructure valuations have been stretched greatly in the last few years, too much focus is given to prices and not enough to future growth potential.
