The strength of performance in its property portfolios allowed REST to post positive returns, despite losses in international equities, in both its accumulation balanced and pension balanced options.
Over the 2014/15 financial year, the property investment option returned 12.99 per cent compared to a return of minus 3.69 per cent in its overseas shares investment option. In its balanced option, REST has an asset allocation of 11 per cent to property and 29 per cent to overseas shares.
The property and international shares combination was a significant factor in the accumulation balanced option returning 1.87 per cent, the pension balanced option returning 1.81 per cent and its core strategy returning 1.82 per cent.
“REST’s strategic property and infrastructure investments underpinned REST’s core strategy performance over the past twelve months. Australian shares and bonds contributed modest returns, but overseas shares – the largest asset class exposure for core strategy – moderated short term performance significantly,” said Chris Stevens, chief financial officer at REST, in a statement.
REST’s most recent property acquisition was 52 Martin Place, Sydney, for $555 million in 2014 – the largest single investment of the super fund.
“That is going fantastic, both in the yield we are getting from an income perspective, but also the valuation uplift which comes back to people wanting to chase good quality assets in markets that are volatile,” said Paul Howard, acting general manager investments, general counsel and company secretary at REST.
He added REST’s property portfolio had done well because it has quality assets, with quality earnings and quality managers.
Looking to the future of the portfolio, Howard said he was expecting some good returns from the multifamily investment class (similar to gated communities) as the development was nearing completion.
Back in 2014, REST announced it was partnering in a ten year joint venture with Greystar, the largest apartment manager and a major property developer in the US, to develop these communities.
Under the terms of the venture, REST is the majority equity partner in approximately eight new rental apartment buildings, with a combined total of around 3,000 apartments, which are being developed and managed across the US.