Aussie super fund turns to US commercial property

Posted by Dynon on April 6, 2015

Big spending AustralianSuper snaps up prime US retail property.

AustralianSuper, one of Australia’s largest superannuation funds, has just bought a $1.1 billion stake in a US shopping mall. It’s the biggest ever direct property investment and first large American property investment by the $80 billion fund.

The $1.1bn price tag gives AustralianSuper a 25% stake in Honolulu’s Ala Moana Centre from US property giant General Growth Properties. And it’s not just any shopping mall. The world’s largest open-air shopping centre, Ala Moana spans 195,000 sqm and accommodates 290 retailers and 80 restaurants.

[Image: Honolulu's central business district]

In recent years, as US commercial property prices have pushed upwards, the market has seen several high-profile partnerships between foreign institutional investors and REITs. But the AustralianSuper deal – and many others like it – suggests soaring confidence that the market’s prospects are good.

For the Australian fund, the Ala Moana is a sought after investment, despite its hefty price and recent declines in the value of the Australian dollar relative to USD. According to AustralianSuper’s Deputy Chief Executive and Chief Investment Officer, Mark Delaney, “This deal demonstrates how the size and scale of AustralianSuper allows Australians to be a part of global investment opportunities to which they might not otherwise have access.”

“The yields on US property are better than fixed income and safer than equities,” said Mr Delaney.

“We’ve been tracking the U.S. market for an extended period of time”, Jack McGougan, head of property at AustralianSuper, stated recently, “and we see good long-term opportunities in select markets to continue to build our international property portfolio.”