QIC in $900m joint venture
It covers the purchase of a 49 per cent stake in a portfolio of eight US regional shopping centres, which has a total value of $2 billion. QIC will pay $435.6 million and assume about the same in debt from the deal.
The deal, the first direct property investment in the US for QIC, will add to the Australian retail assets, which include the Castle Towers mall in Sydney and Melbourne's Eastland.
QIC, which is the investment arm of the Queensland government, also owns a half share of the MLC Centre and 100 per cent of 52 Martin Place in Sydney, and 80 Collins Street, Melbourne. The total portfolio is valued at $10 billion.
The deal comes as the Association of Superannuation Funds of Australia estimates there is a $1.5 trillion pool of superannuation money that must be invested in all sectors to provide for the ageing population.
Many fund managers say the allocation to the real estate sector has risen to an average 10 per cent of portfolios in the past six to eight months as funds seek out higher yielding assets.
The chief executive of ASFA, Pauline Vamos, says in a white paper that for many years most super accounts have been in the accumulation phase, so funds have tailored their investment strategies accordingly.
"However, as the population ages and more and more people move into retirement, the focus will need to shift to acquiring assets which deliver the funds necessary to provide for members drawing an income stream," Ms Vamos said.
The managing director of QIC Global Real Estate, Steven Leigh, said the joint venture represented a "significant step in QIC's long-term investment strategy".
"Expansion into the United States retail sector is a natural progression," he said.
Under the deal, Forest City will be the managing member of the joint ventures and will be responsible for leasing, operations, marketing, financing and development of the properties.
"We have been looking at expanding for some time and the fundamentals in North America are reasonably attractive with evidence of growth in US consumer sentiment," Mr Leigh said.
He said the recovery in overseas markets was likely to prompt other Australian funds to undertake similar deals.
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QIC has entered a $900 million joint venture with US-based Forest City Enterprises to buy a 49% stake in a portfolio of eight US regional shopping centres valued at about $2 billion. The deal is QIC's first direct property investment in the United States.
Under the transaction QIC will pay approximately $435.6 million and will assume about the same amount in debt as part of the 49% interest in the $2 billion portfolio.
Forest City Enterprises will be the managing member of the joint ventures and will handle leasing, operations, marketing, financing and development of the shopping centre properties.
QIC says the joint venture is a significant step in its long-term investment strategy and a natural progression into the US retail sector, where management noted reasonably attractive fundamentals and signs of growth in US consumer sentiment.
QIC's Australian retail holdings include Castle Towers mall in Sydney and Eastland in Melbourne. It also holds a half share of the MLC Centre, 100% of 52 Martin Place in Sydney, and 80 Collins Street in Melbourne, with the total portfolio valued at about $10 billion.
The deal comes as the Association of Superannuation Funds of Australia (ASFA) notes a roughly $1.5 trillion pool of superannuation money that must be invested across sectors. Many fund managers have increased real estate allocations to an average of about 10% of portfolios in the past six to eight months as they seek higher-yielding assets.
ASFA chief Pauline Vamos says that as more people move into retirement the focus for funds will need to shift from accumulation to acquiring assets that deliver income streams to provide for members drawing an income.
According to QIC's managing director of global real estate, Steven Leigh, the recovery in overseas markets and attractive fundamentals are likely to prompt other Australian funds to undertake similar overseas property deals.
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