The Queensland Investment Corp has extended its reach overseas through a $900 million joint venture with the US-based Forest City Enterprises.
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.