AustralianSuper has acquired a 50% stake in a £270m (€325m) UK shopping centre from the BT Pension Scheme, as both institutions seek to build their global property exposures.
The transaction involving thecentre:mk in Milton Keynes marks the Australian superannuation fund’s first direct property investment outside its domestic market, while reducing the BT Pension Scheme’s interest after nearly 40 years of ownership.
AustralianSuper was advised by Henderson Global Investors, which received a mandate six months ago to invest in UK retail properties on its behalf.
The institution has been developing an in-house investment team, led by Jack McGougan, with a view to reducing investment costs.
It is also looking to invest outside its home market and recently hired Australian fund manager QIC to invest in US shopping centres.
McGougan said the fund had been “monitoring the UK retail property market for quite some time” and that the debut deal was in line with its focus on “dominant” shopping centres.
The 1.3m sqf prime retail space, which benefits from consumers nearby Oxford and Cambridge, has 220 retail units and is anchored by department stores John Lewis, House of Fraser and Marks & Spencer.
It has been owned for nearly 40 years by the BT Pension Scheme, which is seeking to reduce its exposure to UK property and diversify globally.
Chris Taylor, chief executive at Hermes Real Estate Investment Management, which advises the BT Pension Scheme on its real estate investments, said the sale of the 50% stake was “consistent with our strategic plan to continue to diversify our real estate portfolio internationally”.
In the summer, the BT Pension Scheme halved its interest in a portfolio of eight London office buildings by selling a 50% stake to the Canada Pension Plan Investment Board (CPPIB) for £174m.
In 2011, Hermes REIM launched a US real estate fund in conjunction with UOB Global Capital and Hampshire Real Estate Companies, for which the BT Pension Scheme provided £150m in seed capital.
AustralianSuper is investing in the US retail market through an “open-ended mandate” with QIC, an Australia-based company that last year entered into a joint venture with US-based Forest City Enterprises to invest in eight regional shopping centres.
AustralianSuper already owns a stake in the QIC Property Fund, which invests in shopping centres in Australia.
It also awarded a “direct investment mandate” with ISPT in 2013 to invest in office and retail assets in its domestic market.
The move to a more direct property investment strategy is part of a wider five-year plan to reduce investment costs.
AustralianSuper has also established in-house investment teams for its infrastructure and Australian equities investments.
The superannuation scheme was a direct investor in the IFM Investors-led consortium that acquired NSW Ports in Australia.