Retirement
Rest expands retail property portfolio with US$250 million investment in US real estate fund
Retirement
Rest expands retail property portfolio with US$250 million investment in US real estate fund
Rest, one of Australia's largest profit-to-member superannuation funds, has announced a substantial investment in a US-based real estate fund, marking a strategic expansion of its retail property portfolio. The fund, known as the US Cities Retail Fund (USCRF), is managed by Nuveen Real Estate, a prominent global real estate investment manager. Rest's commitment involves an investment of up to US$250 million, aimed at enhancing the fund's exposure to retail-sector properties in the United States.
Rest expands retail property portfolio with US$250 million investment in US real estate fund
Rest, one of Australia's largest profit-to-member superannuation funds, has announced a substantial investment in a US-based real estate fund, marking a strategic expansion of its retail property portfolio. The fund, known as the US Cities Retail Fund (USCRF), is managed by Nuveen Real Estate, a prominent global real estate investment manager. Rest's commitment involves an investment of up to US$250 million, aimed at enhancing the fund's exposure to retail-sector properties in the United States.
The USCRF specialises in investing in neighbourhood shopping centres situated in major US markets with favourable demographics and growth potential. The fund's current portfolio includes 10 retail properties located in cities such as Austin, Philadelphia, and San Diego. Additionally, five more shopping strips have been recently secured to join the portfolio, signalling a robust expansion strategy.
Andrew Bambrook, Rest’s Head of Real Assets – Investments, emphasised the strategic value of this investment for Rest's members. "These shopping centres are anchored by major US grocers and supermarkets, including brands like The Fresh Market, Harris Teeter, and Trader Joe’s, alongside convenience retailers that meet people's everyday needs," he explained. Bambrook highlighted that USCRF targets areas with a high concentration of younger families, who are establishing households and experiencing growing day-to-day needs. "Retail precincts that focus on consumer essentials and necessities can offer resilient, stable income streams that support long-term returns," he noted.
Bambrook further elaborated on the resilience of the retail sector, stating, "This sector has shown it can hold up well through different economic conditions, including downturns. They also act as important hubs for their local community, which supports steady foot traffic and therefore reliable cash flows and rental income." He expressed confidence in the USCRF's ability to provide a combination of resilience and income generation, alongside potential capital growth as the portfolio scales.
The investment is also seen as a strategic move to enhance diversification within Rest’s property portfolio. "Rest has a deep heritage with the retail industry in Australia, and our property portfolio has exposure to a number of large shopping centres around the country," Bambrook said. He described the investment as a way to "diversify our diversifiers" by spreading exposure across different retail property types, categories, and geographies. This diversification is part of Rest's broader strategy to increase its overseas exposure, as evidenced by last year's investment with STORE Capital into the 'triple-net-lease' real estate sector.
Bambrook pointed out the demographic trends that underpin this investment, particularly focusing on millennials entering their peak household and spending years, as well as the growth of higher-density urban communities. "With the majority of our members decades from retirement, this investment is positioned to benefit from long-term demographic shifts," he remarked. These trends are expected to sustain demand for local centres that cater to everyday needs, thereby supporting the long-term performance of the investment.
Nuveen Real Estate, the manager of USCRF, oversees 80 retail properties across 37 US markets, ranging from local strips to large urban shopping centres. The firm has a strong focus on mixed-use neighbourhoods and suburbs, aligning with Rest's investment strategy. USCRF was launched in 2018 and recently concluded a US$330 million capital raise, with Rest being a major participant in this fundraising effort.
This move by Rest reflects a broader trend among Australian superannuation funds seeking international diversification to enhance returns and manage risk. By investing in the US retail property market, Rest aims to leverage growth opportunities in regions with supportive demographics and economic tailwinds, ultimately benefiting its more than 2 million members.
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