Australia's $97 billion Future Fund has upped its exposure to the recovering US real estate market, teaming with Dallas-based group Hillwood, which is controlled by Ross Perot Jr, for a $US1bn ($1.11bn) industrial property partnership.
The pair, which have worked together before, are advancing plans to make direct and indirect investments in industrial real estate, mainly large warehouses, across North America.
Their venture is expected to have an equity of $US400 million - more than half of which has been identified and committed - and the partners will aim to buy properties over the next four years. “The new fund provides the investment flexibility to target the highest risk-adjusted returns available across the industrial warehouse asset class, without being restricted by a narrow investment target,” Hillwood chairman Mr Perot said.
The deal replicates the Future Fund’s earlier successful play with Hillwood and adds to its presence in the US. Another Australian player, Goodman Group, is active in the US industrial market, and has teamed up with Birtcher Development to build a $US1.5bn empire.
The Future Fund has been an active player in the US and in 2012 placed $US350m, with real estate fund manager Berkshire Property Advisors, in multi-family complexes. It also invested in the sector through the giant Brookfield Asset Management, which separately led it into a consortium that took a major stake in mall owner General Growth Properties.
While the sovereign wealth fund declined to comment on its latest move, the play comes as savvy private Australian operators shift back into the US.
Most notably, businessman Daniel Grollo has shifted to New York and won the debt backing of international bank Citibank for a Grocon-led group’s purchase of the near $US800m Park Avenue Tower in midtown Manhattan.
Melbourne developer MAB Corporation also struck a joint venture with New York-listed Inland Real Estate Corporation to develop a portfolio of up to 20 shopping centres throughout the south eastern US with a total market value of $US325m.
Under the deal MAB, owned by BRW rich-listers Andrew and Michael Buxton, will develop the centres for Inland using its US offshoot MAB American Retail Partners. The focus for the venture will be on the Carolinas, Georgia, Florida, Virginia and Washington. MAB has previously developed six shopping centres in the US through its venture MAB Rosenthal. Another wealthy Melbourne private investor, Michael Drapac, launched two wholesale investment funds focused on land banks and development sites in the US last year. That attracted money from high net-worth investors and family offices.
Some Australian heavyweights are already back investing in the US, with QIC last September setting up a $US2bn mall joint venture with New York-listed Forest City Enterprises.
The giant AustralianSuper last year awarded QIC a mandate for US property, thought to be between $500m and $1bn, and other major industry funds are expected to follow its lead and issue mandates with investment managers for US property.
First State Super, a $40bn public service super fund, is believed to be looking closely at investments in US real estate as it looks to reduce its exposure to the Australian dollar.
The $28bn industry super fund for the retail industry REST is also thought to be eyeing direct investment in real estate in the US through its in-house investment manager Super Investment Management.
HostPlus, which has $14bn in funds under management, has been looking to invest in offshore real estate, though its focus has been on Asia.
UniSuper is also believed to be looking at increasing its investment in US property trusts. It already holds a stake in Simon Property Group.
Meanwhile, ASX-listed US Masters Residential Property Fund, managed by Dixon Advisory, recently raised $87.3m to fund the acquisition of more properties in New York, though the raising fell short of its $120m target with only 65 per cent of existing shareholders participating in the offer.