Aware Super, one of Australia's largest profit-to-member superannuation funds, has formed a strategic partnership with Delancey Real Estate, the UK investment, asset and development manager, to establish a property platform in the UK to invest up to an initial £1 billion.
The platform, which continues a massive recent investment drive into the UK by Aware Super, has been established to invest into real estate by identifying sectors and assets, focusing first on prime offices in London. Its objective is to deliver "attractive risk-adjusted returns" to Aware Super’s 1.1 million members, the duo said in an announcement.
Aware Super deputy chief investment officer and head of international Damien Webb relocated to London to lead its first international foothold outside of Australia last November, as reported, with an initial team of 15 investment professionals, growing to 30 over time.
Aware Super is one of Australia's superannuation funds, where employers, contractors or self-employed people pay into a retirement fund.
It said the platform’s initial focus will be on central London office properties in prime locations, "capitalising on strong demand from investors and occupiers for Grade A assets amid significant structural and regulatory change in the market and its repricing".
The view is that a slowdown in new office developments, catalysed by the Covid 19 pandemic, has created a scarcity of high-quality office space. That is being combined with strong demand from major corporate occupiers to lease the most sustainable and quality offices.
Alongside investments in prime central London offices, the platform is also "open to exploring opportunities in high-quality, undervalued UK retail, logistics, and mixed-use properties, recognising the potential for attractive cyclical returns in these sectors as well".
Sustainability will be a central focus, with the platform’s decarbonisation agenda integrated at every stage of the investment from acquisition through to management and divestment.
The platform will buy stabilised assets, fund development projects and assist with recapitalisations of existing capital structures. Single asset, portfolio and corporate acquisitions would all be considered.
Aware Super already owns a 22% stake in Get Living, the UK owner and operator of large-scale build-to-rent neighbourhoods, which was founded by Delancey.
In addition to sourcing opportunities for the partnership with Delancey, Aware Super will continue to source other direct investments as it builds its European property portfolio.
Webb said in a statement: “Since opening our first international office in London in November 2023 we have been encouraged by the growing strength of the UK economy.
“By originating exciting deals across real estate, infrastructure and private equity we are building a balanced portfolio of resilient assets which we anticipate delivering strong returns for our 1.1 million members back in Australia.”
Jamie Ritblat, founder and chairman of Delancey, said: “Expanding our relationship with Aware Super strengthens our partnership, combining the expertise and track records of both firms, with the capital and capability to execute. This underlines our status as a trusted partner for institutional investors looking to access opportunities in UK real estate.”
“Amid asset repricing driven by interest rate and regulatory changes, we see an attractive entry point in a weakened office market. Focus will start with prime Central London offices to create a liquid, sustainable, and resilient portfolio, with investments in retail and logistics sectors in prime UK locations under consideration.”
Aware Super senior investment director Property Mathieu Elshout said: “There is a sharp supply-to-demand imbalance in the London office market which is creating an unprecedented flight to quality for high quality office space in the best locations and with compelling sustainability credentials."
Aware Super’s allocation to the platform will take its investment in the UK to more than £2 billion following a commitment to invest £5.25 billion in the UK and continental Europe over five years after the opening of its London office in November 2023.
The overall investment drive is targeted at real estate, infrastructure and private equity opportunities. The fund recently announced investments into UK’s leading post-transition green energy major Octopus Energy and London-headquartered bandwidth and data centre connectivity leader euNetworks.
Aware Super's Australian and London-based investment teams originate and manage A$180 billion (£93 billion) of assets on behalf of its members with a projected growth target of A$250 billion assets under management in the next few years. Returns for Aware Super’s A$10 billion property portfolio are driven by a globally-diversified program which focuses on living, industrial, office upgrades, life sciences and cold storage.
Delancey is an independent investment, asset, and development management business specialising in UK real estate. Since the company’s establishment in 1995, Delancey and its management team have acquired, developed, managed, and sold in excess of £20 billion of real assets and property-related investments.