AMERICAS NEWS: Investing from down under

Last month’s purchase of a $2 billion portfolio of US shopping malls by Queensland Investment Corporation (QIC) has provided further evidence of Australian capital being exported to foreign markets. 

As PERE reported last month, a wave of investment is expected in Europe by superannuation funds and, sure enough, AustralianSuper recently announced it had hired Henderson Global Investors for a prime UK retail strategy. At the same time, some Australian investors are flexing their muscles in the US, with QIC being a case in point.

QIC was established by the Government of Queensland in 1991 to manage its long-term investments. Since then, it has expanded to invest on behalf of superannuation funds and other institutional investors and grown to $71.3 billion in assets. Via its property subsidiary, QIC Global Real Estate, it has struck up a joint venture with Forest City Enterprises to own eight malls, signifying its first investment in the US and a significant step forward in its long-term investment strategy.

“Expansion into the US retail sector is a natural progression for the business, following extensive investigation of the market,” Steven Leigh, managing director of QIC GRE, told PERE. “Our property investment capability and global relationships enable us to continue offering local and offshore client access to opportunities of the scale and return profile that suit their global investing needs.” 

Under the terms of the deal, QIC GRE will buy a 49 percent stake in Forest City’s portfolio for a total investment of $900 million. Roughly $436 million of that investment will be equity, while the remainder will come through the assumption of existing debt on the portfolio. 

According to Leigh, this venture fits the return profile that its investors are seeking. QIC chose Forest City as an operating partner because of the Cleveland-based developer’s considerable boots-on-the-ground experience in the US. Also, Forest City and QIC were like-minded enough to be able to work with one another with ease. 

Moving forward, QIC GRE plans to continue building relationships with like-minded operators and owners to continue seeking investment opportunities in the US. “Our focus at the moment is on North America,” Leigh added. “We see good opportunities to access quality retail stock in the US, and there are reasonable prospects for income growth.”