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QIC to launch debut US real estate fund – Exclusive

The Australian investment manager is targeting up to $1 billion in equity in the initial closes for its first US property vehicle.

QIC is hitting the fundraising trail with its first US real estate fund, QIC US Shopping Center Fund. The Brisbane, Australia-based alternative investment firm has begun marketing the new vehicle to existing investors, PERE has learned.

PERE understands that the firm is targeting $750 million to $1 billion over two closes for the open-ended, retail-focused fund, with slightly over half of the capital expected to come from limited partners in Australia. The company also is seeking to raise capital from new partners outside of its home country, particularly in the US.

The vehicle will be seeded with a 12-property shopping center portfolio totaling 12 million square feet, with the properties located primarily in New York, Washington DC and California. Eleven of the assets were properties in which QIC acquired partial interests through its joint venture with Forest City Realty Enterprises, including most recently the purchase of a 49 percent stake in Ballston Common Mall in Arlington, Virginia, in a deal announced last month.

QIC formed its partnership with Forest City, which also developed all 11 properties, in 2013, when it recapitalized and invested in a portfolio of eight of Forest City’s regional malls. Also in the seed portfolio is The Shops at Tanforan shopping center in San Bruno, California, in which QIC acquired a 100 percent interest last year.

“As we manage and expand our existing portfolio of US regional shopping centers, we bring to bear our proven expertise in sourcing, operating and developing a portfolio of high-quality shopping centers in Australia, adapted to US markets,” said Matthew Strotton, head of US funds and investments at QIC Global Real Estate. “We look forward to offering investors the opportunity to capture the performance of prime US retail real estate markets and to continuing to create value in our US portfolio.”

PERE understands that the sole existing investor in the portfolio currently has a rebalancing requirement, which is being facilitated by QIC. Through the capital raise, the investor expects to retain a stake of less than 50 percent in the seed portfolio.

On behalf of the fund, QIC will pursue a core-plus strategy that will focus primarily on the acquisition and repositioning of US retail properties, with the potential for some ground-up development. Through the fund, the firm will target gross returns of 9 percent to 11 percent, according to sources familiar with the fund. Leverage will be around the 40 percent to 50 percent range.

QIC had A$16.5 billion in real estate assets under management as of December 31. Among its previous real estate funds is the QIC Property Fund, an open-ended Australia-focused vehicle primarily on retail properties, according to PERE Research & Analytics. The investment manager’s property portfolio comprised 35 direct investments in retail and office assets in Australia and internationally at the end of last year, according to QIC’s website.