Australia’s Aware Super, a major pension fund, said it is looking at investing further in U.S. property, confident the country’s longer-term economic fundamentals and domestic consumption levels will not be derailed by current political volatility.
The A$190 billion ($125 billion) fund, one of Australia’s five biggest pension funds, announced this week that it would be embarking on a $1.3 billion venture with Australian developer Goodman Group to buy a U.S. industrial property fund that owns three logistics sites in Los Angeles.
Funds participating in Australia’s A$4.1 trillion ($2.7 trillion) compulsory retirement savings scheme, known as superannuation, are increasingly turning to international investments to notch higher returns.
Aware Super‘s head of property, Alek Misev, said the U.S. was attractive as global interest rates were likely to fall further, and because technology advances and the country’s domestic consumption rates remained strong.
The U.S. and Canada make up 13% of Aware Super‘s global property assets, while Australia accounts for 65% and the UK and continental Europe account for 20%, according to the fund.
“You need to take a longer-term view and have conviction that short-term volatility will even out in the long run over time. And it’s not different in Europe or in the Asia-Pacific. You need to look at the fundamentals,” Misev told Reuters in an interview on Thursday.
The U.S. government is currently in shutdown after Congress failed to pass a funding bill for the new fiscal year, the deadlock stemming from a standoff over healthcare policy and federal spending priorities.
Misev said Aware would focus on well-located property assets, close to major population centres that could attract high-quality tenants.
“Demand is there, there’s not much supply coming in, and interest rates are probably going to come down over time,” he said.
“In property, those are the tailwinds you would like to see. If you then look at where pricing is, we think it’s somewhere at the bottom in the U.S. and Europe and Australia.”
“That is why we are more active right now.”
Tenants at the three sites in the Goodman deal include Amazon and Maersk, Aware said.
Aware Super‘s senior portfolio manager, Anjana Moran, noted that as the fund was working through the deal, it had to factor in U.S. President Donald Trump’s April announcement of sweeping tariffs on trading partners.
“There were announcements around tariffs and when we were thinking about logistics assets and potential exposure to the trade risk, that obviously gave us pause and we needed to do more work to get comfortable and we were able to do that,” Moran said.
The fund is the most exposed to industrial property at 32%, while residential accounts for 30% and office properties represent 17% of its portfolio.
Reuters
