Aware Super buys into $4.5b European malls fund

The deal brings Aware Super alongside Dutch pension giant APG and a French institutional investor in ownership of property platform known as European Outlet Mall Venture. The platform owns and operates four outlet centres worth around €2.6 billion ($4.5 billion) in total, with malls in the Netherlands, Austria and Italy.

Aware Super bought its stake from accounts associated with insurance Allianz, managed by PIMCO. On face value, the Australian super fund’s interest would be worth around $1.4 billion, although that does not factor in debt.

With Australia’s market becoming simply too small to accommodate the tremendous growth in funds expected by Aware Super, it has embarked on a clearly marked path into offshore real estate.

“By expanding our portfolio into continental Europe, we are strengthening our position as a global institutional investor and asset owner, focused on originating high-quality assets in markets with strong fundamentals,” said deputy chief investment officer and head of international, Damien Webb.

“This partnership demonstrates our confidence in the long-term opportunities presented by the European outlet mall sector.”

Aware Super’s property push overseas – which will take in Europe, Asia and the US – is one of the most ambitious so far among Australia’s biggest industry funds, such as AustralianSuper and HESTA, as they look for global real estate opportunities, much of it in Britain and Europe.

While Australia’s big super funds have long had positions in the property market, including offshore, the pressure to go global is increasing as they outgrow investment opportunities at home.

About 70 per cent of Aware Super’s $12 billion property is invested in Australian real estate, much of it into build-to-rent along with industrial real estate, with the remainder overseas.

That allocation is forecast to flip within five years, with as much of 50 per cent or even 60 per cent of Aware Super’s real estate holdings to be invested overseas.

The super fund has established an office on London to supervise its European expansion and had invested about $2 billion before the outlet malls deal.

Those investments include majority control of a European serviced apartment operator, The July, which it plans to grow it into a $1 billion business over the next three years. Another leg of the strategy involves buying up under-loved office towers in London.

So far, its joint venture with a local player has acquired three buildings in London worth about $1 billion in total.

In the US, Aware Super recently bought a 49 per cent stake in $2 billion portfolio of logistics properties around Los Angeles that Goodman Group controls.

With the latest deal, the Europe malls platform has interests in four designer outlet centres including at Roermond in The Netherlands and at Parndorf in Austria. The other two are in Italy: the Serravalle Designer Outlet – which ranks among Europe’s top three outlets – and the Castel Romano Designer Outlet.