Rest will be expanding its investment exposure to industrial property through a $1 billion partnership with a global investment management firm.
The superannuation fund’s partnership with Barings, which acquired Altis Property Partners in 2022, will include a large prime industrial asset as the venture’s initial investment.
Specifically, the prime-grade industrial estate will comprise two modern warehouses located within 20 kilometres of the Melbourne CBD. Tenants will include online retail business Catch, owned by Wesfarmers within the Kmart Group, as well as a third-party logistics provider.
“We believe the industrial investments made through the venture will further diversify Rest’s
property investments and improve investment outcomes for our members,” said Andrew Lill, Rest chief investment officer.
The fund expressed its confidence in the industrial property sector, identifying the space as a crucial area of opportunity to provide long-term value to its nearly 2 million members.
According to Lill, the Australian industrial property market has established itself as a promising growth area due to continued demand for facilities in this sector.
“The national average vacancy rate for industrial property in Australia is the lowest in the world and we expect rates to remain well below historical levels in most markets worldwide,” the CIO observed.
Moreover, the shift from physical to digital commerce has driven strong business and tenant appetite for large-scale and micro-distribution centres dedicated to online shopping.
“This has led to tight vacancy rates and high tenant demand across the sector, which we expect to continue in step with the evolving economic landscape,” Lill said.
While vacancy rates have normalised marginally from the last quarter, the imbalance between supply and demand will likely continue, Lill added.
“We believe deglobalisation will have significant influence on markets and drive societal and economic changes in the near future. We can already see this through moves to onshore and diversify supply chains. This activity, as well as construction delays and lack of appropriately zoned land, will continue to play an ongoing role in supply demand imbalance,” Lill said.
Rest also recently announced another $1 billion investment towards renewable energy in November through a partnership with Quinbrook Infrastructure Partners, marking the next step in its decarbonisation journey.
Earlier this month, the fund additionally expressed its support for impact investments at the Treasurer’s third investor roundtable.
To accomplish this, the fund will be a member of a new Expert Advisory Group of government, banks, and other funds to encourage a pipeline of investments supporting the social enterprise sector.