Delivering strong long-term returns to our members.
Property is an important asset class for us and a strong contributor to long-term returns for our members. We invest in both listed and unlisted (direct) property but are increasingly focused on direct investment in property. It’s part of our strategy of bringing more of our investment expertise and management in-house. And from a portfolio perspective, unlisted or direct property, like other unlisted assets, plays an important role in increasing diversification and reducing volatility in returns over time - given its relatively stable returns over the long-term.
As part of our property investment strategy, we recently launched Aware Real Estate – a property investment platform responsible for the strategic performance and management of our directly owned Australian property portfolio focused on industrial, residential and mixed-use sectors. We believe our focus on direct investments will provide greater alignment and control over our investments, as well as the benefits which flow from increased size and scale, including reduced costs and strong long-term returns.
Our property portfolio
Our Aware Real Estate property portfolio is currently valued at over $1.5 billion and encompasses industrial, residential, office and retail spaces – and we currently have a significant development pipeline of over $2 billion. Our broader Aware Super property portfolio, including Aware Real Estate, is valued at around $8.5 billion and also includes retirement living and services apartments.
The focus of our overarching property investment strategy falls into three pillars - where we see the potential for strong growth and long-term returns for our members. These are
- Living, including multi-family and key worker affordable housing
- Commercial & mixed use; and
- Industrial & storage
As we bring more of our investment management in-house, we believe that our focus on active property management will also help us increase returns from individual property assets, and over time reduce the costs we pay to property fund managers. These benefits will flow through to enhanced returns for members. Our Aware Super property portfolio already includes investments overseas as well as in Australia, and as we grow Aware Real Estate our aim is to leverage our initial experience and expertise in Australia to consider quality opportunities offshore.
Key worker affordable housing portfolio
Our exposure to key worker affordable housing is through our investment in Aware Real Estate. Key worker affordable housing is part of our ‘living’ pillar and a sector we are committed to going forward. The affordable housing is offered at a 20% discount to the prevailing market rent. Our affordable housing portfolio aligns to our target returns for the property sector and offers an attractive investment for our members. Affordable housing investments present lower planning risk and given the reduced rent and target tenant mix, there is limited risk of vacancy, lower turnover, and more reliable tenants.
Many of our members are key workers, and by investing in affordable housing and making it accessible to them, we are not only delivering strong long-term returns but helping some of our members live closer to where they work. Currently we have a pipeline of around 1,800 apartments –with 450 completed and those remaining in different stages of development. We have apartments in Sydney, Melbourne, Perth and Canberra.
Case study
Meridian Miranda
Meridian Miranda consists of 102 apartments across two buildings, split 50/50 into essential worker housing and private residential. It’s located in Miranda in Sydney’s Southerland Shire – 24 kms south of the Sydney CBD and 14km south of the airport.
As well as offering key workers quality accommodation at more affordable rents, the development has incorporated sustainability initiatives including solar panels, native species in landscaping and rainwater tanks.
We’re proud of the Meridian Miranda development. Given the crisis in affordable housing in so many Australian cities and the fact that many key workers gave so much during the pandemic, the discounted rental model offers practical cost-of-living relief for teachers, nurses, healthcare and aged-care workers.
It’s also a development which we expect will deliver strong returns for our members over time.
