Wednesday, 17 February 2016

Exchequer Court_External Photograph 

Have you ever wondered what kinds of assets you may hold as a QSuper member? If you invest in QSuper Lifetime or any of the Ready Made options (Balanced, Moderate or Aggressive) you have exposure to our real estate program. As part of this we invest in approximately $3.7 billion worth of real estate assets on your behalf around the world, including One Times Square and Chelsea Markets in New York City. While our portfolio is heavily dominated by Australian assets, we’re also gradually increasing the global nature of the portfolio, as shown in the chart below:  

Current real estate portfolio exposures by geography at 30 September 2015

9585 Exchequer Graph_12_02_16

As our real asset exposure becomes more global, so does our line-up of real estate managers. Our strategic real estate manager in Europe and the UK is AEW Europe (AEW). AEW is based in Paris and has over 280 employees located in nine offices throughout Europe, enabling them to be resident in the markets in which they seek to invest on our behalf.

The first real estate asset that AEW acquired for QSuper was Exchequer Court in London, in June 2013. Exchequer Court is a landmark multi-let office building that was designed by Fitzroy Robinson and completed in 1995.

Exchequer Court sits at the meeting point between the financial and insurance markets. It’s situated in a prime and prominent position to the eastern side of the City immediately opposite the iconic office tower, 30 St Mary Axe (also known as ‘The Gherkin’), and is a short distance from Lloyd’s of London.

Exchequer Court benefits from this location as it’s highly accessible by car or taxi and well served by several local bus routes and tube lines. The location is also set to benefit from the delivery of Crossrail which is due in 2018. Crossrail will provide a high speed, high frequency train service offering faster and more direct journeys across London’s east-west axis.

The property provides a total of 151,758 square feet (14,099 square metres) of office, retail and ancillary accommodation over a basement, lower ground, ground and six upper floors. The property is let to ten occupiers including: Bangkok Bank Plc, Travelers Management, Pret A Manger (Europe) Ltd, EAT Limited and TJX UK.

AEW has significant experience investing in the London office market and chose this asset for us based on the following characteristics:

  • strong fundamentals in the London office market at the time of acquisition
  • well placed in a strong and improving location within the EC3 postcode (historically London’s insurance district)
  • diversification opportunities as a multi-let building with a range of occupiers as well as having office and retail components that can be sub-divided, thereby increasing the flexibility and attractiveness of the asset to occupiers, and offering the potential to achieve higher rents.

AEW is one of a number of global real estate managers we work with. In addition to the asset specific attributes that our managers seek out, we also aim to build our real estate portfolio with the right geographical, sectoral, and manager diversification, as well as the right spread of risk and minimum target return hurdles.

I hope this gives you more of an idea of the types of assets you may hold as a QSuper member. If you would like to know more about QSuper’s real estate assets, please let me know by leaving a comment in the section below.

The views of the author and those who provide the responses to comments posted on this blog are not necessarily the views of the QSuper Board. We’ve put this information together as general information only. You should get professional advice before relying on this information.

Past performance is not a reliable indicator of future performance. Each of our investment options has a different objective, risk profile, and asset allocation.