Australian private equity asset manager
Advance have awarded
Heitman group a $500 million (US$440m) mandate with a focus on global listed properties and real estate investment trusts.
It comes as the Australian REIT sector gains momentum through new floats, including the Centuria Metropolitan REIT, which closed oversubscribed and raised $114 million.
According to the Sydney Morning Herald it is being run by former head of Mirvac Nick Collishaw, and will own five metropolitan office properties and three industrial properties, valued at $182.9 million.
"Without getting ahead of ourselves, we continue to see value propositions in the metropolitan market and look forward to growing CMA for the benefit of all its investors," Mr Collishaw told SMH.
Commercial Property Executive the long-only mandate will enable Heitman to invest the $500 million amount, in a concentrated portfolio of AsiaPacific, North American and European global real estate securities.
The portfolio will consist of real estate securities investing in up to 25 percent of the FTSE EPRA/NAREIT Developed Index, which is currently less than 80 stocks, according to Heitman. The strategy will offer investors an actively managed portfolio.
Kathy Sandstrom, senior managing director of Heitman’s Global Real Estate Securities group said Heitman looks forward to building a long and lasting relationship with Advance.
“Our investment professionals strive to generate competitive investment returns for our clients throughout the world, and being selected is a wonderful acknowledgement of their hard work,” she said.
John White, managing director and head of Heitman's Asia Pacific Public Real Estate Securities group, said demand for A-REITS was high, due to the sector's high-yielding characteristics.
But he said there was caution in investing in Australia due to the volatile currency, particularly for REITs with overseas exposures.
"Investor demand for real estate continues to grow around the world. Even in this period of irregular economic growth, occupier demand is showing improvement and new construction is still limited in most markets," Mr White said.
Heitman invests in private real estate equity, with assets under management of $US27.5 billion ($31.8 billion), split between public real estate securities and real estate debt.
"Asset classes we like include listed real estate, which offer investors an attractive yield, supported in most cases by stocks which are trading at a discount to their tangible asset backing, offer a compelling return outlook," Mr White said.
"Through allocating a considerable amount of capital to listed real estate, we believe that Advance is making a strategic move to enhance exposure to opportunities from the current and long-term expected market conditions for listed property."At present the new fund is aiming for a 10 per cent weighting to Australia, with a preference to the retail sector.
"We feel more confident towards the retail space, due to the resurgence in consumer spending and the entrant of the new international fashion brands. It's not a high conviction, but we feel the office sector, at this stage, still has some tough issues to deal with."Source: SMH