AusSuper makes European debut with TH Real Estate

Australian superannuation fund AustralianSuper has entered the European real estate debt market, granting a new mandate to TH Real Estate and striking a £280m City development deal. The evergreen mandate from Australia’s largest pension fund, which has A$140bn (£76.8bn) of assets under management, will typically issue the entirety of large-scale development or refurbishment loans or fund the mezzanine element of loans backing major investment transactions. Each deal will be of more than £100m and the mandate can operate across major European cities. There is no limit on the mandate’s loan-to-cost on development loans, and when it issues mezzanine loans it will typically operate anywhere in the capital stack between 50% and 85%. The mandate is classified as “mid-risk” by AustralianSuper, higher yielding than bond investments but lower yielding – and lower risk – than direct real estate investment. The first £280m facility has been issued to Malaysian developer MTD Group to bring forward the development of One Crown Place, EC2, in Shoreditch (pictured) – coincidentally, near to TH’s London office. TH’s second debt fund is providing £50m to the deal, although this is expected to be an atypical structure for the AustralianSuper mandate in future. The 370,500 sq ft development is due to complete in 2021 and the term of the loan is for three years, with a possible one-year extension. One Crown Place will consist of 136,000 sq ft of office space, a 41-bed hotel, 246 flats and 7,000 sq ft of retail. MTD bought the site in 2013 from UBS for £57.5m, which at the time had consent for 400,000 sq ft of offices but this was later revised. CBRE Capital Advisors advised MTD on the financing; CBRE is also the development manager for the One Crown Place project. Fully invested TH Real Estate now has around £2.8bn of debt investments under management in Europe. Its first UK fund, the 2014 £300m Global Real Estate Debt Partners Fund I, is now fully invested and its £500m follow-on fund has now raised around £300m and deployed close to a third of that capital. Both funds target core-plus and value-add deals. The fund manager also has a separate account mandate with its parent company, TIAA, to invest into senior real estate debt. It can invest in Spain, the Netherlands and Ireland but has thus far been active only in the UK. The AustralianSuper mandate builds on a long-standing relationship between the fund and TH. The pair have worked together since 2013, and in March AustralianSuper extended an existing mandate so that TH can now deploy capital for it across Europe in the office and retail sectors. TH manages investments for AustralianSuper, including its 50% interest in thecentre:mk in Milton Keynes and its 67% stake in King’s Cross Central, N1. Jason Peasley, head of mid risk at AustralianSuper, said: “The One Crown Place transaction strongly aligns with our real estate debt strategy to target high-quality opportunities secured against institutional assets in top-tier locations in European cities. Expanding our relationship with TH Real Estate – which has an impressive track record in the European debt sector – allows us to partner with a market-leading global manager to access high-quality real estate opportunities.” Shawn Kaufman, director at TH, added: “We believe this transaction demonstrates the combined strength of TH Real Estate and AustralianSuper. As part of the now formalised debt mandate, together we are able to implement an investment strategy that is both meaningful and relevant to borrowers in the current environment.” To send feedback, e-mail david.hatcher@egi.co.uk or tweet @hatcherdavid or @estatesgazette