A new report “from the coalface” of super fund investing has gone some way to quantifying the cost of shonky investment management, with members potentially losing out on hundreds of thousands of dollars.
Surging equity markets have driven the Future Fund’s return higher, but its prediction that inflation will be stickier than expected has been born out and it “remains conscious of the potential for significant deterioration”.
Why investing back into Australia is good for a global manager
For the global real estate-backed manager, Heitman Capital Management, investing back into Australia and New Zealand adds value across the client base because it gives the firm a better understanding of the local market, too. And real estate debt strategies are a good place to be right now.
David Maki, Heitman’s co-head of private real estate debt and a senior managing director of the staff-owned firm, said at investor presentations in Sydney and Melbourne last week that Heitman had invested about A$500 million into Australian private equity real estate projects in the last few years and another $500 million into the Australian listed market. “It helps with our insights into the market because of the dialogue we have around those investments,” he said.
Heitman has been represented in Australia for several years. Beau Titchkosky, Melbourne-based managing director of client service and marketing for Australasia, said it was actually a “very simple business”. The firm went to its clients with a full range of exposures to the real estate market: debt, equity and listed REITs. “A question which investors often ask is ‘how you look at private debt within a broader portfolio’,” Titchkosky said. “We’re a real estate investment firm so that’s how we look at it.”
Heitman is currently making new investments in the US only in the debt side of its business, Maki said. When the banks pulled back from lending post the global financial crisis and with stricter regulations around capital requirements, this created a “void” for fund managers and other providers to fill.
Private debt, as with other credit-type strategies, is designed to get investors to a certain place. “Markets ebb and flow, even in Australia,” Maki said. “We are directionally a property firm. We view everything as a real estate strategy.”
Heitman, which is a 50-year-old firm, has about A$60 billion under management across its three business lines of private debt, private equity and listed equities. It has more than 300 employees in 10 offices around the world. The 37 partners own 100 per cent of the shares. About A$4.3 billion is managed on behalf of Australian and New Zealand clients.
– G.B.
