Daryl Browning, chief executive of ISPT. Picture: Lyndon Mechielsen
Industry superannuation-backed property funds manager ISPT has come through a tough period with its $19bn empire of commercial real estate intact after facing hefty redemption requests as the coronavirus pandemic broke out.
The group, which acts for the biggest names in industry superannuation, has built up holdings in office, retail, logistics property as well as residential projects across Australia, and came under fierce pressure in April.
Amid concerns about a wave of early superannuation withdrawals, foundation investor Hostplus submitted a $1.5bn redemption request, in what was pitched as a rebalancing strategy, although it was also facing hefty calls from its hospitality industry members.
ISPT’s just released annual review confirms its main core fund received two redemption requests last April but the vehicle trustee used its “absolute discretion” to decline both and then closed off redemptions until the end of September.
But the fund manager defied gloomy expectations and transferred $250.5m of units, with Hostplus receiving $225.5m and AMIST Super $25m, as new and existing investors took up units at their asset backing, rather than at a discount.
“That’s been the primary method of transfer for unit transfer for us for the last three to five years,” ISPT chief executive Daryl Browning said.
After a period of market volatility, Mr Browning predicts that superannuation funds will be considering their portfolios.
“They’ll be looking at the big picture economically and allocating capital,” he said.
“Property has to compete against the other sectors for that allocation and, probably at the moment, investors are generally cautious on property.”
The industry fund veteran said the pandemic was a “black swan event” that had hit the sector when the economy was heading in a predictable direction, albeit with slight headwinds.
“It’s really just changed the way we live, the way we function as a society,” he said, saying that bigger trends like globalisation had all but stopped in their tracks.
Mr Browning cautioned the full economic impact was yet to be felt. “We’ve certainly got issues with potential job losses and ultimately it’s that economic activity that’s the driver of real estate,” he said.
Mr Browning argued that top property institutions went into the crisis well-prepared.
“The balance sheets of most property investors were very, very solid, with relatively modest levels of gearing,” he said. “Interest rates have never been lower so all the ingredients needed to be able to hang on and work through the crisis are there.”
Mr Browning says major banks had learnt how well they had fared by managing loan books, rather than calling in receivers, during the GFC. “It’s never had that sustained downturn like of the 1990s,” he said.
ISPT is still active in the market and made a play for a slice of Atlassian’s new Sydney headquarters, although it pulled back from a deal to buy part of Macquarie Group’s Martin Place project.
