UniSuper loads its CMBS shopping trolley

UniSuper is spearheading Australian super funds as alternative sources of institutional‐grade debt funding through an allocation of $264 million to Australian commercial mortgage backed securities (CMBS).

The investment would be the first for the fund’s newly‐established CMBS portfolio managed by Colonial First State Global Asset Management. To date, UniSuper currently had invested more than $29.6 billion for more than 420,000 current and former higher education and research employees.

The not‐for‐profit superannuation fund would invest in CMBSs issued by Charter Hall Retail REIT (ASX:CHC), a listed real estate investment trust investing in predominantly grocery‐anchored shopping centres worldwide.

UniSuper’s chief investment officer, John Pearce, said this transaction had significant benefits for members. The fund’s scale allowed it to access investment opportunities with attractive terms that many competitors were unable to provide for their members.

“Given our experience, investment strategy and horizon, UniSuper is well placed to capitalise on investment opportunities such as this and we remain open to investing in similar opportunities in future.”

Charter Hall Retail REIT’s chief executive officer, Steven Sewell, welcomed the relationship with UniSuper as a new major institutional grade source of debt funding for the REIT.

The existing CMBS facility would be refinanced by a placement of notes for a four‐year term to September 2015. Other key terms of the AAA‐rated note included a margin of 1.80 per cent over the benchmark interest rate (BBSW) and $264 million facility limit. The new facility would be backed by a large collateral pool of sub‐regional shopping centres and freestanding supermarkets valued at over $779 million, representing a loan‐to‐value ratio of 33.9 per cent.

The transaction remained subject to completing documentation and rating agency confirmation of the AAA credit rating on the notes.