Two Big Australian Funds Are Following Their Peers Into the Affordable Housing Market

Partnerships to provide cheap housing — while making real estate-level returns — are all the rage among allocators.

Brisbane, QL, Australia (Tammy Law/Bloomberg)

Brisbane, QL, Australia

(Tammy Law/Bloomberg)

One of Australia’s largest superannuation funds has set up an investment partnership with QIC to develop and operate local affordable housing.

The Australian Retirement Trust, institutional investment manager QIC, and community housing provider Brisbane Housing Company have announced that they are partnering to create a “scalable model” to start construction on up to 1,200 new homes by 2025.

“This program is an exemplar of how state governments and institutional investors can work together with the community housing sector to raise capital and deliver social and affordable housing at scale,” said BHG chief executive officer Rebecca Oelkers in a statement.

Affordable housing partnerships are all the rage among allocators interested in making impact investments that offer attractive returns. In periods of inflation, real estate can be attractive to investors, and as cheap housing is hard to come by, providing more options is certainly impactful.

On July 7, United Kingdom-based Brunel Pension Partnership announced that one of its subsidiaries, Cornwall Pension Fund, had set up a local impact portfolio that included an affordable housing strategy. That co-investment strategy will be managed alongside PGIM Real Estate.

Meanwhile, in April, Mercy Housing California set up a land acquisition fund to build affordable housing in California, in partnership with JPMorgan Chase, Morgan Stanley, the California Endowment, Wells Fargo, CommonSpirit Health, the California Community Foundation, and the Weingart Foundation, according to the announcement. A month earlier, a joint venture between the California State Teachers’ Retirement System and Belay Investment Group anchored the second close of SoLa Impact, a minority-owned affordable and workforce housing fund.

The Australian Retirement Trust’s partnership involves an investment of up to A$150 million ($104.3 million USD) for a subordinated debt tranche, with QIC as investment manager, according to the announcement. The Queensland government will also provide capital for the housing projects.

“This unique partnership between Australian Retirement Trust, the Queensland Government, and QIC, together with Brisbane Housing Company, has created a significant opportunity for institutional investment [in] social and affordable housing in Queensland,” said Michael O’Brien, managing director of QIC real estate, in a statement.

This is the Australian Retirement Trust’s first social issue-focused investment since its founding. The trust is the result of a merger between Australia’s Sunsuper and Qsuper, which was finalized earlier in 2022.

“We believe [that] this investment opportunity will support more affordable housing in Queensland, while also maximizing the real, long-term investment returns for our more than two million members,” said Nicole Bradford, head of sustainable investment, in a statement.