Rest adds to retail property portfolio with US$250 million commitment to US real estate fund

Rest, one of Australia’s largest profit-to-member superannuation funds, is broadening its exposure in retail-sector property through a significant commitment to a US-based real estate fund.

Rest is committed to invest up to US$250 million in the US Cities Retail Fund (USCRF), managed by Nuveen Real Estate, one of the world’s largest real estate investment managers.

USCRF invests in neighbourhood shopping centres in major US markets with supportive demographics and tailwinds for continued growth. It currently comprises 10 retail properties in places like Austin, Philadelphia and San Diego, with a further 5 shopping strips recently secured to enter the portfolio.

Rest’s Head of Real Assets – Investments, Andrew Bambrook, says the commitment is expected to provide reliable, risk-adjusted returns across market cycles for Rest’s more than 2 million members.

"These shopping centres are anchored by major US grocers and supermarkets, including brands like The Fresh Market, Harris Teeter and Trader Joe’s, alongside convenience retailers that meet people's everyday needs," says Mr Bambrook.

"USCRF prioritises areas with large numbers of younger families, who are forming households and seeing their day-to-day household needs grow, and targets locations where they are most likely to shop for everyday needs for many years to come.

"Retail precincts that focus on consumer essentials and necessities can offer resilient, stable income streams that support long‑term returns.

"This sector has shown it can hold up well through different economic conditions, including downturns. They also act as important hubs for their local community, which supports steady foot traffic and therefore reliable cash flows and rental income.

"We are confident that USCRF offers this combination of resilience and income generation, as well as the potential for capital growth as the portfolio scales."

Mr Bambrook says the commitment will also enhance diversification within Rest’s property portfolio and aims to support the stability of whole-of-fund returns over time.

"Rest has a deep heritage with the retail industry in Australia, and our property portfolio has exposure to a number of large shopping centres around the country,” said Mr Bambrook.

"This commitment helps ‘diversify our diversifiers’ by spreading our exposure across different retail property types, categories and geographies. We have been increasing our overseas exposure in recent years, such as our investment with STORE Capital into the ‘triple-net-lease’ real estate sector last year.

"With the majority of our members decades from retirement, this investment is positioned to benefit from long‑term demographic shifts, particularly millennials entering their peak household and spending years and the continued growth of higher‑density urban communities. These trends underpin sustained demand for local centres that serve everyday needs, supporting the long‑term performance of the investment."

Nuveen Real Estate manages 80 retail properties across 37 markets in the US, from local strips to large urban shopping centres, with a strong focus on mixed-use neighbourhoods and suburbs. They launched USCRF in 2018 and recently concluded a US$330 million capital raise, of which Rest was a major participant.