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Australian pension fund Aware Super looks at US deals unfazed, despite political turmoil

A major Australian pension fund, Aware Super, has said that it will continue to invest in U.S. real estate, as they are confident of the long-term economic fundamentals, and that domestic consumption levels, won't be affected by current political volatility.

One of Australia's largest pension funds (A$190 billion, or 125 billion dollars) announced this week it will be embarking on an $1.3 billion venture to purchase a U.S. Industrial Property Fund that owns three Los Angeles logistics sites.

Superannuation funds, Australia's compulsory retirement saving scheme worth A$4.1 trillion (US$2.7 trillion), are turning more and more to international investments for higher returns.

Aware Super’s head of property Alek Misev stated that the U.S. is attractive because global interest rates are likely to continue falling, as well as the fact that technology advancements and domestic consumption rates remain strong.

According to Aware Super, the U.S., Canada, and Australia account for 13% of the global property assets. The UK, continental Europe, and Australia make up 65%.

"You must have a longer-term view and be convinced that the volatility of short-term will eventually even out over time. It's the same in Europe and Asia-Pacific. In an interview on Thursday, Misev said that you need to focus on the basics.

Congress has failed to pass funding legislation for the new fiscal years. The deadlock is the result of a disagreement over federal spending priorities and healthcare policy.

Misev stated that Aware will focus on property assets located close to population centers, which could attract tenants of high quality.

He said, "Demand exists. There is not a lot of supply. Interest rates will probably go down in the future."

You would love to see a positive trend in the property market. We think that the pricing in the U.S., Europe, and Australia is at the lowest level.

We are now more active because of this.

Aware stated that Amazon and Maersk are tenants at the Goodman sites.

Anjana Mooran, senior portfolio manager at Aware Super, noted that the fund had to take into account the April announcement by U.S. president Donald Trump of tariffs on all trading partners.

Moran explained that "there were announcements about tariffs, and when we thought about logistics assets and possible exposure to trade risk that gave us pause. We needed to do more to get comfortable, and we were able do that."

The fund's portfolio is dominated by industrial properties, which account for 32% of the total. Residential properties make up 30%, and office buildings represent 17%. (1 Australian dollar = 1.5117 dollars) (Reporting and editing by Edwina G. Gibbs; Scott Murdoch)

(source: Reuters)