The New Zealand Super Fund is linking up with the Auckland Council's development arm to potentially undertake some substantial urban regeneration projects in the country's largest city.
NZ Super is of course the $57 billion fund charged with assisting New Zealand's future superannuation payment requirements and it is now a very substantial investor both in New Zealand and globally.
It is teaming up with Eke Panuku Development Auckland in a move that Auckland Mayor Phil Goff says willl give Eke Panuku access to greater funding.
“It means that Eke Panuku will be able to move faster and go further in the critical work it is doing to rejuvenate town centres across Auckland.
"There’s a huge amount of work needing to be done, but constraints in the funding council is able to make available to it in challenging financial times,” Goff said.
“The Super Fund is looking for projects that are long term. It is a reliable and ethical investor, and the return it gets on its investment goes back to Aucklanders and New Zealanders to meet their needs in retirement. All of those things make the Fund an excellent investor for Eke Panuku to partner with,” he said.
There's no specifics talked about in terms of how much the Fund might be tipping in, but it does have very deep pockets and the media release announcing the partnership talks both about "large-scale (over $100 million), climate-friendly property investments" and "over $1 billion of land and vertical development opportunities over the next decade".
NZ Super Fund chief executive Matt Whineray said the fund was hoping to reach agreement on an initial investment before the end of the year.
"We anticipate this partnership agreement being in place for many years and supporting Auckland’s growth for decades to come," he said.
The partnership is to be focused on development opportunities in Eke Panuku strategic priority locations (as set by Auckland Council), such as Northcote and Panmure.
Each project is to be considered on a case-by-case basis with NZ Super Fund investments made in line with its commercial mandate. Control and approval of urban development outcomes will remain with Auckland Council, with local boards, mana whenua and communities fully engaged on the projects.
In recent years the NZ Super Fund has built a substantial portfolio of New Zealand property investments including a series of partnerships with local developers including Russell Group, Classic Group and Ngāi Tahu Property. The Crown-owned investment fund, which invests on behalf of taxpayers in order to help pre-fund universal superannuation, has more than $8 billion invested in New Zealand, and is looking to increase its exposure to domestic real estate and infrastructure.
In terms of how the partnership will operate, the statement from NZ Super Fund and Eke Panuku says "at a high level", under the NZ Super Fund’s 'SuperBuild' model, it would acquire part-ownership of selected Eke Panuku development sites with set urban development outcomes retained. It would then progress in partnership the urban regeneration plans already agreed with Auckland Council and provide opportunities to partner with others on individual projects.
"The partners will also explore how the scale of this programme could be increased, over time, to address Auckland Plan 2050 strategic objectives in a more ambitious way."
Eke Panuku will present to the partnership opportunities for investment. When assessing these opportunities, both Auckland Council (via Eke Panuku) and NZ Super Fund can choose which to invest in.
"All investment decisions will be based on thorough due diligence and made on a commercial basis and in line with set urban development outcomes. The NZ Super Fund will provide development funding, potentially including funding land acquisition costs, and receive a return. Completed developments will be sold to potential investors (noting that Auckland Council does not currently wish to retain ownership of completed assets). The NZ Super Fund may be a potential investor/acquirer of these assets post-development, for example as part of a ‘build-to-rent’ investment portfolio," the statement says.
It says that funding and financing "is a major constraint for Auckland Council".
"With investment from the NZ Super Fund under its SuperBuild model, we will be able to deliver a bigger, faster and more impactful urban regeneration programme than we could do solely with the funding available from Auckland Council. This partnership will provide access to long term capital with the capacity to invest throughout the property and economic cycles. Secure funding will be injected at the start of development projects, expediting, and providing assurance over, project delivery.
"The partnership will be focused on large-scale, master-planned developments with strong community and environmental benefits: energy-efficient and climate-friendly projects with proximity to transport nodes and a focus on sustainable procurement practices."
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