Apr 05 2017Add to Favorites
Ruth Liew, Bloomberg
Record low yields and negative interest rates are pushing investors from Japan to China into funding infrastructure projects across the globe to bolster ailing income, according to Australia’s biggest listed wealth manager AMP Ltd.
Asian pension funds and insurers are ramping up investments in infrastructure debt around the world including mezzanine offerings as they seek to combat waning returns from traditional fixed income assets, said Kerry Ching, managing director for Asia of the company’s investment arm, AMP Capital Investors. The number of Asian investors in AMP’s infrastructure debt strategies has more than tripled since 2012.
“Because insurance and pension funds have a large chunk of their portfolio in marketable securities and fixed interest which has been extremely volatile for the last couple of years, they’re looking for stability,” she said in an interview in Hong Kong. “Global infrastructure debt was a very successful strategy and there’s stability in the capital value.”
Infrastructure spending plans are drawing greater scrutiny worldwide, including a $1 trillion splurge pledged by President Donald Trump to improve roads, airports and bridges across the U.S. Investors pumped a record $413 billion into infrastructure investments globally last year, according to data provider Preqin. Managers such as Global Infrastructure Partners and Brookfield Asset Management raised unprecedented amounts of funding for their infrastructure strategies in 2016.
AMP has invested more than $3 billion in 56 infrastructure debt assets and raised about $1 billion from investors so far for its third fund in the asset class. The company is “on track” to meet the $2 billion fundraising targets for its latest infrastructure debt strategy, an AMP spokeswoman said in a March 31 email. Such debt funds at the firm target a 10 percent yield on investments, according to the email.
The A$165 billion ($125 billion) manager is seeing increasing interest from Taiwanese and South Korean investors, Ching said. Direct and listed real estate investments including commercial properties in Australia are also increasingly popular among Asian investors thirsty for yield, she said.
“Australian economic conditions have held up relatively well compared with Europe,” she said. “Australian property offers slightly better yield than some of our properties in Hong Kong or Singapore.”
As fund flows increase from Asia, AMP Capital is looking to add to its distribution team in the region, Ching said. “In Hong Kong, we will be hiring a few people this year.”
Residential developer Legacy Property is set to commence a syndicated equity raise for its 7thand final stage of Caddens Hill, with minimum investment amounts starting at $250,000, targeting 17.5% investment return over the twelve-month construction period.
MP Funds Management (MPFM) has made its first investment of 2019, a co-investment with another group that MPFM has a successful and ongoing co-investment relationship with. The acquisition of the Crossroads Homemaker Supercenter (the subject property) is an opportunity of scale and dominance in one of Australia’s most significant growth regions. The centre offers an existing net lettable area of 47,997sqm on 143,997sqm land over 4 separate lots. 93% of the property income is underpinned by national retailers including Bunnings Warehouse, Freedom, Fantastic Furniture, the Good Guys and Nick Scali.
Dexus today announced its result for the half year and reaffirmed its guidance for distribution per security growth of circa 5% for FY19. Dexus Chief Executive Officer, Darren Steinberg said: “It has been a productive six-month period where we have added value through enhancing our development pipeline and attracting new investors to our funds management business. This has all been achieved while maintaining low balance sheet gearing. “In our office portfolio we continue to outperform the MSCI office benchmark1 over one, three and five years through driving higher rents and lower incentives, particularly in Sydney which has been reflected in property valuations during the period. “In our funds management business, we now have $15 billion under management with investors and partners that can invest alongside us through the cycle, reinforcing our objective of being the wholesale partner of choice in Australian property.”
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