Australian retirement funds are placing big bets on American strip malls, and Nuveen Real Estate is cashing in on the conviction.
The global asset manager announced the close of a $330 million capital raise for its U.S. Cities Retail Fund, drawing commitments from three Australian retirement funds. The Retail Employees Superannuation Trust, known as Rest, anchored the raise with a $250 million commitment. Nuveen did not identify the other two funds.
Nuveen launched the U.S. Cities Retail Fund in 2018. The fund targets properties anchored by grocers and daily-needs tenants in markets with frequent transactions.
Rest manages about $74 billion on behalf of more than 2 million Australian workers, most of them decades from retirement. The fund seeks assets that generate income across economic cycles, said Andrew Bambrook, Rest's head of real assets.
"These shopping centers are anchored by major U.S. grocers and supermarkets, including brands like The Fresh Market, Harris Teeter and Trader Joe's, alongside convenience retailers that meet people's everyday needs," Bambrook said in a statement. "U.S. Cities Retail Fund prioritizes areas with large numbers of younger families, who are forming households and seeing their day-to-day household needs grow."
Rest isn't new to U.S. real estate. Last fall, the fund committed $250 million alongside Blue Owl Capital into Store Capital, gaining exposure to triple-net-lease commercial properties across 49 states.
Various locations
The Nuveen commitment deepens that U.S. space, this time through grocery-anchored neighborhood retail.
"This commitment helps 'diversify our diversifiers' by spreading our exposure across different retail property types, categories and geographies," Bambrook said.
A recent Nuveen Chicago acquisition puts a concrete address on the investment thesis.
Nuveen this month acquired Elston Plaza, a 92,911-square-foot, grocery-anchored center in Chicago's Avondale neighborhood, for $27 million, according to CoStar data. The property is 95.4% leased.
Located on the densely populated Northwest Side, the property fits squarely within U.S. Cities Retail Fund's playbook: grocery-anchored, near-fully occupied and positioned in a high-foot-traffic urban corridor where residents shop.
The fund currently holds 10 retail properties in markets including Austin, Texas; Philadelphia, Pennsylvania; and San Diego, California, with five additional properties recently under contract. Nuveen's broader retail platform manages $8 billion in assets under management, representing $17 billion in gross asset value.