According to The AFR, industry superannuation fund Hostplus had sought a $1.5 billion cash redemption from unlisted commercial property investor trust ISPT. However, ISPT has rejected its request.
Hostplus may now try to sell its units to other investors in ISPT, although just $20 million in units were transferred between investors in the 2019 financial year.
Meanwhile, fellow industry fund Cbus has criticised AMP Capital, which holds $6 billion worth of property assets. Chief investment officer, Kristian Fok, says it is still waiting for payment 15 months after it requested a $550 million redemption from AMP Capital:
The Australian Financial Review understands the board of ISPT has exercised its right to refuse any redemption request deemed not to be in the best interests of all unit holders…
Greg Combet, the head of lobby group Industry Super Australia, previously told the Financial Review that Hostplus was seeking to rebalance a portfolio overweight to unlisted assets given the downturn in listed markets…
At the end of February, almost 30 per cent of Cbus’ assets were in unlisted markets, mostly in property and infrastructure.
As we know, industry super funds are facing an avalanche of requests from its younger members for early release of their superannuation.
While industry-wide requests are estimated to reach only $27 billion, industry funds have suffered triple the withdrawal rate of retail funds.
These same industry funds also have an overweight exposure to unlisted assets like property and infrastructure, which has allowed them to derive an “illiquidy” premium that has boosted their long-run returns.
Now these same funds have found themselves in strife having to sell down these illiquid assets to fund redemptions by their young membership base, which has been hit hardest by the COVID-19 economic shock.