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<\/p>\nMercer New Zealand has appointed a local investment manager, New Ground Capital, to bring an institutional-grade residential property exposure in the New Zealand market to their Mercer Unlisted Property Fund.<\/p>\n
Mercer manages more than $846bn\u00a0(\u20ac735bn) globally. Its New Zealand clients include KiwiSaver (the nation\u2019s retirement scheme), endowment funds, M\u0101ori iwi investment companies, charitable trusts, and a number of large workplace savings schemes.<\/p>\n
Mercer has made an initial allocation with New Ground which will source and manage the assets, with New Ground also making an appropriate co-investment to align its interest with the fund.<\/p>\n
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New Ground was chosen to deploy the strategy for its decade-long experience in building rental and affordable housing in New Zealand, said Del Hart, Mercer New Zealand\u2019s chief investment officer, who joined Mercer in March from NZ Super.<\/p>\n
She said the fund was seeded from the firm\u2019s existing Mercer Unlisted Property Portfolio, with capital to be drawn over time as attractive opportunities were identified.<\/p>\n
If fully deployed today, she added the allocation to New Ground Capital would amount to around 26% of Mercer\u2019s existing Unlisted Property Fund.<\/p>\n
\u201cResidential real estate is underrepresented in portfolios here and in Australia compared with global portfolios,\u201d she told IPE Real Assets, adding exposure to the asset class improved diversification and resilience.<\/p>\n
The strategy aims to pair inflation-resilient, long-term income with potential residential capital growth, she explained.<\/p>\n
\u201cNew Zealand faces a persistent housing undersupply and growing public-sector demand for leased accommodation. We believe the best way to capture the structural benefits of residential property is by design: a targeted allocation managed by an experienced local specialist and integrated within our unlisted property portfolio.\u201d<\/p>\n
Hart said for most diversified investors the look-through exposure would be modest, but the fund meaningfully enhanced income stability and diversification within unlisted property allocations.<\/p>\n
The fund would invest in residential properties across New Zealand to build out a geographically diversified New Zealand portfolio. The houses would be leased to government and community housing providers aiming to create a stable long-term rental income stream, with the prospect of capital appreciation over time. The fund is opportunity led and can invest in a wide spectrum of residential property types.<\/p>\n
\u201cWe\u2019re confident around the thesis from an investment commercial return perspective, but it has a social outcome associated with it. We think this is a win-win strategy.\u201d<\/p>\n