Unlisted property update - to 30 September 2021

posted on 25.10.2021

This issue’s featured property: World Square Shopping Centre, Sydney – serving over 27m shoppers annually.


  • Net Total Return for September is 1.74%, continuing the recovery of returns as the pandemic recovery process continues. The Fund’s rent collections remain stable with 87% of September 2021 billings collected from 100% owned properties.
  • Net property income fell on the back of increased debtor provisions recorded in September 2021. The rolling 12-month Net Total Return is now 8.50% which although welcome, is a surprising pace of recovery given the global implications of the pandemic.

Q3 2021 valuation 

  • On aggregate, independent valuations for Q3 2021 increased with a total direct property portfolio (excluding unit trust interests) value of $15.93B. This reflected an increase of $189.79M (after development and capital expenditure) from the valuations recorded in Q2 2021.

Key drivers of valuation

Commercial increased by $84.82M after capital expenditure. Property-level movement after capital expenditure ranged between -2.79% and +3.50%. Movement has been attributed to selected firming of capitalisation rates and discount rates between 12.50 bps to 25 bps throughout the portfolio. Strong demand demonstrated in the capital markets for quality office assets, with strong lease covenants and longer WALEs, has been slightly offset by continuing softening leasing fundamentals, particularly in states impacted by COVID-19 and a delayed return to work.

Retail increased by $26.68M after capital expenditure. Transaction activity in the retail investment market has provided valuers with evidence to firm capitalisation rates and discount rates throughout the portfolio. CBD retail and larger suburban malls with high discretionary retail components continue to experience trading difficulties during COVID-19, with normalised rental reversion levels clouded by trade disruptions. The reintroduction of government-imposed lockdowns in VIC and NSW has resulted in the reintroduction and review of COVID-19 allowances within valuations. The associated reduction in interstate and international tourism, reduction of CBD patronage in the Melbourne and Sydney markets, and a softening in market rents also contributed to valuation declines.

Logistics & warehousing increased by $75.77M after capital expenditure. This was driven by further capitalisation rate compression, leasing and development activity, and increased land value rates, following continued strength in the logistics and warehousing investment markets.

Education increased $3.52M after capital expenditure, which is attributable to valuation movement within the VU City Tower development.

Unlisted property assets are a source of stability and great long-term returns for REI Super’s portfolio. 

Approximately 60% of REI Super’s property portfolio within Balanced is invested in unlisted property assets, through one of our long-standing investment managers, Industry Super Property Trust (ISPT).  

Unlisted property assets are assets that are not listed on the Australian stock exchange and are generally not readily available to individual investors.   

Unlisted property investments are excellent long-term investments, providing a combination of growth and income to REI Super’s portfolio. They also have fewer short-term ups and downs in their returns than many investments. 

REI Super’s investments in ISPT are through its Core Fund, which is a diverse portfolio of around 75 Australian commercial, industrial and retail properties across capital cities and regional centres.

Since inception in 1994 the ISPT Core Fund has achieved a total gross return as at 30 September 2021 of 9.50% p.a. 

The portfolio includes many iconic Australian properties:
  • Melbourne’s GPO
  • Westfield’s Doncaster Shopping Centre, Melbourne
  • Brisbane’s Wintergarden complex
  • Casselden Place, Melbourne
  • Liberty Place in Castlereagh Street, Sydney
  • 2 National Circuit, Canberra
  • 100 St Georges Terrace, Perth 


Future investment performance can vary from past performance, and you should not base your decision to invest in REI Super simply on past performance. Past earning rates are not an indicator of future earning rates. The investment returns of REI Super are not guaranteed, and the value of the investment may rise or fall.

The information contained in this article does not constitute financial product advice. However, to the extent that the information may be considered to be general financial product advice, REI Super advises that REI Super has not considered any individual person’s objectives, financial situation or particular needs. Individuals need to consider whether the advice is appropriate in light of their goals, objectives and current situation.

REI Superannuation Fund Pty Ltd ABN 68 056 044 770 AFSL 240569. RSE L 0000314 REI Super ABN 76 641 658 449 RSE R1000412 MySuper unique identifier 76641658449129. September October 2021.